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: 185882
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
Tax status of [a snack combination of] […][a spreadable product] and […][a baked product]
Thank you for your letter dated [mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to […](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 Company) is a distributor of the Product.
2. The Product is comprised of […][Component 1, a spreadable product] and [Component 2, a baked product] packaged together by the manufacturer in [a single container with] separate […][compartments]. The separate [compartments] are packaged and sealed together using a manufacturer’s label. You cannot separate each [compartment] without removing the manufacturer’s label.
3. [Component 1] is packaged in a [compartment] with a heat-sealed plastic topper. This ensures that [Component 1] and [Component 2] do not make contact, which preserves the integrity of each product.
4. [Component 2] [is] packaged within a cup like [compartment], which sits atop the sealed […][Component 1] [compartment].
5. The Product requires refrigeration and therefore is not displayed or sold in the chips or snack section of the grocery store.
RULING REQUESTED
You would like to know if supplies of the Product are zero-rated under Section 1 of Part III of Schedule VI.
RULING GIVEN
Based on the facts set out above, we rule that the Product is 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 (subject to the GST/HST at the rate of 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.
As the Product does not fall under any of the exclusionary paragraphs (a) through (r), the supplies of the Product are zero-rated.
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