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: 178880
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
[…][Application of GST/HST to an Energy Drink]
Thank you for your letter of [mm/dd/yyyy], concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to a new energy drink […] (the Product).
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
1. The Product is a line extension to […][the Company’s] current […] juice products.
2. It is marketed as a healthy alternative to the current energy drinks on the market as it contains […].
3. The Product consists of […][less than 25%] fruit juice content and […][less than 25%] […] juice content.
4. The Product is not carbonated and does not contain any alcohol.
5. […].
6. The Product will be placed in stores on the same shelving or in the same general area as other energy drinks, such as […].
7. The Product is sold either in a single serving can containing […]ml of juice or as part of a prepackaged multi-pack containing [#] cans, each of which contain […]ml of juice.
8. […][A multi-pack] case of the Product is sold to wholesalers at $[…] per pack, while at the retail level, the Product normally sells for $[…] to $[…] per can.
9. The Product is available in [#] flavours: […].
10. The ingredients for the individual flavours for the Product are as follows: […]
11. The corporate website, […], describes the Product through the following statements: […]
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 set out above, we rule that the supply of the Product is excluded from zero-rating under section 1 of Part III of Schedule VI pursuant to paragraph 1(d) of Part III of Schedule VI.
EXPLANATION
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 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.
Paragraph 1(d) excludes
non-carbonated fruit juice beverages or fruit flavoured beverages, other than milk based beverages, that contain less than 25% by volume of:
(i) a natural fruit juice or combination of natural fruit juices, or
(ii) a natural fruit juice or combination of natural fruit juices that have been reconstituted into the original state,
or goods that, when added to water, produce a beverage included in the paragraph.
The Product is a non-carbonated fruit juice or fruit flavoured beverage containing [less than 25%] natural fruit juice by volume. As a fruit juice with less than 25% by volume of natural fruit juice, supplies of the Product are excluded from zero-rating pursuant to paragraph (d) of Part III of Schedule VI, whether sold individually or in multiple quantities as one package. As there are no other applicable zero-rating provisions, supplies of the Product are taxable at 5% GST or the applicable rate of HST.
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
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