23 June 2006 GST/HST Interpretation 59027 - XXXXX Pension Plan

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 supplies of cut fruit and vegetables.

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

The Minister of Finance announced in the Federal Budget of May 2, 2006, a proposal to reduce the rate of the GST and the federal portion of the HST by 1%, effective July 1, 2006. The general rule is that the rate of GST will be reduced from 7% to 6% and the rate of the HST from 15% to 14% on supplies for which the GST/HST is paid on or after July 1, 2006, 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 Reduction in the Rate of the GST/HST - Questions and Answers (http://www.cra-arc.gc.ca/agency/budget/2006/gstrateqa-e.html) on the CRA Web site.

We understand that XXXXX intends to advertise and offer for sale separate cut fruit and cut vegetables, XXXXX.

Ruling Requested

You would like to know if the supplies of cut fruit and vegetables would be zero-rated under these conditions.

Interpretation Given

We are unable to issue a ruling with regard to your enquiry as rulings can only be issued with regard to a clearly defined fact situation of a particular person, as outlined in the enclosed GST/HST Memorandum 1.4, Goods and Services Tax Rulings. We tried to contact you to obtain more information. However, we are pleased to provide the following interpretation based on our understanding of the information you provided.

Generally, every recipient of a taxable supply made in Canada shall pay tax calculated at the rate of 7% on the value of the consideration for the supply (15% in a participating province) unless the supply is zero-rated, pursuant to section 165 of the ETA. The tax rate in respect of a zero-rated supply is 0%, where a zero-rated supply is a supply that is included in Schedule VI to the ETA.

Under Part III of Schedule VI to the ETA, certain supplies of basic groceries are zero-rated. Section 1 of Part III of Schedule VI to the ETA 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 (o.1) excludes supplies of salads that are not canned or vacuum sealed from zero-rating.

Paragraph 87 of GST/HST Memorandum 4.3, Basic Groceries, states that salads are considered to include ingredients such as chopped, shredded, diced, sliced, or pureed vegetables, meat, fish, egg, or other food supplied with a dressing and/or seasoning(s), whether or not the dressing is mixed with the other ingredients. The only exceptions to this rule are fruit salads and gelatin salads that, generally, do not need a dressing. In addition, a combination of one ingredient mixed with a dressing or seasoning(s), which is sold or represented as a salad is also considered to be a salad.

Supplies of cut vegetables without a dressing, which are not sold or represented as a salad, are not considered to be salads.

Additionally, it is our view that a fruit salad is considered to be comprised of whole fruit, fruit portions or fruit pieces of two or more types of fruit with or without dressing. A product that is only one fruit is not considered to be a salad.

Supplies of two or more types of cut fruit in a single container will be considered a salad.

The foregoing comments represent our general views with respect to the subject matter of your request. These comments are not rulings and, in accordance with the guidelines set out in GST/HST Memorandum 1.4, Goods and Services Tax Rulings, do not bind the Canada Revenue Agency with respect to a particular situation. Future changes to the ETA, regulations, or our interpretative policy could affect this interpretation.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 957-8253.

Yours truly,

Jacqueline Russell
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

2006/06/15 — RITS 59990 — Application of the Excise Tax Act (the "ETA") to the [Proposed Transactions of a Pension Trust]