Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 183420
Dear [Client]:
Subject: GST/HST RULING
Tax status of […][XYZ] meal replacement
Thank you for your letter of March 27, 2017, concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to […][XYZ] meal replacement (the Product). We apologize for the delay in responding.
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
We understand the following:
1. […](the Company) manufactures packaged powder meals […].
2. The Product is marketed as a […][Product description].
3. Based on the Company’s website […] and the provided sample labels of the Product, serving size of the Product varies depending on the flavour – between […] grams to […] grams.
4. The ingredients include: […]
5. The Company’s website provides additional information, such as, serving suggestion and health guidance for consuming the Product.
6. The serving suggestion is: Fill a water bottle with […]ml of cold water and add the Product to the water. Shake for […] seconds until the Product is fully mixed. The consistency of the Product can be altered by the volume of water.
7. When purchased, the Product is accompanied with a “user manual”, which provides additional information on the Product.
8. The website provides consumers with a health guidance, which reads: “Children, women who are pregnant, nursing, or may become pregnant should consult their doctor before consuming [XYZ]”.
9. The Product can be purchased under a subscription program. Prices will vary depending on the quantities purchased.
10. […][Marketing description]
11. […]
RULING REQUESTED
You would like to know the tax status of the Product.
RULING GIVEN
Based on the facts set out above, we rule that the Product is zero-rated.
EXPLANATION
Section 1 of Part III of Schedule VI to the ETA zero-rates supplies of food or beverages for human consumption, including sweetening agents, seasonings and other ingredients mixed with or used in the preparation of such food or beverages, other than supplies excluded from zero-rating by way of paragraphs (a) to (r) of that section.
Products that qualify and are labeled as “nutritional supplements” or “meal replacements” pursuant to the Food and Drugs Act (FDA) and Regulations are considered food or beverages for purposes of section 1 of Part III of Schedule VI.
Based on our understanding that the Product meets the requirements of the FDA and Regulations for meal replacement and the fact the Product is supplied and marketed as a meal replacement, the Product is zero-rated.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the ruling(s) given in this letter provided that: none of the issues discussed in the ruling(s) are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 905-721-5081. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Peter Pushkarna
Basic Groceries & Recapture Input Tax Credits Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
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