Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
[Addressee]
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 129135
Business Number: [...]
November 29, 2010
Dear [Client]:
Subject:
GST/HST RULING
[...] [Fruit Flavoured Snacks]
Thank you for your letter of October 6, 2010, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to [...] [Fruit Flavoured Snacks] (the Product).
HST applies at the rate of 15% in Nova Scotia, 13% in Ontario, New Brunswick, and Newfoundland and Labrador, and 12% in British Columbia. 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 [...] [the Company].
2. You have described the Product as a fruit [...] flavoured [...]. It is labelled [...]. Each packet weighs [...]g. The Product is marketed as [...].
3. The Product is currently available in [...] flavours: [...].
4. [...]. [listing of the Product's ingredients]
5. [...]. [listing of the Product's ingredients]
6. You also provided a link to [the Company's] Web site [...] which shows the Product's images and ingredients. This site contained the following additional information: [...].
7. A sample box of the [...] flavour of the Product was purchased from [...] a local grocery store to examine the Product and its packaging. The front of the box shows [...]. It contains the wording [...].
8. The back of the box has the name of the Product and the following wording: [...].
9. The remainder of the back of the package promotes [...] products with the following wording: [...].
10. The nutrition facts and ingredients were given on a [...].
11. [...]. [description of the Product's shape, size and flavour]
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 12%, 13% or 15% 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 (15% in Nova Scotia, 13% in Ontario, New Brunswick, and Newfoundland and Labrador and 12% in British Columbia) 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(l) of Part III of Schedule VI excludes the following products from zero-rating:
"fruit bars, rolls or drops or similar fruit-based snack foods."
"Fruit-based" implies a mixture of fruit and at least one other ingredient. Products having fruit as an important ingredient, such that the product is represented to consumers as being fruit-based, will be within this exclusion. It may also mean that a product is not dominantly composed of fruits and may refer to the use of fruit for flavouring purposes.
As the Product has fruit as an important ingredient and is marketed as being fruit based, it is considered to be a fruit based snack food for the purposes of the above provision. Therefore, supplies of the Product are excluded from zero-rating pursuant to paragraph 1(l) of Part III of Schedule VI and are taxable at the rate of 5% GST or 15%, 13% or 12% HST, as applicable.
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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