13 January 2000 GST/HST Ruling 8367/HQR0001973 - Tax Status of the Dietary Supplement

Dear XXXXX

Thank you for your enquiry of August 4, 1999 (with attachments), concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transaction described below. Your request was forwarded to us by the XXXXX[.] Please note that as of November 1, 1999, Revenue Canada became the Canada Customs and Revenue Agency (CCRA).

Statement of Facts

Our understanding of the facts is as follows:

According to the product literature you provided, XXXXX is described as follows:

1. XXXXX markets a dietary supplement known as XXXXX XXXXX[.]

2. The product comes in tablet form.

3. The product also comes in packets of granules ("tabs") that can be mixed with water or juice.

4. The product includes recommendations on intake, including the intake of children.

5. The product literature cautions, "AS WITH ANY DIETARY SUPPLEMENT, YOU MAY WISH TO CONSULT YOUR DOCTOR PRIOR TO TAKING THIS PRODUCT".

6. Shipments of XXXXX tablets and tabs are shipped to you by XXXXX[.]

Ruling Requested

Whether the supply of XXXXX tablets and tabs is taxable at 7%/15% or is it considered a zero-rated supply of basic groceries.

Ruling Given

Based on the facts set out above, we rule that XXXXX tablets and tabs are taxable at 7% or 15% as applicable.

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%. Goods that are delivered or made available in a participating province are subject to the HST[.] Example: Goods that are delivered or made available in a participating province are subject to the HST, to the extent that they are taxable supplies (not zero-rated).

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 CCRA interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Explanation

All supplies made in Canada are taxable pursuant to section 165 of the Excise Tax Act (ETA) unless they are considered zero-rated supplies or exempt supplies. Certain supplies of food, beverages and ingredients are zero-rated as basic groceries under the ETA.

Although edible, dietary supplements are not consumed to alleviate hunger as are foods traditionally considered basic groceries. They are consumed to supplement a person's diet.

When supplied in tablet, pill, capsule or similar format, dietary supplements are not considered basic groceries, and are therefore excluded from zero-rating. The supply of these goods is taxable at 7% or 15% as applicable.

Similarly, when mixed with juice or water, XXXXX granules are taken to supplement nutritional intake, not drunk for enjoyment or to quench thirst. The fact that there is a suggested daily dosage also suggests that XXXXX is not an ingredient into a beverage.

Consequently, the supply of XXXXX is not considered the supply of an ingredient for beverages under the ETA and therefore, is taxable at the rate of 7% GST, and 15% HST (where applicable).

Where dietary supplements are imported into Canada, the ETA requires the importer to pay the GST, or the HST, if applicable, on the imported goods.

For your convenience, please find enclosed a copy of section 1.4 of Chapter 1 of the GST/HST Memoranda Series. I have also enclosed a copy of GST/HST Memoranda Series 4.3 entitled "Basic Groceries" which provides information on the tax status of various food or beverages for human consumption.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-9218.

Yours truly,

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

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