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Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th Floor
320 Queen Street
Ottawa, ON K1A 0L5XXXXX
XXXXX
XXXXXAttention: XXXXX
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Case: 31323May 17, 2002
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Subject:
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GST/HST APPLICATION RULING
Powdered Dietary Supplements
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Dear XXXXX:
Thank you for your letter of XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to supplies of the various powdered products described below.
Statement of Facts
Our understanding of the facts, is as follows:
• XXXXX [Product 'B'][.]
• Product B is a powder consisting of: dried egg albumin, crystalline fructose, Dutch cocoa powder, cocoa powder, creatine monohydrate, natural flavours and sodium chloride.
• Product B directions for consumption are: Mix 1/3 cup of Product B protein powder to 227 mL of orange juice. Mix for 10 seconds in a blender. Serve immediately.
• The Product B directions state: XXXXX[.]
• The Product B label states: XXXXX[.]
• The Product B label also states: XXXXX[.]
• The Product B label also states: XXXXX [Product 'C'][.]
• Product C is a powder consisting of: soy protein isolate, crystalline fructose, maltodextrin, natural flavours, creatine monohydrate, cellulose powder, Jerusalem artichoke powder, corn bran, soy fiber, oat bran and potassium chloride.
• Product C directions for consumption are: Mix 1/3 cup of Product C protein powder to 227 mL of orange juice. Mix for 10 seconds in a blender. Serve immediately.
• The Product C directions state: XXXXX[.]
• The Product C label states: XXXXX[.] The Product C label also states: XXXXX [Product 'D'][.]
• Product D is a powder consisting of: beef protein, crystalline fructose, maltodextrin, corn syrup solids, creatine monohydrate and natural flavours.
• Product D directions for consumption are: Mix 1/3 cup of Product D protein powder to 227 mL of orange juice. Mix for 10 seconds in a blender. Serve immediately.
• The Product D directions state: XXXXX[.]
• The Product D label states: XXXXX[.] The Product D label also states: XXXXX [Product 'E'][.]
• Product E is a powder consisting of: soy protein isolate (soy lecithin), calcium caseinate, dried egg albumin (bacterial culture, citric acid, sodium carbonate, yeast autolysates), cocoa powder, artificial flavour, brewer's yeast, kelp, bromelain and papain.
• Product E directions for consumption are: Mix 28 g (1/3 cup) with 227 mL (8 fl oz) of skim milk.
• Product E is labelled as a Food Supplement.
• The Product E label states: XXXXX [Product 'F'][.]
• Product F is a powder consisting of: XXXXX Protein Mix (whey powder, calcium sodium caseinate, XXXXX [soy protein isolate], whey protein concentrate [lactalbumin], dried egg white [albumen]), crystalline fructose, maltodextrin, Dutch cocoa powder, tricalcium phosphate, natural flavour, magnesium oxide, soy lecithin, choline bitartrate, canola oil, oat bran, XXXXX Vitamin Mineral Premix (vitamin A acetate, ascorbic acid [vitamin C], thiamine mononitrate, niacinamide, reduced iron), papain, bromelain, para aminobenzoic acid, betaine, inositol.
• Product F directions for consumption are: Mix one heaping 1/2 cup (89 g) of Product F to 454 mL (2 cups) of whole milk. Stir briskly until completely dissolved. A blender is recommended for ease of mixing. Serve immediately.
• Product F is labelled as a Protein and Energy Food Supplement.
• The Product F label states:XXXXX [Product 'G'][.]
• Product G is a powder consisting of: XXXXX Protein Blend (whey protein concentrate, calcium sodium caseinate, milk protein isolate, potassium casseinate, dried egg albumen [bacterial culture, citric acid, sodium carbonate, yeast autolysates]), crystalline fructose, natural and artificial flavours, maltodextrin, corn syrup solids, microcrystalline cellulose, dicalcium phosphate dihydrate, MCT (medium chain triglyceride) oil, vitamin and mineral premix (vitamin A palminate, ascorbic acid [vitamin C], thiamine mononitrate, niacin, ferrous sulphate), guar gum, xanthan gum, dipotasssium citrate, betaine, wheat gluten, PABA, inositol, sodium citrate anhydrous and salt.
• Product G directions for consumption are: Mix 70 g (2 scoops) with 454 mL (16 fl oz) of skim milk.
• Product G is labelled as a Food Supplement.
• The G label states: XXXXX [Product 'H'][.]
• Product H is a powder consisting of: whey protein concentrate, whey protein isolate, natural and artificial flavours, cellulose gum, xanthan gum, carrageenan, and acesulfame potassium.
• Product H directions for consumption are: Mix one (1) heaping scoop (30 g) of Product H with 1 cup (8 fl oz) cold water or milk. Mix thoroughly using a blender or shaker.
• Product H is labelled as a Food Supplement.
• The Product H label states:XXXXX [Product 'J'][.]
• Product J is a powder consisting of: protein blend (calcium sodium caseinate, XXXXX [soy protein isolate], whey powder), crystalline fructose, maltodextrin, Dutch cocoa powder, guar gum, microcrystalline cellulose, tricalcium phosphate, potassium chloride, calcium carbonate, magnesium oxide, soy lecithin, canola oil, sodium chloride, choline bitartrate, para aminobenzoic acid, betaine, inositol, papain, bromelain, vitamin mineral premix (vitamin A acetate, ascorbic acid [vitamin C], thiamine, mononitrate, niacinamide, reduced iron), and natural and artificial flavour.
• Product J directions for consumption are: Mix 1/3 cup (45 g) of Product J to 227 mL (1 cup) of skim milk. A blender is recommended for ease of mixing. Serve immediately. For variety try adding your favorite fruit.
• Product J is labelled as a Protein Supplement.
• The Product J label states:XXXXX [Product 'K'][.]
• Product K is a powder consisting of: Maltodextrin, XXXXX Protein Blend (whey protein concentrate [lactalbumin], calcium sodium caseinate, XXXXX [soy protein isolate], whey powder, dried egg albumin), fructose, dextrose, Dutch cocoa powder, cocoa powder, calcium carbonate, natural and artificial flavours, creatine monohydrate, MCT medium chain triglyceride oil [fractionated coconut oil], XXXXX vitamin mineral premix [vitamin A acetate, ascorbic acid, thiamine mononitrate, niacinamide, reduced iron, para amino benzoic acid, betaine base anhydrous, myo-inositol, choline bitartrate].
• Product K directions for consumption are: As a food supplement, mix in a blender, six (6) heaping scoops of Product K with six (6) cups (1362 mL) of 2% milk. For a smaller serving, mix three (3) heaping scoops of Product K with three (3) cups (681 mL) of 2% milk. Product K can be prepared in advance and consumed throughout the day.
• Product K is labelled as a Protein and energy food supplement.
• The Product K label states:XXXXX [Product 'L'][.]
• Product L is a powder consisting of: Maltodextrin, XXXXX Protein Blend (skim milk powder, whey protein concentrate [lactobalbumin], calcium caseinate, dried egg white), corn syrup solids, dextrose, fructose, MCT medium chain triglyceride oil (fractionated coconut oil), potassium chloride, carrageenan, natural and artificial flavours, XXXXX nutrient blend (vitamin A acetate, ascorbic acid, thiamine mononitrate, niacinamide, reduced iron, para amino benzoic acid, betaine base anhydrous, myo-inositol, choline bitartrate), papain, and bromelain.
• Product L directions for consumption are: To 3 cups (681 mL, 24 fl oz) of 2% partly skim milk, add 4 scoops of [Product L] powder. Mix for 30 seconds in a blender until dissolved and serve.
• The label for Product L does not give an indication of the purpose of consumption but according to the promotional material found at the manufacturers website XXXXX, the product is promoted in the following manner:
XXXXX [Product 'M']
• Product M is a powder consisting of pure creatine monohydrate.
• Product M directions for consumption are: As a dietary food supplement for adults, take one teaspoon 3-4 times daily for three days. Thereafter, take 1 teaspoon twice daily. Can be taken with meals or on an empty stomach. Take with juice or water.
• The Product M label states: XXXXX[.] The manufacturers website XXXXX, promotes the product in the following manner:
XXXXX
Ruling Requested
Are the listed products zero-rated supplies 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 all of the listed products are taxable at the GST rate of 7% or the HST rate of 15% in participating provinces pursuant to section 165 of 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
Generally, every recipient of a taxable supply made in Canada shall pay to Her Majesty in right of Canada tax in respect of the supply calculated at the GST rate of 7% (or HST rate of 15%, as applicable) on the value of the consideration for the supply. Where, however, a supply is a zero-rated supply, the tax rate in respect of that supply is 0%.
The supply of basic groceries, which includes the majority of supplies of food and beverages marketed for human consumption (including sweetening agents, seasonings and other ingredients to be mixed with or used in the preparation of such food or beverages), is zero-rated pursuant to Part III of Schedule VI to the Excise Tax Act (ETA).
The terms 'food' and 'beverage' are not defined in the ETA. The CCRA 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 a food or beverage in the ordinary course of buying basic groceries. Products that meet special dietary needs of certain segments of the population such as those with restricted or special purpose diets, high performance athletes and dieters may not necessarily be viewed by the average consumer as a food or a beverage.
Consumers usually consume food for enjoyment or to allay hunger, while beverages are usually consumed for enjoyment or to quench thirst. Therefore, the CCRA generally considers 'food' and 'beverages' as goods consumed to sustain or maintain life, to allay hunger or thirst, or for enjoyment rather than for therapeutic or preventative effects or to achieve specific beneficial effects related to performance or physique.
Products that are labelled or marketed as products to be consumed to facilitate their intake of certain ingredients (nutritive or otherwise) or which place an emphasis on claims relating to the benefits of the product, for example, therapeutic or preventative effects, or enhancing performance or physique, are not considered to be products that an average consumer would ordinarily purchase in the course of buying food or beverages. Rather, these products are represented as being for another purpose and so are not considered to be basic groceries.
Additionally, a product that is marketed for its beneficial effects, and that is added to a food or beverage simply as a means of consuming it, would not be considered by an average consumer as an ingredient simply because it is ingested in this manner.
There are a number of factors that the CCRA considers in determining whether a product would be considered by an average consumer to be a food, beverage or ingredient.
A factor in determining whether a product is a food, beverage or ingredient is if the product identifies itself as a 'supplement', 'dietary supplement', 'food supplement' or similar terminology. (Note that this factor does not apply to products that are labelled in accordance with the Food and Drugs Act as "nutritional supplements".) Such identification may be 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. In this case, Product B, C, D, E, F, G, H, J, K and M identify themselves as a kind of 'supplement'.
Products that emphasize the purity or superior quality of a particular nutrient and relate that nutrient to a therapeutic or beneficial health effect or enhanced mental or physical performance are consumed for that purpose and not as a food, beverage or ingredient. Product B, C, D, E, H, J, K, L, and M link consumption of the product with enhanced physical performance, especially in relation to bodybuilding.
Directions for use or restrictions relating to the amount to be consumed are generally not characteristics of products that the average consumer would consider to be a food, beverage or ingredient. Such directions or restrictions indicate that the product is being consumed for a purpose other than as a food, beverage or ingredient. Product B, C, D, H, and M have directions of use or restrictions.
Product F, G, H, J, and M contain health warnings as to who should not consume the product. Products that the average consumer would consider to be a food, beverage, or ingredient normally do not carry health warnings.
The product names of Product F, J, K, and L and the pictorial representations on the labels of Product E, G, H would lead a consumer to conclude that the principal purpose of consuming the product is for a therapeutic or preventative effect, to enhance mental or physical performance, to enhance physique or to promote weight loss.
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
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