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.
GST/HST Rulings Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 204903
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
Application of the GST/HST to the supply of […][a Salad Product]
Thank you for your letter dated November 25, 2019 concerning the application of GST/HST to the supply of […][a Salad Product](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
Our understanding of the facts is as follows:
1. […][Information about the Client].
2. […].
3. […][Information about the Product packaging].
4. The ingredients for the Product are as follows:[…].
5. The Product is packaged in a [#]g plastic bowl which is not canned or vacuum-sealed.
6. The plastic bowl has an inner tray and a small container with […][dressing].
7. The small [dressing] container […] is placed just under the compartment with […][other ingredients].
8. The inner tray has […][several] separate compartments [for ingredients]. […].
9. […]
10. The instruction […] [for preparing the salad are] on the label […].
11. You have indicated that the Product will be sold in the produce section of the store.
RULING REQUESTED
You would like to know if the supply of the Product 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 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 is required to pay GST/HST on the value of the consideration for the supply 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.
Under Part III of Schedule VI, certain supplies of basic groceries are zero-rated. 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 mixed with or used in the preparation of such food or beverages, other than supplies included in paragraphs (a) to (r) of that section. Paragraph (o.1) of section 1 excludes supplies of salads not canned or vacuum sealed from being zero-rated.
Paragraphs 104 to 109 of GST/HST Memorandum 4.3, Basic Groceries, outline how the GST/HST applies to supplies of salads. Paragraph 105 states:
Salads are considered to include ingredients such as chopped, shredded, diced, sliced, or pureed vegetables, meat, fish, egg, or other food supplied with a dressing and/or seasonings(s), whether or not the dressing is mixed with the other ingredients. A combination of one ingredient mixed with a dressing or seasoning(s) that is sold or represented as a salad is also considered to be a salad. Fruit salads and gelatine salads generally do not need a dressing to be considered a salad.
Paragraph 109 indicates that salad kits are basic groceries and their supply is zero-rated. It states:
A package that contains the ingredients for a salad where the ingredients are not mixed, such as a package containing lettuce, croutons and dressing (i.e., where the ingredients are in separate containers) and that require mixing by the consumer, is not considered to be a salad for purposes of the GST/HST.
Although no one factor is determinative on its own, there are several factors which, when considered together, indicate that the Product is a salad. More specifically, the outer packaging is designed to serve the purpose of being the salad bowl, some of the ingredients are premixed and separation between the various other elements of the salad is to preserve the freshness of the ingredients. In addition, minimal preparation is required as the instructions on the packaging indicate to simply, […]. Therefore, as the Product contains elements that are premixed and it is designed to be ready for immediate consumption, it is our opinion that the product is a salad that is neither canned or vacuum sealed.
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) 429-1696. 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,
Siraj Patel, CGA, CPA
Senior Rulings Officer
Basic Groceries and Recaptured Input Tax Credits Unit
General Operation and Boarder Issues Division
GST/HST Rulings Directorate
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