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.
XXXXX
XXXXX
XXXXX
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 107122
May 10, 2010
Dear XXXXX:
Subject:
GST/HST RULING
Application of GST/HST to XXXXX
Thank you for your XXXXX of XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to XXXXX (the Product). We apologize for the delay in responding.
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. XXXXX sells weight reduction programs, one of which is the Product.
2. You purchased the Product through XXXXX for $XXXXX which included a charge for shipping and GST.
3. The Product consists of XXXXX elements:
• XXXXX which includes:
- XXXXX;
- XXXXX;
- XXXXX;
- XXXXX.
• Fiber. XXXXX.
• Food XXXXX to help promote weight loss.
4. The Product's food element consists of breakfast, lunch, dinner and dessert items. XXXXX.
5. Prices for individual XXXXX items were not listed 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 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. The tax rate in respect of a zero-rated supply is 0%. 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.
Although food is included as an element of the Product, the supply of the Product is the supply of a weight loss program. The Product is a unique product which is not a good included under section 1 of Part III of Schedule VI. There are no other provisions that apply to zero-rate or exempt supplies of the Product and as a result, its supplies are taxable at 5% GST or 13% HST as applicable.
The Government of Ontario and the Government of British Columbia have each proposed a harmonized sales tax (HST) which will come into effect on July 1, 2010. The HST rate in Ontario will be 13% of which 5% will represent the federal part and 8% the provincial part. The HST rate in British Columbia will be 12% of which 5% would represent the federal part and 7% the provincial part. The Government of Nova Scotia has proposed, that effective July 1, 2010, the HST rate for Nova Scotia would increase from 13% to 15%.
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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