24 December 1998 GST/HST Interpretation HQR0000962 - Tax Status of Hay

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I have reviewed your letter of September 2, 1997, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to your operations. Your letter had been transferred to us from the XXXXX[.] I apologize for the delay of my response.

Interpretation Requested

In the context of a supply of hay, what constitutes a quantity that is larger than the quantity that is ordinarily sold or offered for sale to consumers.

Interpretation Given

Section 2 of Part IV of Schedule VI to the Excise Tax Act provides that a supply of hay that is ordinarily used as feed for farm livestock is zero-rated when supplied in a quantity that is larger than the quantity that is ordinarily sold or offered for sale to consumers.

Hay is ordinarily sold or offered for sale in bales which can have varying sizes and shapes. To be a zero-rated supply, hay must be sold in a quantity larger than one large round bale or an equivalent to this amount. A single large round bale is one which weighs between 750 and 1000 kg (1650 and 2200 lbs.). An equivalent to this would be 15 to 20 square bales, each weighing 50 kg (110lbs.). That is to say, although the supply of hay may be sold in different proportions than the round bale, provided the total supply is the equivalent, it will be a zero-rated supply pursuant to section 2 of Part IV of Schedule VI of the Excise Tax Act.

On April 1, 1997, the harmonized sales tax (HST) replaced the goods and services tax (GST) and the provincial sales tax (PST) in the three participating provinces of Nova Scotia, New Brunswick and Newfoundland with a harmonized tax rate of 15%. If you supply goods that are delivered or made available in a participating province, services to be performed in a participating province or intangible personal property that may be used in a participating province, to the extent that they are taxable supplies (which are not zero-rated), tax must be collected at the harmonized rate.

The foregoing comments represent our general views with respect to the subject matter of your letter. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST/HST Memoranda Series, do not bind the Department with respect to a particular situation.

For your convenience, find enclosed a copy of section 1.4 of Chapter 1 of the GST/HST Memoranda Series.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-0419.

Yours truly,

Kevin W. Smith
Goods Unit
General Operations and Border Issues Division
GST/HST Rulings and Interpretations Directorate

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