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
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Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 113434r
Business Number: XXXXX
Attention: XXXXX
April 21, 2010
Dear XXXXX:
Subject:
GST/HST RULING
Bee pollen
Thank you for your XXXXX of XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to bee pollen granules (the Product). XXXXX.
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
We understand the facts to be as follows:
1. You are a XXXXX carrying on business under the name of XXXXX. You are registered for GST/HST purposes with Business Number XXXXX.
2. XXXXX is or will be importing the Product in granule form from XXXXX and selling it to grocery stores, health food stores, and in the future perhaps to large manufacturers. The Product is pure dried bee pollen in the form of granules.
3. The XXXXX Region, XXXXX office issued a ruling to you on the Product, stating that the supply of the Product is taxable for GST/HST purposes at 5% or 13% as it is a dietary supplement. You do not agree with this determination. You have thus supplied further information on the Product and have requested that the Canada Revenue Agency (CRA) review this ruling. The following facts were obtained from this previous ruling and the additional information that you have provided.
4. You state in your submission that bee pollen is a natural product collimated by honey bees from flowers. It is rich in protein, vitamins and minerals and can be taken directly with a spoon or added to the cereal.
5. At the time of the original ruling, you had planned to sell the Product in XXXXX different formats. However, during your telephone conversation on XXXXX with XXXXX of this office, you stated that you are only selling XXXXX sizes, a XXXXX g XXXXX and a XXXXX kg XXXXX. You may consider selling a XXXXX g XXXXX in the future.
6. The XXXXX g size will be labelled and the XXXXX kg size has no label as it is intended to be sold to stores who will repackage it and use their own labels. The XXXXX g Product will be sold for $XXXXX and the XXXXX kg XXXXX will sell for $XXXXX/kg ($XXXXX).
7. The label for the XXXXX g size has had some modifications since the initial ruling. You have supplied us with this label, which is in both French and English. XXXXX of the label states: XXXXX. XXXXX contains the Nutrition Facts and Ingredients. The ingredients are: XXXXX. The Nutrition Facts are given based upon XXXXX. The label also states: XXXXX. XXXXX contains the wording: XXXXX.
8. You supplied us with a copy of a brochure that you use to promote the Product. XXXXX.
9. The brochure lists the benefits of taking bee pollen and states that XXXXX.
10. The brochure also contains information on dosage, which states that XXXXX.
11. The brochure contained a full listing of the composition of bee pollen, listing the minerals, vitamins, amino acids and enzymes/co-enzymes in bee pollen.
12. The Product is not labelled or advertised as a dietary supplement.
Ruling Requested
You would like to know if your sales of bee pollen are zero-rated (taxable at 0%).
Ruling Given
Based on the facts set out above, we rule that your sales of bee pollen are taxable at 5% or 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
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.
The terms "food" and "beverage" are not defined in the ETA. However, the 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.
The term "ingredient" is also not defined in the ETA. Generally, it is the view of the 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. A product that is marketed for its beneficial effects and that is added to a food or beverage simply as a way to consume it would not be considered an ingredient.
The CRA's approach is based upon the views of an "average consumer". As a result, individual preferences for, or dislikes of, certain products would not alter the general perception that a product was, or was not, a food or beverage. If a product's tax status is in doubt, the CRA will consider the manner in which the product is displayed, labelled, packaged, invoiced and advertised to determine its tax status.
Products commonly described as dietary supplements are not considered to be basic groceries. Dietary supplements include products such as vitamins, minerals, tonics, fibre, protein powders and herbal supplements. These products are generally taken for their therapeutic or beneficial effects and are available in various forms, for example, pill, capsule, tablet, powder, liquid gel, wafer and concentrates. Although these products may contain some essential nutritional elements, they are not considered to be basic groceries.
GST/HST Memorandum 4.3, Basic Groceries and Info Sheet GI-01, Products Commonly Described as Dietary Supplements, outline the criteria that the CRA considers in determining whether a product is a food, beverage or ingredient for human consumption or a dietary supplement. These criteria consider the labelling, packaging, and marketing of the product. They also provide explanations of the meanings of food, beverages and ingredients. These two publications are available on the CRA's Web site.
The Product's labelling and marketing indicates that it is a dietary supplement for the following reasons:
• XXXXX;
• XXXXX; and
• XXXXX.
The primary focus is on the expected health benefits of ingesting the Product. When added to a food, it does not the change the character of the food, but rather aids in the consumption of the Product. Products consumed for beneficial effects do not fall within the meaning of a "food", "beverage" or "ingredient" simply because they are ingested into the body by eating or drinking.
Although some of the criteria in GST/HST Memorandum 4.3, Basic Groceries may indicate that the Product is not a dietary supplement, on balance it is a dietary supplement for purposes of section 1 of Part III of Schedule VI. As a result, supplies of the Product 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 would 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 Government of British Columbia has proposed that the HST rate would 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 613-957-8253. 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,
Gunar Ozols
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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