7 April 2000 GST/HST Ruling 7962/HQR0001568 - Application of the GST/HST to

Dear XXXXX

This is in reply to your letters of January 25, 1999 (with attachments) and November 2, 1999 regarding the subject noted above.

Please note that as of November 1st, 1999, Revenue Canada became the Canada Customs and Revenue Agency (CCRA).

Statement of Facts

Our understanding of the facts is as follows:

XXXXX

•   You sent us a sample of XXXXX[;]

•   XXXXX[;]

•   XXXXX, XXXXX[;]

•   According to the label, XXXXX[;]

•   The label also indicates: XXXXX XXXXX[;]

•   The recommended use is to mix XXXXX[;]

•   The fact sheet indicates that XXXXX[;]

•   XXXXX[;]

•   XXXXX[;]

•   You sent us a sample of XXXXX;

•   XXXXX[;]

•   According to the label, 4 XXXXX[;]

•   The label also indicates to shake the product well before use, and to refrigerate it after opening;

•   The directions are: "XXXXX[";]

•   A XXXXX[;]

•   XXXXX[;]

•   You sent us a sample of XXXXX[;]

•   XXXXX[;]

•   XXXXX[;]

•   XXXXX[.]

Ruling Requested

You request a ruling on the tax status of XXXXX[.]

Ruling Given

Based on the facts set out above, we rule that:

1. XXXXX are subject to the GST at 7% and HST at 15% (where applicable).

2. XXXXX are subject to the GST at 7% and HST at 15% (where applicable).

3. XXXXX are subject to the GST at 7% and HST at 15% (where applicable).

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act, or to departmental interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Explanation

XXXXX[.] Section 1 of Part III of Schedule VI to the Excise Tax Act, entitled "Basic Groceries", zero-rates supplies of food or beverages for human consumption, and many ingredients mixed with or used in the preparation of such food or beverages, unless one of the exceptions set out in paragraphs 1(a) through 1(r) applies.

Paragraph 1(d) excludes from zero-rating non-carbonated fruit juice beverages or fruit flavoured beverages, other than milk-based beverages, that contain less than 25% by volume of

(i) a natural fruit juice or combination of natural fruit juices, or

(ii) a natural fruit juice or combination of natural fruit juices that have been reconstituted into the original state, or goods that, when added to water, produce a beverage included in this paragraph;

XXXXX[.] Therefore, the supplies of all flavours of XXXXX are taxable at the rate of 7% GST and 15% HST (where applicable).

XXXXX[.] Based upon the information provided, we confirm the GST/HST application ruling of May 24, 1996 provided to you by the XXXXX attached) advising you that the supply of XXXXX is taxable at the rate of 7% GST and 15% HST (where applicable).

However, please note that we do not consider citric acid as being a fruit flavoured ingredient.

XXXXX is not considered to be a food since, unlike food, there are restrictions on daily intake and the product is labeled as unsuitable for children. Therefore, the supply of XXXXX is taxable at the rate of 7% GST and 15% HST (where applicable).

On April 1, 1997, the HST replaced the 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, to the extent that they are taxable supplies (which are not zero-rated), tax must be collected at the harmonized rate.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-9585.

Yours truly,

Roger Tessier CA
Technical Officer
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate