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
Case Number: 101883R
Attention: XXXXX
XXXXX
December 10, 2009
Dear XXXXX:
Subject:
GST/HST RULING
XXXXX - Whether an Ingredient or a Dietary Supplement
Thank you for your letter of XXXXX, and accompanying documents, in which you requested that we reconsider our ruling issued to XXXXX, regarding the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to XXXXX. We apologize for the delay in responding to you.
Statement of Facts
Our understanding of the facts is as described in our ruling letter of XXXXX. We also considered the following additional statements submitted in your reconsideration request.
1. XXXXX.
2. XXXXX are found in the human gastrointestinal tract attesting to the ability to digest XXXXX.
3. The presence of XXXXX attests to the essential nutritional nature of this XXXXX.
4. XXXXX is used as a XXXXX.
5. Unlike XXXXX, the XXXXX are entirely man-made.
6. The XXXXX are either bitter or salty tasting and do not enhance the taste of food.
Ruling Requested
In light of these new facts and the comments in your letter, you asked that we reconsider our ruling of XXXXX, in which we ruled that XXXXX is not a food or ingredient for GST/HST purposes and is subject to GST at 5% or HST at 13%.
Ruling Given
Based on the statements and facts set out above and in our ruling of XXXXX, we confirm our ruling that XXXXX is not a food or ingredient for GST/HST purposes and is subject to GST at 5% or HST at 13%.
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
Having carefully considered the additional information and comments provided in your letter and accompanying documents, our position regarding the application of GST/HST to XXXXX remains as outlined in our ruling letter of XXXXX. To the considerations already addressed in the explanation of our previous ruling letter, we add the following.
In your letter of XXXXX, you provided comments regarding Fact number XXXXX of our ruling of XXXXX, as if these paragraphs presented arguments. These paragraphs are found under the subtitle "Statement of facts" and are not arguments: they merely indicate facts. We reexamined the facts contained in these paragraphs and we concluded that they were accurate.
Paragraph 148 of GST/HST Memorandum 4.3, Basic Groceries, states that products commonly referred to as dietary supplements are consumed for their therapeutic or preventative effects (e.g., to correct actual or perceived health problems), or to achieve specific beneficial effects related to performance or physique. Also, it states that products commonly referred to as dietary supplements are not considered to be basic groceries and are not within the scope of section 1 of Part III of Schedule VI. As such, these products are taxable.
The labeling, packaging and marketing criteria set out in GST/HST Memorandum 4.3 are aimed at determining the intention of the consumer in acquiring a product. They are guides to answer the following questions: how does the consumer perceive the product, and for what reason is the consumer acquiring it? It is from applying the labeling, packaging and marketing criteria that we can determine whether the consumer is acquiring the product for its "therapeutic or preventative effects" or rather as an ingredient. This is the only determination we have to make in this case.
In making that determination, we applied the labeling, packaging and marketing criteria to the facts of the case, and in the explanation of our previous ruling letter, outlined certain factors that led us to our conclusion. In your letter of XXXXX, you provided comments on each of these elements and expressed the opinion that each applied separately or in isolation did not permit us to conclude that XXXXX was a dietary supplement.
As noted in paragraph 155 of GST/HST Memorandum 4.3, no one factor is determinative of the nature of the product. In identifying the impression of the average consumer, one must look at all factors together and consider the context and interaction of those factors. Using this approach, as we did in arriving at our previous ruling, our position continues to be that the labeling, packaging and marketing criteria considered together provide an overall indication that XXXXX is a dietary supplement XXXXX.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 954-4397.
Yours truly,
Chris Lewis
Manager
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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