18 July 2002 GST/HST Ruling 41138 - Application of the GST/HST to Nutritional Supplement Bar

Dear XXXXX:

Thank you for your letter of XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to XXXXX Nutritional Supplement bar (the Product) manufactured by your client, XXXXX[.]

Statement of Facts

Our understanding of the facts, is as follows:

1. The Product meets the requirements of the Food and Drugs Regulations to be labelled and marketed as a "nutritional supplement".

2. The Product is available in a variety of flavours including XXXXX (sample enclosed).

Ruling Requested

Supplies of the Product are a zero-rated supply pursuant to section 1 of Part III of Schedule VI to the Excise Tax Act (ETA).

Ruling Given

Based on the facts set out above, we rule that supplies of the Product are zero-rated pursuant to section 1 of 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

Taxable supplies of goods and services made in Canada are generally subject to tax at 7% (or 15% where supplies are made in one of the participating provinces applying the HST). However, "zero-rated" supplies of goods and services are subject to tax at 0%. A zero-rated supply is any supply included in Schedule VI to the ETA.

Section 1 of Part III of Schedule VI to the ETA zero-rates supplies of food and beverages for human consumption ("basic groceries"), unless one of the exceptions in paragraphs 1(a) through 1(r) applies. It is the CCRA's position that products that qualify and are labelled as nutritional supplements pursuant to the Food and Drug Regulations are considered basic groceries pursuant to section 1 of Part III of Schedule VI to the ETA and, therefore, are zero-rated.

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