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: 173199
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
Application of GST/HST to the Crisp Winter Jujube
Thank you for your [correspondence] of [mm/dd/yyyy], concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to supplies of Crisp Winter Jujubes (the Product), that are sold by […](the Company). A sample of the Product was sent for our review. We apologize for the delay in responding to you.
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 is registered for GST/HST purposes.
2. The Product is sold in re-sealable […]g bags.
3. The ingredients listed on the packaging are jujube and palm oil.
4. The writing on the packaging is predominantly in Chinese, with the exception of the nutritional facts. Our understanding of the translation is as follows:
* Front of package - Natural (original) flavour, it is crispy, the brand name.
* Back of package - […].
5. The Product resembles a small dried apple with a diameter of approximately […]cm.
6. The Product is marketed as “crisp winter jujube”.
7. Jujubes are referred to as Chinese dates.
8. The Product is vacuum fried. It is our understanding that vacuum fried means putting food into a machine that pressurizes and cooks it with the use of hot oil, but at lower temperatures than traditional frying methods. During a low-heat/high pressure fry, fruits and vegetables become crispy.
RULING REQUESTED
You would like to know how the GST/HST applies to supplies of the Product.
RULING GIVEN
Based on our understanding of facts, we rule that supplies of the Product are excluded from zero-rating pursuant to paragraph (l) of section 1 of Part III of Schedule VI of the ETA.
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; and 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%.
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 paragraph 1(a) through 1(r) of that section applies.
Paragraph 1(l) of Part III of Schedule VI specifically excludes from zero-rating supplies of fruit bars, rolls or drops or similar fruit-based snack foods. Paragraphs 85 and 86 of GST/HST 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-based” implies a mixture of fruit and at least one other ingredient. Products having fruit as an important ingredient, such that the product is represented to consumers as being fruit-based snack foods, will be excluded from zero-rating under paragraph 1(l).
Based on the information provided, the Product is considered a fruit-based snack food, as the Product has jujube fruit and palm oil as ingredients. Therefore, the Product will be excluded from zero-rating under paragraph 1(l).
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 905-721-5081. 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 and Recapture Input Tax Credits Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
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