12 January 1995 GST/HST Interpretation 11845 - The Application of the Goods and Services Tax (GST) to: Mineral Oil (Feed-Grade, Agricultural Use) Linseed Oil (Feed-Grade, Agricultural Use) Mineral Oil (Food-Grade, Human Use) Medicinal Cod Liver Oil — U.S.P. (Food-Grade, Human Use)

                                                                        January 12, 1995
 XXXXX                                                                                11845(PDL)
CN 1347

Dear XXXXX

This is in response to your letter of September 23, 1994, in which you requested confirmation of the application of the Goods and Services Tax (GST) to:

Mineral Oil (Feed-Grade, Agricultural Use)
Linseed Oil (Feed-Grade, Agricultural Use)
Mineral Oil (Food-Grade, Human Use)
Medicinal Cod Liver Oil — U.S.P. (Food-Grade, Human Use)

Section 10 of Part IV of Schedule VI to the Excise Tax Act provides a tax free status for a supply of prescribed property. The Agriculture and Fishing Property (GST) Regulations list the prescribed property for purposes of section 10. These Regulations include "by-products of the food processing industry and plant or animal products, when sold in bulk quantities of at least 20 kg (44 lbs) or in bags that contain at least 20 kg (44 lbs) and ordinarily used as feed, or as ingredients in feed, for farm livestock, or poultry described in paragraph (2)(c)".

Mineral oil (feed-grade, agricultural use) and linseed oils (feed-grade, agricultural use) are products used as ingredients in feed, therefore if these products meet the bulk requirement outlined in the provision quoted above, the supply will be zero-rated.

Schedule VI to the Excise Tax Act sets out goods and services that are tax-free under the GST. Specifically, Section 1 of Part III of Schedule VI provides a tax free status for food or beverages for human consumption (including sweetening agents, seasonings and other ingredients to be mixed with or used in the preparation of food or beverages).

It is the Department's position that mineral oil (food-grade, human use) and medicinal cod liver oil — U.S.P. (food grade, human use) are not considered to be foods for human consumption for purposes of the Act. Therefore the supply of mineral oil food grade (human use) is subject to the GST at 7%. Medicinal cod liver oil U.S.P. (food grade, human use) does, on the other hand, qualify as an animal product for the purposes of the Regulations quoted on the first page of this letter. The supply of medicinal cod liver oil is zero-rated when the quantity requirements are met. I apologize for the incorrect information supplied to you by telephone November 15, 1994.

This ruling is given subject to the general limitations and qualifications outlined in the GST Memorandum 100-3. We are bound by this ruling provided that none of the above issues are presently under audit, objection or appeal, there are no relevant changes in the future to the Excise Tax Act, and provided that you fully described all necessary facts and transactions for which you requested a ruling.

Additional information or assistance regarding this matter may be obtained by contacting your District Excise/GST office at:

 XXXXX

Yours truly,

J.A. Venne
Director
Tax Policy - Special Sectors
GST Policy and Legislation