Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
XXXXX
XXXXX
XXXXX
XXXXX
Case Number: 107114
Attention:XXXXX
XXXXX
December 4, 2008
Dear Ms. XXXXX:
Subject:
GST/HST RULING
Application of GST/HST to XXXXX Granola product XXXXX
Thank you for your XXXXX of XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to XXXXX Granola XXXXX (the Product).
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
Statement of Facts
Our understanding of the facts is as follows:
1. The Product comes in packages weighing XXXXX grams.
2. The ingredients section of the Product package states the following: "XXXXX."
3. The Product's exterior package (that is visible to a prospective purchaser) makes no mention of how the Product is to be used or consumed.
• XXXXX
4. The XXXXX Website states: "XXXXX
5. The Product is not sold primarily as a breakfast cereal.
Ruling Requested
You would like to know the GST/HST applies to supplies of the Product.
Ruling Given
Based on the facts set out above, we rule that supplies of the Product are taxable at 5% GST, or 13% HST pursuant to section 165.
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
Generally, every recipient of a taxable supply made in Canada shall pay tax calculated at the rate of 5% on the value of the consideration for the supply (13% in the participating provinces of Nova Scotia, New Brunswick, and Newfoundland and Labrador) unless the supply is zero-rated, pursuant to subsection 165(3). The tax rate in respect of a zero-rated supply is 0%, where a zero-rated supply is a supply that is included in Schedule VI.
Under Part III of Schedule VI, 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.
Under paragraph 1(h) of Part III of Schedule VI, the following products are excluded from zero-rating:
"granola products, but not including any product that is sold primarily as a breakfast cereal."
Granola means a mixture of cereals (e.g., rolled oats, rice) and honey and/or syrup as the main ingredients, and may include nuts and fruit. The ingredients in granola are not processed to a great extent, and the distinct character of each ingredient is retained. The mixture may be sold in loose form or pressed, for example, into bars.
The Product is called "granola" and the ingredients listed on the packaging support this. Granola is excluded from zero-rated under paragraph 1(h), except where the granola product is sold primarily as a breakfast cereal. The Product's exterior package (that is visible to a prospective purchaser) makes no mention of how the Product is to be used or consumed. XXXXX the Product may used as cereal, other uses such as, as a topping for yogurt, and as an ingredient for baking are also listed.
As the Product is considered to be a granola product that is not sold primarily as a breakfast cereal, it falls under the exclusion pursuant to paragraph 1(h) of Part III of Schedule VI, and is taxable at 5% GST or 13% HST, as applicable.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-952-9585. 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,
Ben Boboski
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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