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: 171791
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
Tax status of […][fruit-based snack foods]
Thank you for your letter of July 16, 2015, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to […] (the Product). We apologize for the delay in replying.
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 Government of New Brunswick has proposed to increase the rate of the HST in that province from 13% to 15%, effective July 1, 2016. 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
From the information provided in the request for the ruling and in review of the samples of the Product provided, it is our understanding that:
1. […] (the Company) is a GST/HST registrant and has been assigned Business Number […].
2. The Company is a Canadian company based in […][City 1] […].
3. The Product comes in a consumer package containing [#] pieces of the Product and weighing […]g in total.
4. The Company markets the Product as […].
5. The nutritional facts represented are referenced to an individual piece of the Product which weighs […]g and has [#] calories.
6. The Company produces the Product in [#] flavours; […].
7. […][Flavour 1] uses the core Product ingredients of […].
8. In addition to the core ingredients, the other Product flavours add an additional ingredient of […].
9. The Product caters to many consumers with dietary restrictions. The Product is gluten free, vegan, raw, paleo-friendly, peanut free, and does not contain refined sugar, dairy, eggs, additives, or trans fats.
10. […].
11. […].
12. The Product is a chewy, […] snack food.
13. The adhesive qualities of the […] hold the Product ingredients together […].
14. Currently, the Product is supplied exclusively in […][Province 1].
RULING REQUESTED
You would like to know the GST/HST status of the Product.
RULING GIVEN
Based on the facts set out above, we rule that supplies of the Product are taxable supplies that do not qualify for zero-rating under section 1 of Part III of Schedule VI.
EXPLANATION
Generally, 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 (15% in Nova Scotia, 14% in Prince Edward Island, 13% in Ontario, New Brunswick, and Newfoundland and Labrador) unless the supply is zero-rated. According to subsection 165(3), 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) unless an exclusion set out in paragraphs 1(a) through 1(r) applies.
Based on the information provided, the Product is considered a fruit-based snack food that is similar to a fruit bar and excluded from zero-rating by virtue of paragraph 1(l) of Part III of Schedule VI. Paragraph 1(l) specifically excludes fruit bars, rolls or drops or similar fruit-based snack foods from zero-rating. Paragraphs 85 and 86 of Memoranda Series 4.3, Basic Groceries, state that supplies of fruit bars, rolls, or drops or similar fruit-based snack foods (in solid or semi-liquid form) are taxable. Examples include fruit leathers, dried fruit bars, and similar products that are 100% fruit or have fruit as a significant ingredient. Fruit bars may include one or more fruits or may include fruit in combination with vegetables, grains, nuts or seeds.
[…].
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 the GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
David Nichol
Basic Groceries and Recaptured Input Tax Credits Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
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