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.
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XXXXX
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Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
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XXXXX
XXXXX
XXXXX
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Case Number: 98193
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December 10, 2007
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Dear XXXXX:
Subject:
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GST/HST RULING
XXXXX Snack Mix
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Thank you for your letter XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the supply of XXXXX Snack Mix.
All legislative references are to the Excise Tax Act (ETA) and the regulations thereunder, unless otherwise specified.
Effective January 1, 2008, the rate of the GST will be reduced from 6% to 5% and the rate of the HST from 14% to 13%. The new rates will apply to supplies for which the GST/HST is paid on or after January 1, 2008, without having become payable before that date. Specific transitional rules will apply to certain supplies, for example, real property. For more information on the transitional rules for the reduction of the GST/HST rate, please refer to GST/HST Notice 226, Proposed GST/HST Rate Reduction in 2008 on the CRA Web site at www.cra-arc.gc.ca/E/pub/gi/notice226/README.html.
Statement of Facts
Our understanding of the facts is as follows:
1. XXXXX in the line of products known as XXXXX. This product line has products sold in boxes of XXXXX.
2. The subject of this ruling request is XXXXX (the Product).
3. The Product is a snack mix that contains XXXXX. The base product is sold in various sizes and XXXXX considers it a taxable snack mixture.
4. The first few ingredients listed on the XXXXX packaging for the similar product, XXXXX are: XXXXX.
5. Each box of the Product will contain XXXXX.
Ruling Requested
XXXXX believes that the Product is substantially the same as in the base XXXXX product and would be taxable. You have asked that we confirm this.
Ruling Given
Based on the facts set out above, we rule that supplies of the Product are taxable at 6% GST (or 14% HST as applicable) pursuant to section 165.
This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are 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
Generally, every recipient of a taxable supply made in Canada shall pay tax calculated at the rate of 6% on the value of the consideration for the supply (or 14% in the participating provinces of Nova Scotia, New Brunswick, and Newfoundland and Labrador) unless the supply is zero-rated. Zero-rated supplies are included in Schedule VI. The tax rate in respect of a zero-rated supply is 0%.
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.
In particular, paragraph 1(f) of Part III of Schedule VI excludes from zero-rating the following:
"chips, crisps, puffs, curls or sticks (such as potato chips, corn chips, cheese puffs, potato sticks, bacon crisps and cheese curls), other similar snack foods or popcorn and brittle pretzels, but not including any product that is sold primarily as a breakfast cereal."
The Product in this case is considered to be a "similar snack food" for purposes of paragraph 1(f) of Part III of Schedule VI. As such, the Product is excluded from section 1 of Part III of Schedule VI and is therefore, a taxable supply subject to the GST at 6% or HST at 14% (as applicable).
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at XXXXX.
Yours truly,
XXXXX
Goods Unit
General Operations & Border Issues Division
Excise and GST/HST Rulings Directorate
2007/12/10 — RITS 98192 — XXXXX Crackers