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: 129608
Business Number: [...]
January 17, 2011
Dear [Client]:
Subject:
GST/HST RULING
Taxable status of [...] [a Cereal Product]
Thank you for your letter of October 25, 2010, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to [...] [a Cereal Product] (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 [...] has requested a ruling regarding the tax status of the Product.
2. The Product is a [...] cereal [...].
3. The Product is packaged in a [...] with a net weight of [...] grams.
4. [The] Product is placed in the baby food section of retailers.
5. The labelling on the front of the package contains the following wording: [...].
6. The [Product's] ingredients are: [...].
Ruling Requested
You would like to know how the GST/HST applies to the supplies of the Product.
Ruling Given
Based on the facts set out above, we rule that the Product is zero-rated pursuant to section 165 of the ETA and Part III of Schedule VI to the ETA.
Explanation
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 to be mixed with or used in the preparation of such food or beverages) other than supplies listed in paragraphs (a) to (r) of that section.
Paragraph 1(f) of Part III of Schedule VI excludes from zero-rating supplies of 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 Memorandum 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.
While the Product may have some of the properties similar to those listed in GST/HST Memorandum 4.3, the physical properties, packaging and marketing are different from those generally used for "other similar snack food". Specifically, the Product does not have the physical properties (ingredients, flavouring, texture and shape) usually associated with snack food. The Product is packaged in a [...] and is marketed in the baby food section of retail outlets as a cereal for toddlers.
Based upon the facts of this case, the Product is not an "other similar snack food" as listed in paragraph 1(f) of Part III of Schedule VI. The supply of the Product does not fall within any of the exclusions in section 1 of Part III of Schedule VI.
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.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-5124. 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,
Angela Stachowski
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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