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: 135239
July 4, 2011
Dear [Client]:
Subject:
GST/HST RULING
Tax status of sodium tripolyphosphate, citric acid and sodium citrate
Thank you for your letter of May 11, 2011, regarding the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the supply of sodium tripolyphosphate, citric acid and sodium citrate.
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 relevant facts as follows.
1. Your client purchases sodium tripolyphosphate, citric acid and sodium citrate ("the products") and ships them directly to his customers (the recipients) without knowing how the products will be used by the recipients of these products.
2. The three products are designated as food additives in the Food and Drug Regulations, C.R.C., c. 870.
3. Your client buys and sells only "Food Grade" food additives, which is an industry term signifying that the products are suitable for use as a food additive in food or beverages for human consumption.
4. The products can be used for purposes other than as a food additive.
RULINGS REQUESTED
You want to know if the supply of the products is zero-rated as a supply of "ingredients", as this term is used in section 1 of Part III of Schedule VI, and under what conditions, if any.
Rulings Given
We rule that the supply of sodium tripolyphosphate, citric acid and sodium citrate is zero-rated as an "ingredient" pursuant to section 1 of Part III of Schedule VI provided it is not packaged or promoted for a use other than as an ingredient for food or beverages.
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 their validity, and all relevant facts and transactions have been fully disclosed.
Explanation
It is CRA's position to recognise as an ingredient for purposes of section 1 of Part III of Schedule VI of the ETA a product which is so recognised by Health Canada. The fact that the products here at issue are designated as food additives in the Food and Drugs Regulations constitutes such recognition. Amongst the food additives recognised by Health Canada, only those specifically mentioned at paragraph 145 of GST/HST Memorandum 4.3 - Basic Groceries are excluded by CRA from being considered as "ingredients" for purposes of section 1 of Part III of Schedule VI. These are ethyl alcohol and other alcohols, and supplies of propane and carbon dioxide (CO2). None of the products here at issue are excluded from that recognition.
CRA's policy on the supply of products which could be used as an ingredient for food or beverages as well as for other uses is enunciated as follows at paragraph 144 of GST/HST Memorandum 4.3 - Basic Groceries: "Many products have uses as ingredients for food or beverages for human consumption. These same products may also have non-food or non-beverage uses. Such multi-use ingredients are zero-rated when supplied as ingredients for food or beverages for human consumption. When the product is supplied for a non-food use in the same packaging or form (e.g., in bulk) as when supplied for food or beverage uses, the supply is also zero-rated. When a good is packaged and promoted for non-food uses only, the supply is taxable."
For example, all supplies of a chemical with uses as an ingredient for food or beverages for human consumption will be zero-rated, when supplied in the same format (bulk or large bags) as when supplied for food uses. The zero-rated status will apply regardless of the status of the recipient or the intended use of the product.
If you require clarification with respect to any of the issues discussed in this letter, please call me at (613) 952-8815.
Yours truly,
Raymond Labelle
Senior Rulings Officer
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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