17 September 2004 GST/HST Interpretation 54333 - Tax status of postage stamps sold to an Indian band-operated postal outlet on a reserve

Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'agence.

Dear XXXXX:

Thank you for your letter XXXXX (with attachments), concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to XXXXX (the bars).

Statement of Facts

Our understanding of the facts is as follows:

1. XXXXX has recently launched the bars.

2. The bars are packaged in cartons of 6 for sale at the retail grocery store level.

3. The main ingredients of the bars include flour, sugar/glucose-fructose and XXXXX.

Ruling Requested

Is the supply of the bars subject to the GST/HST?

Ruling Given

Based on the facts set out above, we rule that the supply of the bars in cartons of 6 is zero-rated pursuant to section 1 of Part III of Schedule VI to the Excise Tax Act (ETA).

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act (ETA), or to our interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Explanation

Taxable supplies of goods and services made in Canada are generally subject to tax at 7% GST or 15% HST, as applicable. However, "zero-rated" supplies of goods and services are subject to tax at 0%. A zero-rated supply is any supply included in Schedule VI to the ETA.

Section 1 of Part III of Schedule VI to the ETA zero-rates supplies of food or beverages for human consumption and sweetening agents, seasonings and other ingredients mixed with or used in the preparation of such food or beverages, unless one of the exclusions set out in paragraphs 1(a) through 1(r) applies.

Paragraph 1(m) excludes from zero-rating:

cakes, muffins, pies, pastries, tarts, cookies, doughnuts, brownies, croissants with sweetened filling or coating, or similar products where

(i) they are prepackaged for sale to consumers in quantities of less than six items each of which is a single serving, or

(ii) they are not prepackaged for sale to consumers and are sold as single servings in quantities of less than six,

but not including bread products, such as bagels, English muffins, croissants or bread rolls, without sweetened filling or coating;

It is the CRA's position that the bars are considered to be "similar products" for the purposes of paragraph 1(m). As the bars are sold in cartons of 6, they remain zero-rated by virtue of subparagraph 1(m)(i).

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at 613-952-9585.

Yours truly,

Nicole Thomas, CMA
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

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