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: 187346
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
[…][Application of the GST/HST to the supply of a food product]
Thank you for your letter of September 22, 2017, concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to […] (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
Our understanding of the facts is as follows:
1. […] (the Company) is a GST/HST registrant with the business number noted above.
2. The Company acquires the Product for the purpose of resupply at its retail stores.
3. The Product is described as whole grains with very high fibre content, gluten free, […].
4. The Product is available in [various] blends, namely, […].
5. You provided a sample of […][blend 1], which has the following ingredients: […].
6. The Product is packaged in a […]g sealable bag which depicts the manufacturer’s logo, includes a description of the package contents […], an indication that the Product is very high in fibre, gluten free, […] and is 100% whole grains.
7. The back of the package contains a Nutrition Facts table that details the facts based on how the Product will be consumed, or more specifically, as a snack or out of a bowl. The Nutrition Facts are based on […]cup of the Product as a snack and […]cup of the Product in a bowl.
8. The back of the package also contains depictions of suggested ways to consume the Product, […].
9. The manufacturer’s website describes […][blend 1] as follows: […].
10. […].
11. In physically examining the contents of […][blend 1], it can be described as […], small […] grains, with flax seeds […].
12. The Company has indicated that the Product will be displayed in the aisle next to the cereals in the store.
RULING REQUESTED
You would like to know whether the supply of the Product is zero-rated under section 1 of Part III of Schedule VI.
RULING GIVEN
Based on the facts as represented, we rule that the supply of the Product is zero-rated under section 1 of Part III of Schedule VI.
EXPLANATION
Generally, in accordance with section 165, every recipient of a taxable supply made in Canada shall pay tax calculated at the rate of 5% on the value of the consideration for the supply (or at the rate of 13% in Ontario; 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island) unless the supply is zero-rated. The tax rate in respect of a zero-rated supply is 0%. A zero-rated supply is a supply that is included in Schedule VI.
Section 1 of Part III of Schedule VI zero-rates supplies of food or beverages for human consumption, including sweetening agents, seasonings and other ingredients to be mixed with or used in the preparation of such food or beverages, other than supplies included in paragraphs (a) to (r) of that section.
Under paragraph 1(h) of Part III of Schedule VI, supplies of the following products are excluded from zero-rating:
“granola products, but not including any product that is sold primarily as a breakfast cereal.”
As the Product as described is sold primarily as a breakfast cereal, the Product is zero-rated under section 1 of Part III of Schedule VI.
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 905-721-5218. 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,
Zubair Patel
Basic Groceries and Recaptured Input Tax Credits Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
Email this Content