21 July 2005 GST/HST Interpretation 50343 - Meaning of the Terms "Program" and "Recreational" for Purposes of 16/III/V to the Excise Tax Act

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 concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the supply of seeds.

All legislative references are to the Excise Tax Act (ETA) and the regulations therein, unless otherwise specified.

Statement of Facts

We understand that XXXXX ("the Company") is a supplier of vegetable seeds.

The Company refers to paragraphs 10 and 12 of GST/HST Memoranda 4.4, Agriculture and Fishing, which outline the conditions for zero-rating a supply of vegetable seeds. Paragraph 10 states, in part, that a supply of grains or seeds in their natural state, treated for seeding purposes, or irradiated for storage purposes, that are ordinarily used as or to produce food for human consumption, or feed for farm livestock or poultry, is zero-rated when supplied in a quantity larger than that ordinarily sold or offered for sale to consumers. Paragraph 12 details the guidelines to determine where seeds are supplied in a quantity larger than that ordinarily sold or offered to consumers. The guidelines are based on the size of the seed. Small seeds supplied in packages of a quantity exceeding 125 grams (g) are zero-rated and large seeds in quantities exceeding five kilograms (kg) are zero-rated. Large seeds include peas, corn and beans. When small seeds are supplied on a count basis, they are zero-rated when supplied in quantities exceeding 2500 seeds.

These guidelines have been in place since the implementation of the GST. The Company indicates that the guideline for large seeds was adequate when it was originally written. However, the industry has changed since then and is now offering the large size seeds by seed count.

The Company's catalogue lists most vegetable seeds by weight, although some varieties of vegetables are sold by seed count. Some varieties of beans and corn are sold by seed count with an approximate equivalent weight, as noted in the table below:

XXXXX  XXXXX  XXXXX

XXXXX  XXXXX  XXXXX

XXXXX  XXXXX

XXXXX  XXXXX

XXXXX  XXXXX

XXXXX  XXXXX

XXXXX  XXXXX

XXXXX  XXXXX

XXXXX  XXXXX  XXXXX

XXXXX  XXXXX

XXXXX  XXXXX

XXXXX  XXXXX

XXXXX  XXXXX

Ruling Requested

You would like to know the quantity of large seeds that, when sold on a count basis, will be zero-rated for GST/HST purposes.

Ruling Given

Based on the facts set out above, we rule that when large seeds are sold by seed count, they will be zero-rated when sold in quantities exceeding 20,000 seeds.

This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Goods and Services Tax Rulings. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.

Explanation

Based on the approximate equivalent weights in the catalogue, the seed count that corresponds to the 5 kg threshold for large seeds is 20,000 for beans and 30,000 for corn. Our research indicates that, for peas, the number of seeds in 5 kg would fall within this range.

The guidelines in paragraph 12 of GST/HST Memoranda 4.4, Agriculture and Fishing were developed in consultation with the seed industry. We have once again consulted with XXXXX, to determine a reasonable quantity threshold for zero-rating a supply of large seeds when sold by seed count.

The CRA and XXXXX agree that when large seeds are sold by seed count, they should be zero-rated when sold in quantities exceeding 20,000 seeds.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 957-8253.

Yours truly,

Jacqueline Russell
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

2005/07/20 — RITS 51322 — XXXXX Association Affinity Programs