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, 16th floor
320 Queen Street,
Ottawa ON K1A 0L5
XXXXX
XXXXX
XXXXX
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XXXXX
Case Number: 109565
Business Number: XXXXX
December 3, 2008
Dear XXXXX
Subject:
GST/HST RULING
XXXXX
Thank you for your XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to XXXXX (the Product).
HST applies at the rate of 13% in the participating provinces of Nova Scotia, New Brunswick and Newfoundland and Labrador. 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
Our understanding of the facts is as follows:
1. The request for a ruling on the Product contained a submission from XXXXX, as the Product is manufactured by XXXXX.
2. XXXXXalso included proof of the Product, as well as an advertisement that appeared on a former XXXXX.
3. XXXXX describes the Product as a XXXXX cereal product, which comes in various flavours, and is marketed as a XXXXX for toddlers XXXXX.
4. The Product proof (packaging label) contains the following information:
• XXXXX.
XXXXX
The ingredients of the Product are as follows XXXXX
5. The Product is packaged in a XXXXX container and has a net weight of XXXXXg.
6. XXXXX the Product will be placed in the baby food section of the retail store and not the snack food section.
Ruling Requested
You would like to confirm the position that the Product is not a product which would be excluded from zero-rating by paragraph 1(f) of Part III of Schedule VI, but would be zero-rated under section 1 of Part III of Schedule VI.
Ruling Given
Based on the facts set out above, we rule that the Product is not excluded by any of paragraphs 1(a) to (r) of Part III of Schedule VI and thus supplies of the Product are zero-rated supplies pursuant to section 1 of the same Part and Schedule.
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. The tax rate in respect of a zero-rated supply is 0%. Taxable supplies that are zero-rated for GST/HST purposes are described 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.
Paragraph 1(f) of Part III of Schedule VI excludes from zero-rating supplies of chips, crisps, puffs, curls or sticks (such as potato chips, corn chips, cheese puffs, potato sticks, bacon crisps and cheese curls), other similar snack foods or popcorn and brittle pretzels (but not including any product that is sold primarily as a breakfast cereal).
GST/HST Memoranda Series 4.3, Basic Groceries outlines factors that are used to determine if a particular product is similar to a chip, crisp, puff, curl or stick as described under paragraph 1(f) of Part III of Schedule VI. These factors include the properties of the product (ingredients, flavours, texture, cooking process and appearance), its labelling, its packaging, and its marketing.
While the Product may have some of the properties similar to those listed in GST/HST Memoranda Series 4.3, the physical properties, packaging and marketing are different from those generally used for "other similar snack food". Specifically, the Product does not have the physical properties (ingredients, flavouring, texture and shape) usually associated with snack food. The Product is packaged in a hard plastic container and is marketed in the baby food section of retail outlets as XXXXX for toddlers.
Based upon the facts of this case, the Product is not an "other similar snack food" as listed in paragraph 1(f) of Part III of Schedule VI. The supply of the Product is zero-rated as it does not fall within any of the exclusions to section 1 of Part III of Schedule VI.
It should be noted that no one factor is determinative of the tax status of a product and changes in the labelling, packaging and/or marketing (e.g., a change in the product name or varieties offered) would not necessarily result in a different tax status. All factors must be considered in determining whether a product falls within paragraph 1(f) of Part III of Schedule VI.
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,
Nancy Jardine
Goods Unit
General Operations and Borders Issues Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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