30 August 2007 GST/HST Interpretation 94916 - Visitor Rebate Program - Documentary Evidence

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 fax XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to XXXXX (the Product).

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

Statement of Facts

Our understanding of the facts is as follows:

1. The Product is sold in a XXXXX fl oz/XXXXX mL bottle.

2. The Product's ingredients are listed on the label as: XXXXX fruit juice, water, concentrated XXXXX fruit juice, XXXXX.

3. The Product's label states XXXXX.

4. The Product's label states XXXXX; XXXXX% Fruit Juice.XXXXX This results in XXXXX mL of the XXXXX mL contents being fruit juice.

5. The Product, when added to water according to the directions on the bottle, produces XXXXX mL of fruit flavoured beverage. The fruit juice content of this reconstituted beverage is approximately 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 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%.

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

Paragraph 1(d) of Part III of Schedule VI excludes from zero-rating the supply of non-carbonated fruit juice or fruit-flavoured beverages, including concentrates that, when reconstituted (according to instructions on the package) contain less than 25% by volume of natural juice(s) or goods that, when added to water, produce a beverage included in the paragraph.

The Product falls under the latter part of paragraph (d) of Part III of Schedule VI. That is, when water is added to the Product, it becomes a juice that has less than 25% by volume of natural juice. Consequently the Product is taxable as it is excluded from the zero-rating provisions.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 306-975-6214.

Yours truly,

Cheryl McKenzie
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

2007/10/01 — RITS 94917 — XXXXX Fruit Beverage 6 x XXXXX mL XXXXX