30 March 2001 GST/HST Ruling 33365 - Application of the GST/HST to the Supply of Nutritional Supplement Bars

Dear XXXXX

Thank you for your letter of November 2, 2000, (with attachments), concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to XXXXX[.]

Statement of Facts

Our understanding of the facts is as follows:

1. XXXXX is supplying a new product, XXXXX (the product).

2. The product meets the criteria in Division 24 of the Food and Drugs Regulations under the Food and Drugs Act of a nutritional supplement, and is labelled as such.

3. The product is a 50g bar that is sold individually in nutrition centers, drug stores and grocery stores.

4. The product is available in XXXXX flavours: XXXXX.

5. The promotional information for the product includes the following statements:

XXXXX

Ruling Requested

Are supplies of the product zero-rated under Part III of Schedule VI to the ETA?

Ruling Given

Based on the facts set out above, we rule that supplies of the product are zero-rated under Part III of Schedule VI to the ETA.

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

Pursuant to subsections 165(1) and 165(2) of the Excise Tax Act (ETA), every recipient of a taxable supply made in Canada shall pay tax in respect of the supply calculated at the rate of 7% on the value of the consideration for the supply, or 15% when the supply is made in a participating province. However, under subsection 165(3) of the ETA, the tax rate in respect of a zero-rated supply is 0%.

Supplies that are zero-rated for GST/HST purposes are included in Schedule VI to the ETA. Under Part III of Schedule VI to the ETA, certain supplies of basic groceries are zero-rated. Under section 1 of Part III of Schedule VI to the ETA, supplies of food or beverages for human consumption (including sweetening agents, seasonings and other ingredients to be mixed with or used in the preparation of such food or beverages) are zero-rated, other than supplies of the items listed in paragraphs (a) to (r) of that section.

It is the CCRA's position that products which qualify as nutritional supplements pursuant to the Food and Drugs Regulations under the Food and Drugs Act are food for purposes of section 1 of Part III of Schedule VI to the ETA, and are not within any of the exceptions listed in paragraphs (a) to (r). Therefore, supplies of the product are zero-rated under section 1 of Part III of Schedule VI to the ETA.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 957-8253.

Yours truly,

Jacqueline Russell
Technical Officer
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate