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: 137871
August 31, 2012
Dear [Client]:
Subject: GST/HST RULING
Tax status of feed and food mineral oil and medicinal cod liver oil – revocation of ruling
This is to inform you that we are revoking the ruling issued to you dated [mm/dd/yyyy] […] as it pertains to the supply of certain grades of mineral oil and of food-grade medicinal cod liver oil […]. This letter contains our revised rulings on the tax status of these supplies.
In the […][previous] ruling, we ruled that Linseed oil (feed-grade, agricultural use) was zero-rated. That ruling is not being revoked.
This letter revokes and provides revised rulings on mineral oil (food-grade, human use), mineral oil (feed-grade, agricultural use) and food-grade cod liver oil. By mineral oil (food-grade, human use), we mean mineral oil graded as per industry standards to be used as an ingredient for food for human consumption. By mineral oil (feed-grade, agricultural use), we mean mineral oil graded as per industry standards to be used as an ingredient for feed for farm livestock. By food-grade medicinal cod liver oil, we mean medicinal cod liver oil graded as per industry standards to be for human consumption.
[…]
Mineral oil (food-grade, human use)
In the [previous] ruling, we stated that the supply of mineral oil (food-grade, human use) was not considered to be food for human consumption and was therefore subject to the GST/HST. This letter revises that position. In certain circumstances, food-grade mineral oil is approved for use as an additive for food for human consumption. Therefore, the supply of the human use, food-grade mineral oil is zero-rated when supplied as an ingredient for food for human consumption.
Please be advised that, on the other hand, supplies of dietary supplements for human consumption are taxable. A dietary supplement is generally considered a product which is marketed and consumed for therapeutic or preventative health effects or to achieve special beneficial effects related to performance or physique. This can be differentiated from general food or beverages in that food is generally consumed to satisfy hunger or thirst. Therefore, the supply of mineral oil marketed as a dietary supplement is subject to the GST/HST, including when it is food-grade and indicated to be for human use. Form is a significant factor when determining whether a product is a basic grocery. When mineral oil is supplied in a pill, capsule or other similar form, this is an indicator that the product is a dietary supplement for GST/HST purposes. In your case, the mineral oil (food-grade, human use) is not packaged and promoted as a dietary supplement and is packaged and promoted as a food ingredient in the production of food for human consumption. Based on these facts, the supply of the food grade, human use mineral oil is zero-rated.
Many products have uses as ingredients for food or beverages for human consumption. These same products may also have non-food or non-beverage uses. Such multi-use ingredients are zero-rated when supplied as ingredients for human consumption. When the product is supplied for a non-food use in the same packaging or form (e.g., in bulk) as when supplied for food or beverage uses, the supply is also zero-rated. When a good is packaged and promoted for non-food uses only, the supply is taxable. Therefore, were you to supply food grade mineral oil in the same packaging format as you supply it for human consumption to clients who may use it for non-food uses, the supply would also be zero-rated.
Mineral oil (feed-grade, agricultural use)
The [previous] ruling stated that the supply of mineral oil (feed-grade, agricultural use) was zero-rated when supplied as a feed ingredient. We based our position on the belief that mineral oil qualified as a “by-product of the food processing industry or a plant or animal product” as these terms are used in subsection 1(3) of the Schedule to the Agriculture and Fishing Property (GST) Regulations, which lists zero-rated goods.
Mineral oil is a refined petroleum product and, thus, not a by-product of the food processing industry or plant or animal product. As a result, the supply of mineral oil as a feed ingredient does not qualify for zero-rating under the provision of the Agricultural and Fishing Property (GST/HST) Regulations.
Consequently, the supply of mineral oil (feed-grade, agricultural use) is subject to GST or to HST when sold or marketed as a feed ingredient. HST applies at the rate of 15% in Nova Scotia, 13% in Ontario, New Brunswick, and Newfoundland and Labrador, and 12% in British Columbia. GST applies at the rate of 5% in the remaining provinces and territories.
Medicinal cod liver oil U.S.P. for human use
In the [previous] ruling, we stated that the supply of medicinal cod liver oil U.S.P (food grade, human use) was zero-rated. Our revised ruling is that medicinal cod liver oil is a dietary supplement. Its supply is thus not zero-rated as a basic grocery and is taxable.
[…]
These rulings are subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by these rulings 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.
If you require clarification with respect to any of the issues discussed in this letter, please call me at (613) 952-8815.
Yours truly,
Raymond Labelle
Senior Rulings Officer
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
Email this Content