27 March 2008 GST/HST Interpretation 103195 - Tour Packages and the 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 XXXXX cereal (Product A) and XXXXX cereal (Product B).

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 has been reduced from 6% to 5% and the rate of HST from 14% to 13%. The new rates 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 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, GST/HST Rate Reduction in 2008 on the Canada Revenue Agency (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:

Product A

1. Product A is packaged in cartons XXXXX cereal.

2. Product A's ingredients are: XXXXX

3. The labelling on the carton says: XXXXX.

4. The labelling on the XXXXX says: XXXXX It also says XXXXX.

5. You have confirmed that Product A will be displayed in the cereal section of retail grocery stores and will be sold primarily as a breakfast cereal.

Product B

1. Product B is packaged in cartons XXXXX cereal.

2. Product B's ingredients are: XXXXX.

3. The labelling on the carton says: XXXXX.

4. The labelling on the XXXXX says: XXXXX.

5. You have confirmed that Product B will be displayed in the cereal section of retail grocery stores and will be sold primarily as a breakfast cereal.

Ruling Requested

You would like to know how the GST/HST applies to supplies of Products A and B.

Ruling Given

Based on the facts set out above, we rule that supplies of Products A and B are zero-rated pursuant to section 1 of Part III of Schedule VI XXXXX.

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

Section 1 of Part III of Schedule VI XXXXX zero-rates supplies of food or beverages for human consumption (including sweetening agents, seasonings and other ingredients to be mixed with or used in the preparation of such food or beverages), other than supplies included in paragraphs (a) to (r) of that section.

Paragraph 1(f) of Part III of Schedule VI XXXXX excludes supplies of the following from zero-rating:

"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."

In this case, Products A and B are both considered to be products that are sold primarily as breakfast cereals, and therefore they do not fall under the exclusion set out in paragraph 1(f) of Part III of Schedule VI XXXXX. As such, supplies of both Product A and Product B are zero-rated pursuant to section 1 of Part III of Schedule VI XXXXX.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 954-2560. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.

Yours truly,

Tim Myers
Technical Policy Advisor
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

2008/02/14 — RITS 100110 — Foreign Convention and Tour Incentive Program