8 January 2008 GST/HST Ruling 98478 - – XXXXX [frozen fruit]

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 request XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to XXXXX [Frozen] Fruit XXXXX (the Product).

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 CRA Web site at www.cra-arc.gc.ca/E/pub/gi/notice226/README.html.

Statement of Facts

We understand the facts to be as follows:

1. The Product's ingredients include: XXXXX. [various fruit]

2. The Product comes in a XXXXX.

3. The net weight of the Product, as indicated on the package, is XXXXX g.

4. The Product is labelled as XXXXX.

5. The Product consists of XXXXX fruit, which has been frozen to maintain freshness.

6. Directions for consumption of the Product are (per packaging): XXXXX.

7. The Product is sold in the frozen foods section of retail grocery stores.

8. XXXXX.

9. 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 pursuant to Section 1 of Part III of Schedule VI.

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

Paragraph 1(o.1) of Part III of Schedule VI excludes from zero-rating the supply of "salads not canned or vacuum sealed". In the case 1146491 Ontario Ltd et al v The Queen [2002] 2900 ETC, salad kits were not considered to be salad for the purposes of paragraph 1(o.1) of Part III of Schedule VI, as the salad kits were not "fully assembled ready to eat salads, requiring no further effort to make it so". In this case, the Product is sold in a frozen state, where the consumer is required to thaw the Product and time passes before the Product may be consumed. Due to this, we do not consider the Product to be a salad for the purposes of paragraph 1(o.1) of Part III of Schedule VI.

As the Product does not fall within any of the exclusions in Section 1, the Product is considered to be zero-rated as a basic grocery pursuant to Section 1 of Part III of Schedule VI.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-952-9218. 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,

Michelle McCrae
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

2007/12/31 — RITS 98510 — XXXXX Oil XXXXX in Liquid Form