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
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Case Number: 118583
Business Number: XXXXX
Attention: XXXXX XXXXX
November 26, 2009
Dear XXXXX:
Subject:
GST/HST RULING
XXXXX
Thank you for your letter of XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to supplies of 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 sold by XXXXX. You describe the Product as made of XXXXX. There are no other ingredients, preservatives or other types of fruit in the package.
2. You state that the Product is sold in the XXXXX section of retail stores.
3. The Product is packaged in a XXXXX bag. The net weight of the Product is XXXXX g.
4. The Product proof (packaging) which was included with the submission contains the following information:
* The labelling on the front of the package contains the following wording: XXXXX. In addition, the front of the package includes a picture of the Product, which consists of XXXXX.
* The back of the package contains the following information:
XXXXX
XXXXX
XXXXX.
* The Nutrition Facts and Ingredients are also listed on the back of the package. The Product contains the single ingredient of XXXXX. The Nutrition Facts are based upon a serving size of XXXXX g.
Ruling Requested
You would like to know whether supplies of the Product are zero-rated under section 1 of Part III of Schedule VI.
Ruling Given
Based on the facts set out above, we rule that supplies of the Product are zero-rated supplies pursuant to section 1 of Part III of Schedule VI, and therefore are taxable at 0% pursuant to subsection 165(3).
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 (i.e., a supply included in Schedule VI) 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.
Paragraph 1(i) of Part III of Schedule VI excludes the following from zero-rating:
"Snack mixtures that contain cereals, nuts, seeds, dried fruit or any other edible product, but not including any mixture that is sold primarily as a breakfast cereal."
A "snack mixture" is described in GST/HST Info Sheet GI-021, Snack Foods, as a mixture of two or more of the ingredients noted in paragraph 1(i) of Part III of Schedule VI. A product containing two or more types of the same kind of ingredient, such as two or more kinds of dried fruit (e.g., dried bananas and strawberries), would be considered a snack mixture and, therefore, taxable at 5% GST or 13% HST, as applicable. A product containing only one type of fruit is thus not considered to be a snack mixture. Therefore the Product would not be excluded from zero-rating under paragraph 1(i) of Part III of Schedule VI.
Paragraph 1(l) of Part III of Schedule VI excludes supplies of "fruit bars, rolls or drops or similar fruit-based snack foods" from zero-rating. It is the view of the Canada Revenue Agency that a good that consists of fruit and at least one other ingredient (such as fruit flavouring), and that can be purchased as a snack, falls within paragraph 1(l). As the Product consists of fruit with no other ingredients, it will not be excluded by paragraph 1(l) of Part III of Schedule VI.
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 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 (902) 426-6940. 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 Border Issues Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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