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: 155194
Business Number: […]
February 4, 2014
Dear [Client]:
Subject: GST/HST RULING
[…] [Product A and Product B]
Thank you for your letter of July 4, 2013, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to […] (Product A) and […] (Product B).
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Effective April 1, 2013, the 12% HST in British Columbia has been replaced by the 5% GST and a provincial sales tax.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
1. Product A is a box of finger biscuits that are covered with cocoa and milk chocolate.
2. Product B is a box of biscuits which are mounted with a layer of cocoa and milk chocolate.
3. Both products are imported from […][the Company]’s affiliate in […][Country X].
4. Product A is packaged in a […] gram box, resembling packaging normally used for cookies. The box contains […][6 or more] finger biscuits in rows. The biscuits are not individually wrapped.
5. Product B is packaged in a […] gram box, also resembling packaging normally used for cookies. The box contains [6 or more] biscuits layered in rows. The biscuits are not individually wrapped.
6. Both products are sold in the cookie section of retail stores.
7. […].
8. The ingredients of Product A, as listed on the product packaging, are […]. The ingredients include a caution that Product A “may contain tree nuts and egg.”
9. The ingredients of Product B, as listed on the product packaging, are […]. The ingredients include a caution that Product B “may contain tree nuts and egg.”
10. It is your position that both products should be zero-rated.
11. A sample box of each of the products was delivered for our review.
RULING REQUESTED
Are supplies of Product A and Product B 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 both Product A and Product B are zero-rated for GST/HST purposes pursuant to 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(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.
Product A and Product B both resemble cookies/biscuits in appearance and texture, are marketed as biscuits, are shelved with other cookie/biscuit brands, and have packaging resembling that of other cookie/biscuit boxes. It is our position that both Product A and Product B are considered to be cookies for the purpose of paragraph 1(m). As the products are sold in packages that contain 6 or more single servings, the exclusionary provisions of paragraph 1(m) do not apply.
As none of the exclusions in paragraphs 1(a) to (r) of section 1 of Part III of Schedule VI to the ETA apply to supplies of Product A and Product B, these supplies are zero-rated.
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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