File # 11850-3(MB)
Doc # 2671G
Ref: S1 of Pt III to Sch VI.
Dear XXXXX
This letter is in response to your telephone conversation with a member of my staff, during January, 1996, regarding the supply of powdered vitamins as an ingredient for livestock feed and the application of the Goods and Services Tax (GST).
Under the provision of section 1 of Part III of Schedule VI to the Excise Tax Act (ETA), supplies of ingredients to be mixed with or used in the preparation of food and beverages for human consumption are zero-rated.
Generally, food products retain their zero-rating tax status regardless of their form (e.g. milk powder vs. fluid milk), other than supplies of products in pill, capsule or tablet format. Vitamins and minerals in pill, capsule or tablet form are not considered basic groceries and are taxable; however, some vitamins and minerals sold in powdered form as an ingredient for food or beverages and of a quality suitable for human consumption may be zero-rated under section 1 of Part III to Schedule VI of the ETA.
When the ingredient supplied is of a grade suitable for human consumption, then the supply is zero-rated regardless of the purchaser's proposed use of the product. Similarly, supplies of powdered vitamins, of a grade used in the preparation of food for human consumption is zero-rated even though it may actually be used in the manufacturing of livestock feed; however, a sub standard grade that is a grade which is not suitable for human consumption, is subject to the GST at 7%. When a good is packaged and promoted for non-food uses, the supply is subject to GST at a rate of 7%.
The foregoing comments represent our general views with respect to the subject matter of your query. Unannounced proposed or future amendments to the legislation may result in changes to our interpretation. These comments are not rulings and, in accordance with the guidelines set out in Section 1.4 of the GST Memoranda Series, do not bind the Department with respect to a particular situation.
If you need additional information, please feel free to contact Michèle Brûlé, Policy Officer, at (613) 952-9208.
Yours truly
J.A. Venne
Director
Special Sectors
GST Rulings and Interpretations
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