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
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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: 122313
Business Number: XXXXX
Attention: XXXXX
May 6, 2010
Dear XXXXX:
Subject:
GST/HST RULING
Dried fruit products
Thank you for your letter of XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to XXXXX flavours of dried fruit XXXXX (the Products).
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. You are requesting a ruling on XXXXX food products XXXXX.
2. XXXXX intends to import the Products into Canada. Your submission included sample Products and you provided the web site for XXXXX which contains additional Product and marketing information.
3. The XXXXX web site states that XXXXX.
4. The submission listed the specific Products for which rulings have been requested. The Products are as follows:
• XXXXX
• XXXXX
• XXXXX
5. All Products are packaged in a XXXXX plastic bag with XXXXX which allows the contents to be seen. XXXXX.
6. The descriptions and ingredients of the Products, as obtained from each of the Product's packaging, are as follows:
• XXXXX. XXXXX.
• XXXXX! XXXXX.
• XXXXX. XXXXX.
7. The Nutrition Facts give the serving size for each of the Product flavours and the servings per container. The recommended serving size is XXXXX g for all flavours. XXXXX.
8. The submission states that the Products are XXXXX.
9. The web site, under the link for products, states that XXXXX.
Ruling Requested
You would like to know how the GST/HST applies to supplies of the Products.
Ruling Given
Based on the facts set out above, we rule that supplies of the Products 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. 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. Generally, a product that is represented (i.e., labelled and marketed) solely for use as an ingredient would not fall within the exceptions as the product would not fall within the meaning of certain words and phrases included in the exceptions. However, where a product can be purchased as both an ingredient and a snack food, that product may fall within the exceptions if other requirements included in the paragraph are met.
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. Products which contain a single fruit are not considered to be snack mixtures.
Therefore, the packages of dried fruit that contain two or more types of fruit are considered to be a snack mixture. Supplies of such packages would thus be excluded from zero-rating under paragraph 1(i) of Part III of Schedule VI. The specific Products which will be excluded under this paragraph are:
• XXXXX
• XXXXX
• XXXXX
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 a number of the Products consist of fruit with other ingredients and they can be purchased as a snack, these Products will be excluded from zero-rating by paragraph 1(l) of Part III of Schedule VI. The specific Products which will be excluded by this paragraph are:
• XXXXX
• XXXXX
• XXXXX
As supplies of the Products are excluded by either paragraphs 1(i) or 1(l) of Part III of Schedule VI, supplies of the Products 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 (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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