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.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 188950
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
Tax status of potted lettuce
Thank you for your letter dated [mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to […] potted lettuce (the Product). We apologize for the delay in responding.
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
We understand the following:
1. The Product is marketed as […] and is supplied as a potted plant.
2. The Product is supplied directly to grocers and the Product placement is within the produce section.
3. The Product is intended to be consumed over the life of the plant on an “as desired” basis, thus ensuring readily available fresh produce.
RULING REQUESTED
You would like to know whether the supply of the Product is a zero-rated basic grocery under section 1 of Part III of Schedule VI.
RULING GIVEN
Based on the facts set out above, we rule that the supply of the Product is not zero-rated under section 1 of Part III of Schedule VI.
EXPLANATION
Generally, in accordance with section 165, 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 (or at the rate of 13% in Ontario; 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island) unless the supply is zero-rated. The tax rate in respect of a zero-rated supply is 0%. A zero-rated supply is a supply that is included in Schedule VI.
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 included in paragraphs (a) to (r) of that section.
Some edible/partially edible products, such as potted vegetable plants (parts of which are edible), dietary supplements, vitamins and minerals, are not basic groceries under Section 1 of Part III of Schedule VI. The Product, at the time it is supplied, is a potted vegetable plant and as such would not be considered a basic grocery. It is from the living Product that food is later harvested.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the ruling(s) given in this letter provided that: none of the issues discussed in the ruling(s) are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 289-356-7396. 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,
Peter Pushkarna
Rulings Officer
Basic Groceries & Recapture Input Tax Credits Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
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