1 July 1997 GST/HST Interpretation HQR0000352 - GST/HST Status of the Supply of Food or Beverages for Human Consumption

                                                                        Place Vanier, Tower C,
9th Floor
25 McArthur Road,
Vanier, Ontario
K1A 0L5
 XXXXX
 XXXXX                                                                                Case: HQR0000352
 XXXXX                                                                                11850-4, 11850-5

Dear XXXXX

Thank you for your letter of October 8, 1996 concerning the Goods and Services Tax (GST) and the Harmonized Sales Tax (HST) status of a new product being launched by XXXXX The HST is applicable to taxable supplies made in a participating province which are : Newfoundland, Nova Scotia and New Brunswick. You supplied sample package flats for the XXXXX for our examination. I apologize for the delay in issuing this letter.

Statement of Facts

Our understanding of the facts, based on the information provided, is as follows:

1. XXXXX

2. XXXXX

3. XXXXX

4. XXXXX

5. XXXXX

Interpretation Requested

You inquired as to whether the XXXXX are taxable or zero-rated.

Interpretation Given

As you are aware, supplies of food or beverages for human consumption are zero-rated under section 1 of Part III of Schedule VI to the Excise Tax Act (ETA) , unless they are specifically excluded under one of the paragraphs (a) to (r) of section 1.

Paragraph 1(m) subjects the following to the GST/HST :

"cakes, muffins, pies, pastries, tarts, cookies, doughnuts, brownies, croissants with sweetened filling or coating, or similar products where

(i) they are prepackaged for sale to consumers in quantities of less than six items each of which is a single serving, or

(ii) they are not prepackaged for sale to consumers and are sold as single servings in quantities of less than six,

but not including bread products, such as bagels, English muffins, croissants or bread rolls, without sweetened filling or coating"

Accordingly for the purposes of paragraph 1(m) it is the Department's position that the XXXXX are considered to be "similar products" because they are more like a muffin than a bread product. This is also supported by the list of examples of these products. Paragraph 85 of GST Memoranda 300-3 (Basic groceries) lists various examples of goods that may be taxable under paragraph 1(m). One of the examples is : "(q) loaves/breads such as banana or carrot loaf consisting primarily of a muffin mix or similar sweetened base" which are very similar to your XXXXX whether prepackaged for sale to consumers or otherwise, are taxable. The Department has previously determined that a single serving under paragraph 1(m) is a product weighing less than 230 grams. The individual XXXXX which each weighs XXXXX grams, are single servings. The XXXXX in question are prepackaged for sale to consumers in quantities of XXXXX The supply of the XXXXX is taxable for GST/HST purposes because they are sold in quantities of less than six. The supply of the XXXXX is zero-rated for GST/HST purposes because they are supplied in a quantities of six or more single servings.

The foregoing comments represent our general views with respect to the subject matter of your letter. 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 GST Memoranda Series (1.4), do not bind the Department with respect to a particular situation.

For your convenience, find enclosed, copy of GST Memoranda Series (1.4).

Should you have any further questions or require clarification on the above please do not hesitate to call the undersigned at (613) 952-9588.

Yours truly,

Bruno Charron, CA
Senior Rulings Officer
Industries Unit
General Operations and Border Issues Division
GST/HST Rulings and Interpretations Directorate

Legal References: paragraph 1(m) of Part III of Schedule VI

Authority: Excise Tax Act