March 29, 1995
XXXXX
11845-1(PDL)
CN948
This is further to your electronic mail message received November 14, 1994 regarding the application of the Goods and Services Tax (GST) terrestrial snails produced for human consumption.
Section 8 of Part IV of Schedule VI of the Excise Tax Act zero-rates a supply of fish or other marine or freshwater animal not further processed than frozen, salted, smoked, dried, scaled, eviscerated or filleted, other than any such animal that is
(a) not ordinarily used as food for human consumption; or
(b) sold as bait in recreational fishing.
I have confirmed with Health Canada that terrestrial snails are ordinarily used as food for human consumption and that terrestrial snails are classified under Division 21, Marine and Freshwater Animals of the Food and Drug Regulation.
On the basis of this information it is the Department's position that terrestrial snails are zero-rated under section 8 of Part IV of Schedule VI of the Excise Tax Act.
You may contact Pamela Lafrance, Tax Policy Officer, Goods at (613) 957-9152 if additional information or assistance is required.
Yours truly
E. Vermes
A/Manager
Tax Policy
Goods and Health Care
GST Rulings and Interpretations
| c.c.: |
Manager,
Interpretation Services
XXXXX
P. Lafrance |
WORKSHEET
DOMUS 948
SNAILS
Information Required by District Office
What is the tax status of land snails produced solely for human consumption?
The purchase of live terrestrial snails for breeding and rearing for food for human consumption will be zero-rated under section 8 of Part IV of Schedule VI:
"a supply of fish or other marine or freshwater animals not further processed than frozen, salted, smoked, dried, scaled, eviscerated or filleted, other than any such animal that is
(a) not ordinarily used as food for human consumption; or
(b) sold as bait in recreational fishing."
The purchase of business items related to the breeding and rearing of terrestrial snails listed in the Agriculture and Fishing Property (GST) Regulations will be zero-rated. Input tax credits will be available for business purchases not listed in these regulations.
The sale of terrestrial snails as food for human consumption will be zero-rated under section 1 of Part III of Schedule VI:
"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 outlined in (a) to (r)."
Facts Available
XXXXX has purchased tropical land snails. This company plans to reproduce these snails and sell them as food for human consumption. GST is currently being charged on all supplies purchased for the breeding and rearing of these snails. XXXXX has applied to be registered in order to recover the GST paid on these supplies.
REFERENCE MATERIAL
Excise Tax Act,
Schedule VI, Zero-Rated Supplies
Part IV, Agriculture and Fishing, section 8
Part III, Basic Groceries, section 1
Publications (attached)
• Snail Farming, prepared for the Agriculture Development and Diversification Secretariat
• Tropical Snails in Quebec by Andre Deschamps
• Snail farming could be big business, Newspaper report
• Genuine Quebec Snails, Tipsheet, produced by Agriculture and Agri-food Canada
• Facts Sheet on Snail Importation and Rearing, Agriculture Canada
Other Parties contacted
Health Canada, XXXXX
Agriculture Canada, XXXXX
Excise Tax Act Provision Section 8 of Part IV of Schedule VI zero-rates a supply of fish or other marine or freshwater animals not further processed than frozen, salted, smoked, dried, scaled, eviscerated or filleted, other than any such animal that is
(a) not ordinarily used as food for human consumption; or
(b) sold as bait in recreational fishing.
A "Fact Sheet on Snail Importation and Rearing" has been prepared by Agriculture Canada. This sheet provides information on what type of terrestrial snail is allowed into Canada. The importation and rearing of edible snails is regulated by the Plant Protection Division of Agriculture Canada under the Plant Quarantine Act.
XXXXX Since terrestrial snails are recognized in the Food and Drugs Regulations Revenue Canada should also recognize then as food when sold as such.
Section 10 of Part IV of Schedule VI zero-rates items purchased by farmers and fishermen. The list of zero-rated items are found in the Agriculture and Fishing Property (GST) Regulations. In reviewing the schedule to these regulations the prescribed property that relates to agriculture is listed under five categories equipment, feed, by-products of the food processing industry and plant or animal products, pesticides and quota. If the conditions outlined in category two or three are met then the snail farm may obtain these purchase zero-rated. The prescribed property that relates to fishing contains no property that would apply to snail farming.
XXXXX
CN1489
Dear XXXXX
This is in response to your letter dated November 10, 1994 addressed to Mr. Ken Syer, GST Policy and Legislation. The letter deals with the application of the Goods and Services Tax (GST) to a number of goods sold by your client, XXXXX
In our previous rulings of December 23, 1993 and February 28, 1994 we ruled that supplies of XXXXX XXXXX were taxable under paragraph 1(d) of Part III of Schedule VI to the Excise Tax Act. The supply of XXXXX XXXXX were taxed at zero percent because they were non-carbonated beverages which contained no fruit.
The provisions of the Excise Tax Act in question are paragraphs 1(d) and 1(n) of Part III of Schedule VI. These provisions exclude the following from the zero rated status for basic groceries:
Paragraph 1(d)
"non-carbonated fruit juice beverages or fruit flavoured beverages, other than milk-based beverages, that contain less that 25% by volume of
(i) a natural fruit juice or combination of natural fruit juices, or
(ii) a natural fruit juice or combination of natural fruit juices that have been reconstituted into the original state, or goods that, when added to water, produce a beverage included in this paragraph would be taxable at 7%" and
Paragraph 1(n)
"beverages (other than unflavoured milk) or pudding, including flavoured gelatine, mousse, flavoured whipped dessert product or any other products similar to pudding, except
(i) when prepared and prepackaged specially for consumption by babies,
(ii) when sold in multiples, prepackaged by the manufacturer or producer, of single servings, or
(iii) when the cans, bottles or other primary containers in which the beverages or products are sold contain a quantity exceeding a single serving."
Please note that single servings of the goods under paragraph 1(n) will continue to attract GST unless sold in manufacturer's packages containing two or more single servings. A single serving beverage for the purposes of paragraph 1(n) is less than 600 ml by volume.
In your letter of November 10, 1994 you state that XXXXX XXXXX powdered beverage mixes have been reformulated and now contain no fruit juice when produced for the XXXXX. As per your client's submission, these goods have had the fruit juice formerly present in the products, removed effective July 1, 1994. Based upon this information, effective that date, supplies of XXXXX powdered beverage mixes are zero-rated under section 1 of Part III of Schedule VI to the Excise Tax Act as basic groceries.
You also stated that XXXXX contain 25% or more natural fruit juices by volume. Your client's submission states that each of these beverages has contained 25% or more natural fruit juices by volume since they were introduced into the Canadian market.
Your letter dated February 8, 1995 confirmed that XXXXX was introduced into the Canadian market December 13, 1993, XXXXX was introduced May 8, 1991 and is available in packages of 42-15 ml bottles and XXXXX mini-packs which consist of 10-15 ml bottles were introduced August 10, 1993. Consequently, XXXXX and XXXXX are zero-rated as basic groceries effective those dates. This amends our previous rulings noted above.
Additional research has been completed with respect to XXXXX Beverages (bulk and envelopes) and XXXXX . It has been identified that neither of these products contain 25% or more natural fruit juices by volume when reconstituted with water and therefore the supply of both these products is taxable at 7%.
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.
You may contact Enikö Vermes, A/Manager, Goods and Health Care Services at (613) 954-5127 or Pamela Lafrance, Tax Policy Officer, Goods at (613) 957-9152 if additional information or assistance is required.
Yours truly,
J. A. Venne
Director
Tax Policy - Special Sectors
GST Rulings and Interpretations
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