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: 112478
Business Number: XXXXX
Attention: XXXXX
XXXXX
March 10, 2009
Subject:
GST/HST RULING
XXXXX
Dear XXXXX:
Thank you for your XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the 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 Product is manufactured by XXXXX.
2. The submission consists of a front and back colour picture of the Product, which shows the ingredients and marketing information.
3. The ingredients of the Product are: XXXXX.
4. The Product is packaged in a plastic bottle with a XXXXX lid. The Product weight is XXXXX
5. The plastic bottle is XXXXX. It has a XXXXX of the bottle, with the front view showing the XXXXX. The back of the bottle has the XXXXX.
6. The label on the front of the bottle has the following information:
• "XXXXX"
• "XXXXX"
• "XXXXX"
• "XXXXX"
• "XXXXX"
• The label also contains a XXXXX
7. The label on the back of the bottle contains the following:
• XXXXX
• XXXXX
• XXXXX
• XXXXX
• XXXXX
• XXXXX
8. The web site listed on the Product (XXXXX) was reviewed. This was a sub page of the main XXXXX web site. This site contains the following information about XXXXX:
XXXXX
XXXXX
XXXXX
Ruling Requested
You would like to know how the GST/HST applies to supplies of the Product.
Ruling Given
Based on the facts set out above, we rule that the supply of the Product is a zero-rated supply (taxable at 0%) pursuant to subsection 165(3) and section 1 of Part III of Schedule VI.
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 (or 13% in the participating provinces of Nova Scotia, New Brunswick, and Newfoundland and Labrador) unless the supply is zero-rated. Zero-rated supplies are included in Schedule VI. The tax rate in respect of a zero-rated supply is 0%.
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.
The terms "food" and "beverage" are not defined in the ETA. However, the Canada Revenue Agency (CRA) considers a product to be a food or beverage if an average consumer would recognize and purchase the product as such in the ordinary course of buying basic groceries. Consumers usually consume food and beverages to sustain or maintain life, to allay hunger or thirst, or for enjoyment rather than for therapeutic or preventative effects.
Generally, it is the view of CRA that an average consumer would consider a product to be an ingredient if it added to the flavour, texture or appearance of the final product; that is, if it was integral to the final product. Moreover, to be considered an ingredient, the final product must, in and of itself, be a food or beverage. For GST/HST purposes, we consider the Product to be an ingredient, as it is added to XXXXX.
As the Product is a food that is not included in any of paragraphs (a) to (r) of section 1 of Part III of Schedule VI, supplies of the Product are zero-rated under section 1 of the same Part and Schedule.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at XXXXX. 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,
XXXXX
Goods Unit
General Operations and Borders Issues Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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