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, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 160479
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
Application of GST/HST to coconut based beverages
Thank you for your letter concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to […] beverage as described below (the Product). We apologize for the delay in this response.
The HST applies in the participating provinces at the following rates: 13% in Ontario, New Brunswick and Newfoundland and Labrador, 14% in Prince Edward Island, and 15% in Nova Scotia. 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 facts as follows:
1. […] (The Company) operates […] in Canada and is registered for GST/HST purposes […].
2. The Company buys the Product from […] (the Manufacturer) for resale in its retail stores in Canada.
3. The Product is a non-alcoholic, non-carbonated, and non-dairy beverage sold in a 32 fluid ounce (1 quart) or 946 millilitre […] container.
4. Nutrition and labelling information have been provided. The ingredients of the Product are as follows: […]
5. No information regarding the ingredient’s percentage or composition was provided. According to the Manufacturer, such information is proprietary information. The letter from the Manufacturer stated […]
6. The labelling on the packaging and the information contained in […][the manufacturer’s] website do not make any claims regarding any therapeutic or medicinal benefits from drinking the Products.
7. The Manufacturer’s website […] contains the following information on the Product: […]
RULING REQUESTED
You would like to know whether supplies of the Product in the Company’s stores are zero-rated under section 1 of Part III of Schedule VI to the ETA.
RULING GIVEN
Based on the facts set out above, we rule that supplies of the Product in the Company’s stores are zero-rated.
EXPLANATION
Generally, in accordance with section 165, every recipient of a taxable supply made in Canada is required to pay GST/HST on the value of the consideration for the supply, unless the supply is zero-rated (listed in Schedule VI to the ETA and subject to the GST/HST at the rate of 0%).
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 included in paragraphs (a) to (r) of that section.
The Product is a non-alcoholic, non-carbonated, and a non-dairy beverage. Since it is also not a fruit flavoured beverage, only paragraph 1(n) of Part III of Schedule VI to the ETA needs to be considered.
Paragraph 1(n) of Part III of Schedule VI provides that supplies of beverages (other than unflavoured milk) are excluded from zero-rating, except when:
(i) prepared and pre-packaged specially for babies,
(ii) sold in multiples, pre-packaged by the manufacturer or producer, of single servings, or
(iii) the cans, bottles or other primary containers in which the beverages or products are sold contain a quantity exceeding a single serving.
The single serving threshold for beverages for GST/HST purposes includes all servings under 600ml in volume.
As the Product is sold in 946ml containers, it meets the exception in subparagraph 1(n)(iii), and consequently, the exclusion under paragraph 1(n) as quoted above does not apply to the Product.
As none of the exclusions contained in section 1 of Part III of Schedule VI to the ETA apply to the Product, supplies of the Product are zero-rated for GST/HST purposes.
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 given in this letter provided that: none of the issues discussed in the ruling 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 905-721-5222. 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,
David Nichol
Senior Rulings Officer
Basic Groceries & Recaptured Input Tax Credits Unit
General Operation and Border Issues Division
Excise and GST/HST Rulings Directorate