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: March 31, 2014
TO:
[Addressee]
FROM:
Ben Boboski
Senior Rulings Officer
Goods Unit, General Operations and Border Issues Division, Excise and GST/HST Rulings Directorate. Legislative Policy & Regulatory Affairs Branch
Case Number: 158880
SUBJECT: GST/HST Rulings
[Application of the GST/HST to] Deer Feed
This memorandum is in response to your enquiry regarding the application of the GST/HST to deer feed.
STATEMENT OF FACTS
1. […] (the Store) sells a product called […] Deer Feed (the Product).
2. The ingredients of the Product are corn and molasses.
3. The Product is sold in […][bulk quantities of at least 20kg] and […][amounts of less than 20kg] bags.
4. The Product label states: […] [Describes benefits of this Deer Feed]
5. The Product is sold in the area of the Store in which livestock feed is sold.
6. The Store website describes the Product as follows: […]
7. The Product is ordinarily purchased by both deer farmers and hunters.
RULING REQUESTED
You would like to know how the GST/HST applies to supplies of the Product.
RULING GIVEN
Based on the facts set out above, we rule that supplies of the [bulk quantities of at least 20kg] size of the Product are zero-rated pursuant to subsection 1(3) of the Schedule to the Agriculture and Fishing Property (GST/HST) Regulations.
EXPLANATION
There are three provisions that could possibly apply to zero-rate supplies of the Product:
Under Schedule VI to the Excise Tax Act (ETA)
Section 2 of Part IV of Schedule VI to the ETA zero-rates a supply of:
(a) grains or seed in their natural state, treated for seeding purposes or irradiated for storage purposes,
(b) hay or silage, or
(c) other fodder crops,
that are ordinarily used as, or to produce, food for human consumption or feed for farm livestock or poultry, when supplied in a quantity that is larger than the quantity that is ordinarily sold or offered for sale to consumers, but not including grains or seeds or mixtures thereof that are packaged, prepared or sold for use as feed for wild birds or as pet food.
The Product is not included in any of paragraphs (a), (b), or (c), as the Product does not consist of grains or seeds in their natural state (it contains molasses), it is not hay or silage and is not a fodder crop (usually complete plants often grasses), and therefore, the Product is not zero-rated under this provision.
The Agriculture and Fishing Property Regulations
Section 10 of Part IV of Schedule VI to the ETA zero-rates a supply of a prescribed property which is listed under the Agriculture and Fishing Property Regulations (the Regulations). Under the Schedule to the Regulations subsections 1(2) and 1(3) zero-rate supplies of certain feed products.
Subsection 1(2) of the Regulations zero-rates:
Feed, when sold in bulk quantities of at least 20kg or in bags that contain at least 20kg, that
(a) is a complete feed, supplement, macro-premix, micro-premix or mineral feed (other than a trace mineral salt feed), all as defined in the Feeds Regulation, 1983,
(b) is labelled in accordance with those Regulations, and
(c) is designed for
(i) a single species or class of farm livestock, fish or poultry, ordinarily raised or kept to produce, or to be used as, food for human consumption or to produce wool, or
(ii) rabbits
Deer are not considered to be farm livestock under the Feeds Act and Feeds Regulations. Therefore, deer feed cannot be labelled in accordance with that Act. Consequently, because the requirements of the provision are not met, supplies of the Product are not zero-rated under subsection 1(2) of the Regulations.
Subsection 1(3) of the Regulations zero-rates:
By-products of the food processing industry and plant or animal products, when sold in bulk quantities of at least 20kg or in bags that contain at least 20 kg, that are ordinarily used as feed, or as ingredients in feed, for farm livestock, fish or poultry described in subparagraph (2)(c)(i) or for rabbits, ostriches, rheas, emus or bees. (emphasis added)
In order for supplies of the Product to be zero-rated under this provision, four conditions must be satisfied:
1. Composition. The product which is comprised of corn and molasses (derived from sugar beets or sugar cane) is a plant product. Condition satisfied.
2. Quantity. Sold in [bulk quantities of at least 20kg] bags. Condition satisfied.
3. Ordinarily used as feed for farm livestock.
a. Is the Product “for farm livestock”? Section 1 of Part IV of Schedule VI to the ETA zero-rates a supply of farm livestock (other than rabbits), poultry or bees that are ordinarily raised or kept to produce, or to be used as, food for human consumption, or to produce wool. The CRA has taken the position that deer is considered to be farm livestock for GST/HST purposes. As deer are considered farm livestock for GST/HST purposes and the Product is sold to feed deer, the Product is feed for farm livestock. Condition satisfied.
b. Ordinarily used as feed for farm livestock. The term “ordinarily” is not defined in the ETA. Generally where a good is commonly used in agriculture (i.e., standard industry practice) in Canada the “ordinarily used” condition is satisfied. To a large extent deer are fed by grazing. However, at certain times of the year grazing is supplemented by feed. It is quite common for deer to be fed products including corn, cracked corn, or pelletized corn and which is sometimes mixed with molasses. In order to be zero-rated under subsection 1(3) of the Regulations it is not required that the Product be sold and used exclusively for farmed deer. However, where a good is sold for and fed only to wild deer, its supplies would be excluded from zero-rating. The facts indicate that the Product is ordinarily sold as feed for farm livestock (i.e., deer). Condition satisfied.
While the Product is marketed to both deer farmers and to hunters, it is enough to satisfy paragraph 1(3) of the Regulations that it is supplied to deer farmers. As a result, supplies of the Product are zero-rated.
Where the product is supplied in amounts of less than 20 kg., the supply will be taxable. Consequently, the [amounts of less than 20kg] quantity of the Product is excluded from zero-rating.
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