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XXXXX
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C.N: 3065
File: 11850-2/o
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Dear XXXXX
This letter is a result of the Ways and Means Motion tabled by the Government in the House of Commons on April 23, 1996. The Ways and Means Motion contains proposed amendments to the Goods and Services Tax (GST) legislation. Of particular interest to your members is a proposed amendment regarding the application of the GST to the supply of salads. This letter is to explain that proposed amendment.
Clause 137 of the April 23, 1996, Ways and Means Motion proposes to amend, in part, paragraph 1(o) of Part III of Schedule VI to the Excise Tax Act. The amended provision is to be replaced by six new provisions. New paragraph 1(o.2)/III/VI ETA reads as follows:
"salads not canned or vacuum sealed;"
This new provision is not modified by the phrase "when sold in a form suitable for immediate consumption" as was the term "prepared salad" prior to the proposed amendment. This has resulted in simplified administrative rules. For the purposes of the proposed paragraph 1(o.2) the following is Revenue Canada's proposed treatment of "salads not canned or vacuum sealed":
• For the purposes of this provision, salads are considered to include food whether mixed or not including chopped, shredded, diced, sliced or pureed vegetables, meat, fish, egg or other food supplied with a dressing and/or seasoning(s). Single ingredient salads which consist of one ingredient and a dressing or seasoning are also considered to be salads. Salads also include gelatin salads. These salads commonly contain fruit and may be formed in the shape of a mould.
• All supplies of salads in cans or in containers which are vacuum sealed (such as certain jars) are zero-rated as per the wording of the proposal.
• Packages containing salad ingredients such as vegetables, croutons and dressing and/or seasonings whether mixed or not are considered salads. These packages are sometimes known as salad kits. Packages of ingredients must include a dressing or seasoning to be considered a salad. Where there is no dressing or seasonings applied to the other ingredients or supplied with or made available with the other ingredients, the supply is not considered a salad. An exceptions to this rule are fruit salads and gelatin salads which, generally do not need a dressing.
• Packages comprised of solely mixed vegetables such as stir-fry mixes, party mixes and similar mixtures are not salads. The supply of these packages is zero-rated.
Please be aware that this proposal becomes law when the Bill receives Royal Assent and this particular clause is to be effective May 14, 1996. Your members are advised to collect the tax as of the effective date.
If you would like to discuss this matter further, please do not hesitate to call Ken Syer, A/Senior Policy Officer, at (613) 952-9590.
Yours truly,
J.A. Venne
Director
Special Sectors
GST Policy and Legislation
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