10 December 2007 GST/HST Interpretation 96111 - Foreign Convention and Tour Incentive Program

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 XXXXX (the Product).

All legislative references are to the Excise Tax Act (ETA) and the regulations therein, 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. The Product is available in XXXXX flavours: XXXXX.

2. A sample of the Product with the XXXXX flavour has been provided on which we base this statement of facts.

3. The Product's (XXXXX flavour) ingredients include: XXXXX. There is an indication on the package that the Product is "oven baked".

4. The Product comes in XXXXX container about XXXXX cm high an XXXXX cm large. XXXXX The Product consists of about XXXXX which are bite-sized. A XXXXX is about XXXXX cm long and XXXXX cm large at its widest part. The weight of the Product indicated on the package is XXXXXg.

5. On the back of the package, one can read the following text (English and French versions).

XXXXX

XXXXX

XXXXX

6. On the back of the package there is also a photograph of the Product XXXXX.

7. The photograph, text and name of the product XXXXX.

8. On the front side of the Product's package, XXXXX.

Ruling Requested

You would like to know how the GST/HST applies to supplies of the Product.

Ruling Given

Based on the facts set out above, we rule that supplies of the Product are zero-rated under section 1 of Part III of Schedule VI.

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

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 facts above demonstrate that the Product has different properties than those found in products enumerated under paragraph 1(f). Further, the packaging and marketing indicates that the Product is not similar to products enumerated under paragraph 1(f). Therefore, the exclusion in paragraph 1(f) of Part III of Schedule VI does not apply to the Product. Since no other exclusions apply, supplies of the Product are zero-rated under section 1 of Part III of Schedule VI.

It should be noted that there may be significant differences between brands and types of XXXXX (e.g., the properties of the product itself, the labelling, packaging and promotion) such that the application of the GST/HST to similar products must be made on a case-by-case basis.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-5124.

Yours truly,

Raymond Labelle
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

2007/12/18 — RITS 95842 — Eligibility of the XXXXX to Claim the 83% Public Service Body Rebate