22 November 2000 GST/HST Ruling 25873 - Application of the GST/HST to the Supply of Pig Feed

Dear XXXXX:

Thank you for your letter of December 17, 1999 (with attachments) concerning the application of the Goods and Services Tax (GST) to XXXXX marketed as a pig feed.

Statement of Facts

1. You have requested that we review the interpretation issued by the XXXXX on January 11, 1999, which stated that peat feed is a 7% taxable supply.

2. In the interim, your client, XXXXX. has applied for, and been granted, registration of XXXXX under the Feeds Act; registration number XXXXX[.]

3. The marketing material enclosed with your letter indicates that XXXXX (the 'Product') is packaged in 15 kg (25 lb.) bags.

4. You indicate that the bagged Product is supplied on pallets of 1 ton (2,000 lb. or 907 kg).

5. The marketing material indicates that the Product is "PEAT MOSS XXXXX". The marketing material does not list any other ingredients.

Ruling Requested

Whether the supply of XXXXX is a zero-rated supply.

Ruling Given

Based on the information provided, supplies of XXXXX are a 7% taxable supply pursuant to 165(1) of the Excise Tax Act.

Explanation:

Generally, every recipient of a taxable supply made in Canada shall pay to Her Majesty in right of Canada tax in respect of the supply calculated at the GST rate of 7% on the value of the consideration for the supply. Where however, a supply is a zero-rated supply, the tax rate in respect of that supply is 0%.

Section 2 of Part IV of Schedule VI to the Excise Tax Act (ETA) provides for the zero-rating of the following:

"A supply of

(a) grains or seeds in their natural state, treated for seeding purposes or irradiated for storage purposes,

(b) hay or silage, or

(c) other fodder crops, that are ordinarily used as, or to produce, food for human consumption or feed for farm livestock or poultry, when supplied in a quantity that is larger than the quantity that is ordinarily sold or offered for sale to consumers, but not including grains or seeds or mixtures thereof that are packaged, prepared or sold for use as feed for wild birds or as pet food."

Although peat may be used as a feed for animals, it is not ordinarily used for this purpose. The research performed by our XXXXX in XXXXX indicates that the use of peat as a feed is not widespread, therefore its use as a feed cannot be considered ordinary. The Product is not a zero-rated supply pursuant to section 2 of Part IV to Schedule VI of the ETA.

Pursuant to section 10 of Part IV of Schedule VI to the ETA, certain supplies as described in the Agriculture and Fishing Property (GST/HST) Regulations (the Regulations) are considered prescribed property and zero-rated if supplied by way of sale. Supplies of feed described in subsections 1(2), 1(2.1), and 1(3) of the schedule to the Regulations are prescribed property.

Subsection 1(2) of the schedule to the Regulations reads:

"Feed, when sold in bulk quantities of at least 20 kg (44 lbs) or in bags that contain at least 20 kg (44 lbs), that

(a) is a complete feed, supplement, macro-premix, micro-premix or mineral feed (other than a trace mineral salt feed), all as defined in the Feeds Regulations, 1983,

(b) is labelled in accordance with those Regulations, and

(c) is designed for

(i) a single species or class of farm livestock, fish or poultry ordinarily raised or kept to produce, or to be used as, food for human consumption or to produce wool, or

(ii) rabbits."

Subsection 1(2.1) of the schedule to the Regulations reads:

"Feed, when sold in bulk quantities of at least 20 kg (44 lbs) or in bags that contain at least 20kg (44 lbs), that is designed for ostriches, rheas, emus or bees."

Subsection 1(3) of the schedule to the Regulations reads:

"By-products of the food processing industry and plant or animal products, when sold in bulk quantities of at least 20 kg (44 lbs) or in bags that contain at least 20kg (44 lbs), that are ordinarily used as feed, or as ingredients in feed, for farm livestock, fish or poultry described in subparagraph (2)(c)(i) or for rabbits, ostriches, rheas, emus or bees."

The sample label for the Product enclosed with your letter, shows that it is packaged in 15 kg bags. To be zero-rated, a condition common to all of the above-referenced subsections is that the feed is packaged in bags that contain at least 20 kg.

Although the Product has been registered in accordance with the Feeds Regulations (registration number XXXXX), it has not been registered as a complete feed, supplement, macro-premix, micro-premix or mineral feed designed for a single species or class of farm livestock, fish or poultry. The registration number indicates that the Product is registered as a multiple species, single ingredient feed in accordance with the Feeds Regulations.

The Product may be marketed to the swine industry, but the feed itself, peat, is not designed for a single species or class of farm livestock, fish or poultry, nor is it supplied in bags that contain at least 20 kg. As such, subsections 1(2) and 1(2.1) of the Regulations are not applicable to the Product.

Subsection 1(3) of the Regulations does not require that the Product be specifically designed for a single species or class of farm livestock, fish or poultry, however it does require that the Product be "ordinarily used as feed, or as ingredients in feed, for farm livestock, fish or poultry described in subparagraph (2)(c)(i) or for rabbits, ostriches, rheas, emus or bees " and "sold in bulk quantities of at least 20 kg (44 lbs) or in bags that contain at least 20 kg (44 lbs)." As noted above, peat is not ordinarily used as a feed, or as ingredients in feed for farm livestock. Further, the Product is not supplied in bags that contain at least 20 kg. Therefore, subsection 1(3) of the schedule to the Regulations is not applicable to the Product.

As the Product does not fall within any of the zero-rating provisions of the ETA, it is regarded as a 7% taxable supply.

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 Canada Customs and Revenue Agency with respect to a particular situation.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at 952-9218.

Yours truly,

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