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: 133908
April 11, 2011
Dear [Client]:
Subject:
GST/HST RULING
Tax Status of [...] Crackers
Thank you for your letter of March 25, 2011, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the supplies of [...] Crackers (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
We understand the facts to be as follows:
1. [The Product comes] in [...] flavours [...], and [...] in a [...]g box..
2. The labelling of the Product [...].
3. The [...] flavoured product is [...]
4. The Product's shape is [...].
5. [...] [listing of the Product's ingredients]
6. [...] [listing of the Product's ingredients]
7. You state that [...] has requested that retailers shelve the Product in the [...].
8. The Products provided are currently distributed in [...]
Ruling Requested
You would like to know if supplies of the Product are zero-rated pursuant to section 1 of Part III of Schedule VI.
Ruling Given
Based on the facts set out above, we rule that supplies of the Product are zero-rated pursuant to 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.
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). Paragraph 1(m) excludes from zero-rating single servings of baked goods such as cakes, muffins, pies, pastries, etc. However, paragraph (m) does not apply to bread products such as crackers, bagels, English muffins, croissants or bread rolls that do not have a sweetened coating or filling.
There are significant differences between the Product and the [...], whereas there are no significant differences between the Product and the [...]. The Product label states that it is a [...], although labelling is a contributing factor in determining zero-rated status, it alone is not a determinative factor, thus the fact that the term [...] is used on the label does not automatically preclude the Product from being zero-rated. Other factors such as appearance, ingredients, taste, texture, ingredients, and product placement are all reflective of the Product being considered a cracker. The Product is not excluded by paragraphs (a) to (r), therefore it is zero-rated.
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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