31 May 2002 GST/HST Ruling 40430 - Application of the GST/HST to a Box of Cookies

Dear XXXXX:

Thank you for your letter of May 6, 2002 (with attachments), concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the tax status of a supply of a box of XXXXX cookies.

Statement of Facts

1. The box of XXXXX cookies consists of XXXXX portion packs that are individually wrapped.

2. The box contains the following information: ingredient, net weight XXXXX XXXXX and the universal product code (UPC).

3. Each pack (inside the box) weights XXXXX and contains XXXXX cookies. The information on this package also contains ingredient and net weight.

Ruling Requested

Is the box containing XXXXX portion packs of XXXXX cookies considered to be prepackaged for sale to consumers and, therefore, zero-rated?

Ruling Given

Based on the facts set out above, we rule that in accordance with section 1 of Part III of Schedule VI to the Excise Tax Act, the supply of a box of XXXXX portion packs of XXXXX cookies is zero-rated.

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 subparagraph 1(m)(i) of Part III of Schedule VI, cookies that are prepackaged for sale to consumers in quantities of less than six items, each of which is a single serving, are subject to tax at 7% or 15% if applicable. Therefore, a zero-rated prepackaged unit would be a box of six or more single servings packaged by the manufacturer in a container intended for purchase by the final consumer. A box considered to be prepackaged for sale to consumers normally contains the information required under the Consumer Packaging and Labelling Act. This information includes, ingredients, and net weight. The universal product code (UPC) is another indication that the box is prepackaged for sale to consumers.

The box of XXXXX cookies is zero-rated because it is prepackaged for sale to consumers and includes six or more servings. However, if the box is opened and individual packs inside it are sold separately, the individual packs would be subject to GST/HST in accordance with 1(m)(i) of Part III of Schedule VI. Nevertheless, the fact that it is possible for retailers to sell individual packs and therefore use the box as a display, does not preclude the supply of the box from being zero-rated.

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,

Gabrielle Nadeau
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate