15 August 2001 GST/HST Ruling 35143 - Application of GST/HST to the Supply of Feed for Farm Livestock (Pigs)

Dear XXXXX:

Thank you for your letter of December 20, 2000 (with attachments), asking us to reconsider our ruling to you dated XXXXX. More specifically, you are asking us to determine whether XXXXX (the 'Product') qualifies for zero-rated status under section 2 of Part IV of Schedule VI to the Excise Tax Act (ETA).

Statement of Facts

Based upon your recent submission, our understanding of the facts is as follows:

1. XXXXX (the 'Product') is sedge grass peat.

2. The Product is packaged, marketed and promoted by XXXXX XXXXX as feed for farm livestock (pigs).

3. The Product is extracted from a fen (geotrophic peatland), which is different from a bog (ombrotrophic peatland).

4. The peatland where the Product is harvested is disc plowed to loosen the material.

5. The loose material used in the Product is blown into a truck, stockpiled, bagged, and sold to customers (farmers).

6. The remaining loose material is bulldozed, screened and sold as a soil amendment.

7. The Product is supplied in XXXXX bags.

8. A sample label of the Product identifies it as XXXXX.

9. A letter from XXXXX, states that peat from a bog is nutrient deficient and acidic whereas, peat from a fen is more vegetative with a much higher pH (less acidic).

10. A letter from XXXXX, states that peat moss is routinely fed on various commercial farms in XXXXX. It used to be a very common feed for pigs and it is still fed to pigs in various European countries as a source of selected minerals and to satisfy the pigs' need to root in dirt. The letter also states that the product has been chemically evaluated in studies performed at the University and has been proven to be safe.

11. The report published in the XXXXX entitled "Peat Moss To Stimulate Growth In Piglets Around The Time Of Weaning" found that "In general the piglets performed well; no abnormalities in animal health and animal behaviour were observed. The piglets on the peat moss treatment readily consumed the product."

12. The same study also found that piglets derived little nutritive value from the peat moss and that the positive effects should be attributed to the stimulation of gut health and animal well-being.

13. The study concludes by stating "Further research appears warranted to better define the value of feeding peat moss to pigs at the various stages of production."

Ruling Requested

Are supplies of the product zero-rated for GST/HST purposes under section 2 of Part IV of Schedule VI to the ETA?

Ruling Given

Based on the facts set out above, we rule that the product is a 7% taxable supply.

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

Explanation

Section 2 of Part IV of Schedule VI to the ETA, zero-rates supplies of the following goods:

(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.

Sedge grass peat is not a grain or seed in their natural state. Sedge grass peat is also not hay or silage. Based upon the information provided, sedge grass peat has little nutritive value as a livestock fodder. That is, despite the fact it may be more vegetative than other peat, the benefits of feeding pigs sedge grass peat is attributed to "gut health" and not any nutritive effect.

In addition, the information submitted with your query does not support the view that sedge grass peat, at present, is ordinarily used as feed or to produce feed for livestock. The term 'ordinary' is commonly understood to mean; routine, normal, not uncommon or exceptional, or not remarkable (Webster's Third New International Dictionary (unabridged), 1986).

The information submitted supports the view that sedge grass peat is a product that is the subject of research endeavors that may result in its use as a feed. On this basis, the product cannot be considered to be ordinarily (i.e., routinely or normally) used as a livestock feed or to produce a livestock feed.

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 Division
Excise and GST/HST Rulings Directorate