17 December 2002 GST/HST Ruling 43025 - Application of the GST/HST to Protein Bars and Protein Shakes

Dear XXXXX:

This letter is further to our letter dated XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to XXXXX Protein Bars and Shakes. The information provided in this letter pertains to XXXXX Protein Shakes (the Product).

Statement of Facts

Our understanding of the facts is as follows:

XXXXX, XXXXX

2. The Product is rich in protein and is formulated to enhance the XXXXX by increasing XXXXX.

XXXXX

3. The ingredients in the Product include casein and whey proteins, plus XXXXX XXXXX. The Product is available XXXXX. They are advertised as XXXXX or as "XXXXX " and are available in singles or packs of XXXXX.

4. Directions for use on the package indicate that one packet of the Product is to be mixed with XXXXX.

Ruling Requested

Is the Product zero-rated as a basic grocery, pursuant to section 1 of Part III of Schedule VI to the Excise Tax Act (ETA)?

Previous Ruling Given

Based on the facts set out above, we ruled that the XXXXX of the Product was taxable at the rate of 7% GST or 15% HST, as applicable, and the XXXXX of the Product was zero-rated pursuant to section 1 of Part III of Schedule VI to the ETA.

Revised Ruling Given

Based on the facts set out above, we rule that XXXXX the Product are taxable at 7% GST or 15% HST, as applicable pursuant to section 165 of the ETA.

This ruling supersedes our previous ruling dated XXXXX.

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 transactions for which you requested a ruling.

Revised Explanation

The terms "food" and "beverage" are not defined in the ETA. However, the CCRA's position is that these terms are to be construed according to their ordinary meaning. That is, a food or a beverage is a good that an average consumer would recognize and purchase as such in the ordinary course of buying basic groceries.

In addition, if a product identifies itself as a 'supplement', 'dietary supplement', 'food supplement' or other type of similar supplement, this is an indication that the product is consumed for the purpose of enhancing or improving a person's state of health and not as a food, beverage or ingredient.

Among other factors, the CCRA will consider labelling, packaging and marketing to determine whether a product would be considered a "food", "beverage", or "ingredient".

The Product is XXXXX[.] This would indicate that the Product is not a food or beverage.

The main ingredients of the Product are casein and whey proteins, plus XXXXX. The Product is rich in protein and is formulated to XXXXX[.] Products such as these, which place an emphasis on claims relating to the benefits of the product such as therapeutic or preventative effects, or claim to enhance performance or physique, are not considered to be a food or beverage.

Directions for use on the package indicate that one packet of the Product is to be mixed with XXXXX. These types of directions or restrictions relating to the amount to be consumed generally indicate that the product is being consumed for a purpose other than as a food, beverage or ingredient.

As a result of the above, the CCRA considers that XXXXX the Product are taxable at 7% GST or 15% HST, as applicable pursuant to section 165 of the ETA as dietary supplements.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-5124

Yours truly,

Nicole Thomas
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate