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: 200876
Business Number: [#]
Dear [Client]:
Subject: GST/HST RULING
Supply of […][a feed ingredient]
Thank you for your letter of [mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to the supply of […][a feed ingredient]. 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 that:
1. […](the Company) is an incorporated company located in [Canada] and is registered for GST/HST purposes.
2. The Company has started selling […](the Product) in a bag with a net weight of [#]kg.
3. The Product is a feed ingredient used in daily formulations to improve milk production and conditioning. The customer is using the Product for their dairy cows.
4. The label for the Product states:
Palm Palmitic Acid (C16.0)
Energy supplement for Ruminants,
Breeding, and Finishing pigs
5. The Product has been assigned a registration number […] by the Canadian Food Inspection Agency (CFIA) and is regulated under the authority of the Feeds Act.
6. According to the Company’s Safety Data Sheet dated [mm/dd/yyyy], the composition/information on ingredients is Palmitic Acid […].
RULING REQUESTED
You would like to know whether the supply of the Product is zero-rated for GST/HST purposes.
RULING GIVEN
Based on the facts set out above, we rule that the supply of the Product by way of sale is zero-rated under section 10 of Part IV of Schedule VI by virtue of subsection 1(3) of the Schedule to the Agriculture and Fishing Property (GST/HST) Regulations.
EXPLANATION
Section 10 of Part IV of Schedule VI provides that a supply of prescribed property is a zero-rated supply. The Schedule to the Agriculture and Fishing Property (GST/HST) Regulations (the Regulations) lists property that, when supplied by way of sale, is prescribed property for the purposes of section 10.
Subsection 1(3) of the Schedule to the Regulations states:
By-products of the food processing industry and plant or animal products, when sold in bulk quantities of at least 20 kg (44 lbs.) or in bags that contain at least 20 kg (44 lbs.), that are ordinarily used as feed, or as ingredients in feed, for farm livestock, fish or poultry described in subparagraph (2)(c)(i) or for rabbits, ostriches, rheas, emus or bees.
Subparagraph (2)(c)(i) states:
a single species or class of farm livestock, fish or poultry ordinarily raised or kept to produce, or to be used as, food for human consumption or to produce wool
To fall within the provisions of subsection 1(3), the Product must meet all of the following requirements:
1. it is either a by-product of the food processing industry, or a plant or animal product;
2. it is ordinarily used as feed, or as ingredients in feed, for farm livestock, fish or poultry;
3. the farm livestock, fish or poultry are ordinarily raised or kept to produce, or to be used as, food for human consumption or to produce wool; and
4. the feed ingredient is sold in bulk quantities of at least 20 kg (44 lbs.) or in bags that contain at least 20 kg (44 lbs.).
The Product consists of a single ingredient called Palmitic Acid which is the most common saturated fatty acid found in animals, plants, and microorganisms. As such, it is a product of a plant and/or animal. It is ordinarily used as feed, or as ingredients in feed, for farm livestock. The customer is using the Product to improve milk production and conditioning in dairy cows which are considered farm livestock ordinarily raised or kept to produce, or to be used as, food for human consumption. The Product is sold in a bag with a net weight of [#]kg. As such, the Product meets the bulk quantity of at least 20kg. Therefore, the Product meets all the requirements for subsection 1(3) and consequently the supply of the Product by way of sale is zero-rated for GST/HST purposes.
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 given in this letter provided that: none of the issues discussed in the ruling 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 905-242-9234. 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,
Jill McDonald
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
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