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: 137575
August 15, 2011
Dear [Client]:
Subject:
GST/HST RULING
Tax status of [...] [Crackers]
Thank you for your letter of July 27, 2011, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to [...] (Product A) and [...] (Product B).
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. Product A is available in [...] flavours: [...]. The [...] have been provided as an example.
2. Product B is available in [...] flavours: [...]. Provided was the [...] as an example.
3. Product A's ingredients are: [...].
4. Product B ingredients are: [...].
5. Product A and Product B have [...]. [labelling described]
6. Product A is pictured as [...]. [shape described]
7. Product A's nutritional information is based on [...]
8. Product B's nutritional information is based on [...]
9. Product A and Product B are promoted on the Manufactures website as [...]
10. Both Product A and Product B are found in the cracker aisle of the grocery store.
11. Product's A and B are packaged in a rectangular box, and [...].
12. Product's A and B are marketed and sold as crackers.
Ruling Requested
You would like to know if the supply of Product A or Product B is zero-rated under section 1 of Part III of Schedule VI.
Ruling Given
Based on the facts set out above, we rule that the supply of Product A or Product B is zero-rated.
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).
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. Paragraph 1(f) does not apply to Product A or B, they have the characteristics of crackers.
Products A and B are crunchy and brittle, baked, and contain similar ingredients to crackers. Also, the Products are marketed as crackers, for placement in the grocery stores as crackers, and the main competition is from other crackers. Further, the labelling for Product's A and B states that they are crackers. Products A and B are crackers; the supply of which is zero-rated under section 1 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 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 Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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