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: 144550
Business Number: […]
December 18, 2012
Dear [Client]:
Subject: GST/HST RULING
GST/HST Application to the importations of phosphoric acid and phosphate rock
Thank you for your letter of May 4, 2012, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the importations of phosphoric acid and phosphate rock.
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.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
We understand the facts to be as follows:
1. […] (the Company) is a supplier of agricultural products and services in […].
2. The Company imports two products (the Products) for […]: phosphoric acid (Product A) and phosphate rock (Product B).
3. Product A is a liquid material […].
4. Product B is a raw material […]. Product B can be supplied in various sizes, from granular to larger rock sized.
5. The Products are not suitable for use as fertilizer at the time of import.
RULING REQUESTED
You would like to know if the importations of phosphoric acid and phosphate rock are non-taxable importations for GST/HST purposes.
RULING GIVEN
Based on the facts set out above, we rule that importations of phosphoric acid and phosphate rock are taxable importations for GST/HST purposes.
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
Most supplies of goods and services that are made in the participating provinces are taxable supplies subject to the HST (15% in Nova Scotia, 13% in Ontario, New Brunswick, Newfoundland and Labrador, and 12% in British Columbia), and subject to 5% GST in all other provinces, unless a relieving provision applies.
Pursuant to section 6 of Schedule VII to the ETA, importations of goods are non-taxable where the supply of the good is included in any of Parts I to IV and VIII, other than section 3.1 of Part IV of Schedule VI to the ETA. Under section 5 of Part IV of Schedule VI to the ETA a supply of fertilizer (other than a good sold as soil or as a soil mixture, whether or not containing fertilizer) made to a recipient at any time is zero-rated when it is supplied in bulk or in a container that contains at least 25 kg, where the total amount of the fertilizer supplied to the recipient at that time is 500 kg or more. Therefore, if the Products are fertilizers for purposes of section 5 of Schedule VI to the ETA, the importations would be considered non-taxable as per section 6 of Schedule VII to the ETA, where the packaging and quantity criteria are met.
To determine whether supplies of Products A or B qualify as a fertilizer, the GST/HST treatment is explained in GST/HST Memorandum 4.4, Agriculture and Fishing, and GST/HST Info Sheet GI-048 Fertilizer and Pesticides. GI-048 lists four requirements all of which must be met for a product to be considered a fertilizer for GST/HST purposes.
1. The product directly provides plant nutrients.
2. The product contains one or more of the major or lesser plant nutrients.
3. The product label contains a “guaranteed analysis” that is verified by a laboratory analysis, and if the product contains major plant nutrients, the “grade” is displayed as part of the product name.
4. The product being supplied is marketed, advertised, packaged, labelled, or sold for use as a fertilizer.
Product A and Product B do not meet all of the requirements above. For example, the Products are not supplied with a “guaranteed analysis” verified by a laboratory analysis since the Products are not supplied as fertilizers and are not considered to be fertilizers under the Fertilizers Act. Product A and Product B require further processing to become fertilizers. As such, the supplies of the Products are not zero-rated under section 5 of Schedule VI to the ETA and there are no other provisions that would apply to include the Products as non-taxable importations under Schedule VII to the ETA. As such, the importations of the Products are taxable importations for GST/HST purposes.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-5124. 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,
Angela Stachowski
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
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