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.
DATE July 22, 2014
FROM
David Nichol
Senior Rulings Officer
Basic Groceries and Point-of-Sale Rebates Unit, General Operations and Border Issues Division, Excise and GST/HST Rulings Directorate
55 Athol St., East, Oshawa ON
L1H 1J8
TO
[Addressee]
[…]Case #158585
SUBJECT: [GST/HST INTERPRETATION]
Tax Status of [a] [Fruit Snack]
This memorandum is in response to your [correspondence] of [mm/dd/yyyy], regarding the tax status of […][Fruit Snack] products. […]
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
Statement of Facts
We have the following understanding based on your submitted representations, a review of a sample product, and our review of […][the Company] website.
1. […][The Company] produces three varieties of its [Fruit Snack] products (the Product):
- […][Variety 1]
- […][Variety 2]
- […][Variety 3]
2. The Product is a […] gram […][container] of cut fruit contained in a fruit sauce/syrup, with a […][wholegrain topping]. […][Description of container].
3. The Product is sold in a manufacturer’s package that contains […] identical products.
4. The listed ingredients for the [Variety 3] product are as follows: […]
5. The Product is marketed as a convenient anytime snack that can be consumed at room temperature, chilled, or heated. However, at time of sale it is held at room temperature.
6. The Product is prepared for consumption by separating the lid from the bowl and unsealing the fruit and the topping. The topping is then sprinkled on top of the fruit before heating or chilling.
7. On visual inspection, the Product is prominently a “fruit in sauce” product. It would be a fruit cup product with the exception of its thicker sauce/syrup and the fact it comes with an optional topping.
8. The fruit contained in the product has not been cooked. It has been heated for the purposes of pasteurization only prior to its placement in the sauce.
9. […].
[…][Interpretation Requested]:
What is the tax status of the Product?
[…][Interpretation Given]:
It is our opinion that the Product is zero-rated under Part III of Schedule VI and is therefore subject to GST/HST at the rate of 0%.
Explanation:
The supply of food and beverages marketed for human consumption (including sweetening agents, seasonings and other ingredients to be mixed with or used in the preparation of such food or beverages), is zero-rated, or subject to the GST/HST at the rate of 0%, unless excluded by the provisions contained in paragraphs (a) through (r) of section 1 of Part III of Schedule VI.
The Product is a fruit based snack food that has natural fruit as its most prominent ingredient. The fruit is contained in thick sauce and the packaging contains an optional whole grain topping. The fruit maintains its natural texture and presentation, albeit cut or sliced, within the sauce. The fruit is not pulverized, rolled, dried, or puréed. The fruit has not been cooked during the manufacturing process.
Paragraph (h) excludes from zero-rating “granola products, but not including any product that is sold primarily as a breakfast cereal”. Although this product contains traces of granola, it is not, in its own right, a granola product. As the most prominent component/ingredient is cut fruit, the Product is first and foremost a fruit based snack food.
Paragraph (i) excludes “snack mixtures that contain cereals, nuts, seeds, dried fruit or any other edible product, but not including any mixture that is sold primarily as a breakfast cereal”. Fruit in syrup/sauce and a cereal grain does not constitute a snack mixture. As contemplated, the fruit in snack mixtures is dry.
Paragraph (l) excludes from zero-rating fruit bars, rolls or drops or similar fruit-based snack foods. Cut fruit in syrup/sauce is not, or is not similar to, a bar, a roll, or a drop. This paragraph is used to exclude fruit based products that are pressed or formed together in a manner that they are no longer recognized in their natural form.
Paragraph (o) excludes food or beverages heated for consumption. Although the consumer may heat the Product in preparation for consumption, the Product itself is not supplied heated for consumption.
Paragraph (o.1) excludes salads not canned or vacuum sealed. The CRA does not consider fruit pieces to constitute a salad unless more than one type of fruit is present. It is our understanding the [Variety 1] product and the [Variety 3] product do not contain multiple fruits and are therefore not considered salads. However, the [Variety 2] product is a mix of fruit, albeit only […] fruits, and arguably would meet the CRA’s definition of a salad. However, as the Product is sold in vacuum sealed containers, the exclusionary provisions of this paragraph would not apply.
As none of the exclusionary paragraphs of section 1 of Part III of Schedule VI apply to this product, the product is zero-rated, or subject to the GST/HST at the rate of 0%.
[In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the interpretation given in this letter, including any additional information, is not a ruling and does not bind the Canada Revenue Agency (CRA) with respect to a particular situation. Future changes to the ETA, regulations, or the CRA’s interpretative policy could affect the interpretation or the additional information provided herein.]
If you have any further questions with respect to this file, please call me at (905) 721-5222.
Sincerely,
David Nichol
Basic Groceries and Point-of-Sale Rebates Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
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