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 October 4, 2012
TO
[Addressee]
FROM
Ben Boboski
Senior Rulings Officer
Goods Unit, General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
FILE 136950
SUBJECT : GST/HST INTERPRETATION - Application of GST/HST to yogurt based products
This memo is in response to your request of July 7, 2011, for a GST/HST ruling regarding the GST/HST treatment of yogurt based products.
You […] asked […] whether […] supplies of certain yogurt based products are zero-rated or excluded from zero--rating under one of the paragraphs of section 1 of Part III of Schedule VI to the Excise Tax Act (ETA).
The products in question are packaged on-site individually in [#] gram clear […][packaging]. The ingredients in the products vary somewhat but the principal component is always yogurt. The products may also include, for example: fruit, various berries (e.g., strawberries, blueberries, or blackberries), oats and almonds. Ingredients are layered and not mixed into the yogurt. That is, the products are not homogenous.[…], the Company stated that three of its products […] contain […]%,[…]% and […]% yogurt by weight.
Under Part III of Schedule VI to the ETA, certain supplies of basic groceries are zero-rated. Section 1 of Part III of Schedule VI zero-rates supplies of food or beverages for human consumption, including sweetening agents, seasonings and other ingredients mixed with or used in the preparation of such food or beverages, other than supplies included in paragraphs (a) to (r) of that section.
[…] For GST/HST purposes, a good is considered to be yogurt if its primary component (i.e., greater than 50% by weight) is yogurt regardless of layering or mixing of non-yogurt ingredients.
Although yogurt is considered to be a basic grocery for GST/HST purposes and its supply is generally zero-rated, there are exceptions which occur under particular circumstances:
• Where supplied via catering pursuant to paragraph 1(o.5).
• Supplied through a vending machine pursuant to paragraph 1(p).
• Supplied in an establishment such as a restaurant or a lunch counter within a business pursuant to paragraph 1(q).
• Drinkable yogurt products are considered beverages for the purposes of paragraph 1(n). Therefore, the supply of an individual single serving of a yogurt beverage would be subject to the GST/HST while a manufacturer’s package containing two or more single servings or any serving greater than a single serving would be zero-rated.
• Pursuant to paragraph 1(o.4), the supply of any beverage which is dispensed at the place where it is sold is subject to the GST/HST regardless of the serving size. Therefore, the supply of a dispensed yogurt beverage is subject to the GST/HST.
• Paragraph 1(o.3) which excludes “platters of cheese, cold cuts, fruit or vegetables and other arrangements of prepared food” has never been applied to yogurt nor to any items included in discussions under paragraph 1(n). It’s possible that a yogurt dip could be a dressing used in a vegetable or fruit platter but the yogurt would be a minor component (dip or dressing) and not the object of the platter itself.
We note that […] products […] contain greater than 50% yogurt by weight. […] these products are characterized as yogurt and are zero--rated for GST/HST purposes provided that they are not sold from an establishment within the store which would result in supplies of such products being taxable under paragraph 1(q).
If you would like to discuss this matter further, please contact me at 613-952-9585.
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