30 March 2001 GST/HST Ruling 30826 - Application of the GST/HST to Strawberry-flavoured Diet Supplement Beverage Powders

Dear XXXXX:

Thank you for your letter of March 23, 2000 (with enclosures), concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the above-referenced product.

Statement of Facts

Our understanding of the facts is as follows:

1. Your organization is granted the power to act on behalf of XXXXX [Company A], a division of XXXXX. and you request a ruling in respect of XXXXX (the 'product')

2. Company A imports the product in XXXXX gram containers from XXXXX of XXXXX.

3. The product is a strawberry-flavoured XXXXX powder intended to supplement the diet of athletes with additional XXXXX to create muscle mass.

4. One scoop XXXXX of the product when mixed with XXXXX ml. of cold water or skim milk or other beverage will produce a strawberry flavoured mixture.

5. The principal ingredients of the product consist of XXXXX[.]

Ruling Requested

You wish to know the tax status of the product pursuant to the Excise Tax Act [ETA].

Ruling Given

Based on the facts set out above, we rule that the supplies of the product are taxable at 7%, or 15% as 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 ETA, or to our interpretative policy; and that you have fully described all necessary facts and transactions for which you requested a ruling.

Explanation

Part III of Schedule VI to the ETA, entitled "Basic Groceries", zero-rates supplies of food or beverages for human consumption, as well as 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) excepts from zero-rating, supplies of :

"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".

Supplies of the strawberry flavoured product fall under the exception of paragraph 1(d) of Part III of Schedule VI to the ETA. Consequently, supplies of the product are subject to tax at 7% (or 15% as applicable).

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