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: 142757
Business Number: [...]
August 22, 2013
Dear [Client]:
Subject: GST/HST RULING
Tax Status of [...] [cookies]
Thank you for your letter of [mm/dd/yyyy], concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to [...] [cookies] (the Product). We apologize for the delay in providing our 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 (effective April 1, 2013) and 15% in Nova Scotia. The GST applies in the rest of Canada at the rate of 5%.
Effective April 1, 2013, the 12% HST in British Columbia has been replaced by the 5% GST and a provincial sales tax.
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) has written in to confirm the tax status of the Product.
2. The Product is manufactured by [...] the Manufacturer.
3. The primary ingredients of the Product are [...] rolled oats, [...] chocolate, and [...] flour. Secondary ingredients include [...]. The Manufacturer is marketing the Product as being 100% natural.
4. As part of your submission, you have provided a sample [...] [package] of the Product. The Product is packaged in a [...] gram [package] that resembles a traditional [package] of cookies, with each [package] containing [...] [six or more] cookies which are not individually wrapped.
5. The back of the [package] includes a statement which describes the Product as follows: [...]
6. A physical examination of the Product revealed that the Product resembles a traditional cookie in appearance, texture, and composition. The chocolate chips are easily visible along with traces of [...] rolled oats.
7. The Product is not sold primarily as a breakfast cereal.
8. In your request, you have indicated that although the shelf space cannot be controlled, the Product is intended to be shelved with other cookie-like products.
9. It is your position that the Product should be zero-rated.
Ruling Requested
You would like to confirm the tax status of the Product.
Ruling Given
Based on the facts set out above, we rule that the supply of the Product is zero-rated under section 1 of Part III of Schedule VI to the ETA.
This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.
Explanation
Paragraph 1 (h) of Part III of Schedule VI to the ETA excludes from zero-rating granola products, but not including any product that is sold primarily as a breakfast cereal. Given its characteristics, we do not consider the Product to be a granola product; therefore, it is not excluded from zero-rating under paragraph 1 (h) of Part III of Schedule VI to the ETA.
Paragraph 1 (m) of Part III of Schedule VI to the ETA excludes from zero-rating cakes, muffins, pies, pastries, tarts, cookies, doughnuts, brownies, croissants with sweetened filling or coating, or similar products where, (i) they are packaged for sale to consumers in quantities of less than six items each of which is a single serving, or (ii) where they are not prepackaged for sale to consumers and are sold as single servings in quantities of less than six, but not including bread products such as bagels, English muffins, croissants or bread rolls, without sweetened filling or coating.
The Product resembles everyday cookies in appearance and texture, is marketed as a cookie, is shelved with other cookie brands, and has packaging resembling that of other cookie [packages]. It is our position that the Product is considered to be a cookie for the purpose of paragraph 1 (m). As the Product is sold in packages that hold 6 or more single servings, the exclusionary provisions of paragraph 1 (m) do not apply.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 905-721-5220. 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, CGA
Basic Groceries and Point-of-Sale Rebates Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
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