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: 129177
Business Number: [...]
November 29, 2010
Dear [Client]:
Subject:
GST/HST RULING
[...] [Snack Foods]
Thank you for your letter of October 6, 2010, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to [...] [Snack Foods] (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. The Product is baked and [...]. It is labeled as a [...] and is packaged in a [...]. Each package 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. [...]. [listing of the Product's ingredients]
7. 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: [...].
8. A sample box of the [...] flavour was located in [...] section of a local grocery store and was purchased to examine the Product and its packaging. The front of the container has [...] and the following wording [...].
9. The back of the container lists the nutrition facts and ingredients.
10. [...]. [description of the Product's texture, shape 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.
In particular, paragraph 1(f) of Part III of Schedule VI excludes from zero-rating the following:
"chips, crisps, puffs, curls or sticks (such as potato chips, corn chips, cheese puffs, potato sticks, bacon crisps and cheese curls), other similar snack foods or popcorn and brittle pretzels, but not including any product that is sold primarily as a breakfast cereal."
GST/HST Memoranda Series 4.3, Basic Groceries outlines factors that are used to determine if a particular product is similar to a chip, crisp, puff, curl or stick as described under paragraph 1(f) of Part III of Schedule VI. These factors include the properties of the product (ingredients, flavours, texture, cooking process and appearance), its labelling, its packaging, and its marketing.
In this case, the Product has [...] as its main ingredient, which is consistent with the snack foods enumerated in paragraph 1(f). In addition, the Products' flavours [...] are those which is typically associated with these snack foods. Furthermore, the appearance [...], shape [...] and the texture [...] are similar to those enumerated under paragraph 1(f). The Products are packaged loosely in a [...] container.
The Product in this case is therefore considered to be "similar snack foods" for purposes of paragraph 1(f) of Part III of Schedule VI. As such, the Product is excluded from section 1 of Part III of Schedule VI and supplies of the Product are subject to the GST or HST as applicable.
In December 2008, the Canada Revenue Agency provided rulings on [...].
It should be noted that no one factor is determinative of the tax status of a product and changes in the labelling, packaging and/or marketing (e.g., a change in the product name or varieties offered) would not necessarily result in a different tax status. All factors must be considered in determining whether a product falls within paragraph 1(f) 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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