26 May 2000 GST/HST Interpretation 8151/HQR0001757 - Treatment of Game Bird Feeds

Dear Sirs:

We are writing to clarify our position as set out in our letter of July 30, 1998, to the XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to supplies of game bird feed. In that letter we stated that we consider game birds to be ordinarily used as food for human consumption, and that accordingly, effective August 1, 1998, feed for game birds will be a zero-rated supply of prescribed property under the Agriculture and Fishing Property (GST/HST) Regulations to the Excise Tax Act provided the feed is sold in bulk quantities of at least 20 kg (44 lbs.) or in bags which contain at least 20 kg (44 lbs.).

All references to game birds include pheasant, partridge, quail, wild turkey, squab and colins, but exclude guinea-fowl and silkies.

Please note that on November 1, 1999, Revenue Canada became the Canada Customs and Revenue Agency (the "CCRA").

Interpretation Given

The purpose of this interpretation is to clarify that the CCRA considers pheasant, partridge, quail, wild turkey, squab and colins to be poultry, and that they are ordinarily used as food for human consumption; and that only certain supplies of feed for game birds may be zero-rated.

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% (or HST rate of 15%, as applicable) 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 165 of the Excise Tax Act) Section 10 of Part IV of Schedule VI to the Excise Tax Act (the "ETA") provides that a supply of prescribed property is a zero-rated supply. The Schedule to the Agriculture and Fishing Property (GST) Regulations (the "Agriculture Schedule") lists property that, when supplied by way of sale, is prescribed property for the purposes of section 10. The supply of game bird feed may fit within the provisions of either subsections 1(2) or 1(3) of the Agriculture Schedule.

Subsection 1(2) of the Agriculture Schedule provides for the zero-rating of the following supplies:

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,

(Applicable to supplies of property delivered to recipients after June 10, 1993. This provision, excluding the mineral feed, was effective December 31, 1990)

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

(b) 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. (Effective December 31, 1990, except that supplies of feed designed for rabbits delivered to recipients before December 11, 1992, were excluded.)

Consequently, a supply of feed for game birds may qualify as a zero-rated supply pursuant to subsection 1(2) of the Agriculture Schedule where the feed complies with the requirements of paragraphs (a) to (c) of subsection 1(2) of this Schedule.

Where a feed product qualifies under all of paragraphs (a) to (c) of subsection 1(2) of the Agriculture Schedule, the supply of the feed is zero-rated in all circumstances regardless of the end use, when supplied in the required minimum quantities.

Subsection 1(3) of the Agriculture Schedule provides for the zero-rating of the following supplies:

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 20 kg (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.

(Effective December 31, 1990, except that for supplies delivered to recipients before December 11, 1992, it excludes by-products and plant or animal products ordinarily used as feed, or as ingredients in feed, for rabbits, ostriches, rheas, emus or bees.)

The phrase "described in subparagraph (2)(c)(i)" in subsection 1(3) of the Agriculture Schedule is understood to mean that the farm livestock, fish or poultry are ordinarily raised or kept to produce or to be used as food for human consumption or to produce wool.

To fall within the provisions of Subsection 1(3) of the Agriculture Schedule, game bird feed must meet all of the following requirements:

1. it is either a by-product of the food processing industry, or a plant or animal product;

2. it is ordinarily used as feed, or as ingredients in feed, for farm livestock, fish or poultry;

3. the farm livestock, fish or poultry are ordinarily raised or kept to produce, or to be used as, food for human consumption or to produce wool; and

4. it (the feed ingredient) is sold in bulk quantities of at least 20 kg (44 lbs.) or in bags that contain at least 20 kg (44 lbs.).

Consequently, a supply of feed for game birds may qualify as a zero-rated supply pursuant to subsection 1(3) of the Agriculture Schedule where the feed complies with the requirements of this subsection.

When it is the case that a product or by-product complies with the requirements of subsection 1(3) of the Agriculture Schedule, the supply of the product or by-product is zero-rated in all circumstances regardless of the end use, when supplied in the required minimum quantities.

Supplies of game bird feed that do not qualify for zero-rating under the foregoing provisions in the Agriculture Schedule could potentially be zero-rated under section 2 of Part IV of Schedule VI to the ETA as a supply of grains or seeds. In order for the supply to be zero-rated, the grains or seeds must be in their natural state, treated for seeding purposes, or irradiated for storage purposes, and they must be ordinarily used as, or to produce, either food for human consumption or feed for farm livestock or poultry. In addition, the grains or seeds must be supplied in a quantity that is larger than the quantity that is ordinarily sold or offered for sale to consumers. Not included are grains or seeds or mixtures thereof that are packaged, prepared, or sold for use as feed for wild birds or as pet food.

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 feed for game birds 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 letters. Proposed amendments to the Excise Tax Act, if enacted, could have an effect on the interpretation provided herein. 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 CCRA 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 (613) 954-2560.

Yours truly,

Richard Aronoff
Goods Unit
General Operation and Border Issues Division
Excise and GST/HST Rulings Directorate