File: 11850-2/o
XXXXX
XXXXX
XXXXX
XXXXX C.N.: 2481
Dear XXXXX
This is in response to your fax of September 26, 1995, and telephone conversations with Ken Syer of this office regarding the application of the Goods and Services Tax (GST) to the supply of XXXXX salad products. We apologize for the delay in responding to your letter.
Statement of Facts
1. You are supplying XXXXX which contains a mixture of romaine lettuce, spinach and cherry tomatoes. Packaged with the mixed vegetables are two separate packages one containing croutons and the other containing dressing.
2. You are also supplying XXXXX which contains romaine lettuce and as with the product above, this product also contains a separate package of croutons and one of dressing.
Ruling Requested
You would like to confirm the application of the GST to the supply of the two products described above.
Ruling Provided
The supply of the XXXXX is subject to the GST at 7%.
Explanation
The supply of "prepared salads" is subject to the GST at 7%. Subparagraph 1(o)(ii) of Part III of Schedule VI to the Excise Tax Act defines prepared salads as follows:
"the following prepared foods and beverages sold in form suitable for immediate consumption, either where sold or elsewhere, namely, ...
(ii) prepared salads ..."
For the purposes of that provision, the XXXXX are considered to be prepared salads and the supply of these salads is subject to the GST at 7%.
The Government of Canada introduced on April 23, 1996, in the House of Commons a Ways and Means Motion to amend the Excise Tax Act (ETA) and related legislation pertaining to the GST. In the Motion are amendments which affect the application of the GST to the supply of salads. This letter includes policy on the application of the GST to the supply of salads before and after the proposed changes come into force.
Proposed Amendments
It has been proposed that paragraph 1(o) of Part III of Schedule VI to the ETA be repealed and replaced with new provisions. Proposed paragraph 1(o.1) will exclude the following from the zero-rated status for basic groceries:
"salads not canned or vacuum sealed;"
This provision is expected to simplify the administration of the GST as it pertains to the supply of salads. Supplies of salads that are canned or vacuum sealed will be zero-rated while all other supplies of salads will be taxable at 7%. This provision is to come into force on May 14, 1996.
The proposed provision will eliminate the phrase "when sold in a form suitable for immediate consumption" which modifies "prepared salads" prior to the coming into force date. The elimination of this phrase removes much of the complexity under the prior policy. This will not affect the application of the GST to your XXXXX salads discussed above. The supply of these two salads will remain subject to the GST at 7% under the proposed amendments. However, it may affect the application of the GST to other salads supplied by your firm. Please note that proposed legislation does not become law until it receives Royal Assent.
This ruling is given subject to the general limitations and qualifications outlined in GST Memorandum Series 1.4. We are bound by this ruling provided that none of the above issues are currently under audit, objection or appeal, there are no relevant changes to the Excise Tax Act, and provided that you have fully described all necessary facts and transactions for which you have requested a ruling.
If you would like to discuss this matter further, please do not hesitate to contact Ken Syer at (613) 952-9590.
Yours truly,
J. A. Venne
Director
Special Sectors
Rulings and Interpretations
Policy and Legislation Branch
c.c.: K. Syer
M. Brulé
XXXXX
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