6 May 2002 GST/HST Ruling 33160 - Bar[, a Nutritional Supplement]

Dear XXXXX:

This is in reply to your facsimile message of XXXXX, which was initially sent to our XXXXX TIS Center, but was subsequently transferred to our offices for direct reply. You asked about the application of the of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the XXXXX flavour of the XXXXX bar and the XXXXX XXXXX flavour of the XXXXX Bar, a nutritional supplement.

We note that we have already provided you with an Application Ruling on the XXXXX XXXXX flavour of the XXXXX bar XXXXX XXXXX. Therefore, this ruling will deal only with the XXXXX flavour of the XXXXX Bar ("bar").

Statement of Facts

1. The bar qualifies as a nutritional supplement, but not a meal replacement, pursuant to the Food & Drugs Act (F&DA) and it Regulations. Section B.01.001 of the Regulations to the F&DA defines "nutritional supplements" to mean "a food sold or represented as a supplement to a diet that may be inadequate in energy and essential nutrients".

2. As a nutritional supplement, the bar must meet the nutritional profile, compositional and labelling requirements of the Regulations to the F&DA. It must contain 21 specified micronutrients (i.e. vitamins and minerals) within a range relative to their energy content, which is also regulated. Also, among other things, there are requirements for protein and fat content.

3. The bar is labelled as a "nutritional supplement".

Ruling Requested

Is the XXXXX Bar zero-rated for GST/HST purposes under 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 the XXXXX Bar is zero-rated under 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 ETA, or to our interpretative policy; and that you have fully described all necessary facts and transactions for which you requested a ruling.

Explanation

Taxable supplies of goods and services made in Canada are generally subject to 7% GST (or 15% where the supplies are made in one of the provinces participating in 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 food and beverages for human consumption ("basic groceries") and many ingredients mixed with or used in the preparation of such food or beverages, unless one of the exceptions in paragraphs 1(a) through 1(r) applies.

We have reviewed all information submitted on the bar. In particular, we note the bar qualifies and is labelled as a nutritional supplement pursuant to the Regulations to the F&DA. It is the CCRA's position that products which qualify and are labelled as nutritional supplements pursuant to the Regulations to the F&DA are considered to be 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) 952-9585.

Yours truly,

Pauline Greenblatt
Goods Unit
General Operations and Border Issues Unit Division
Excise and GST/HST Rulings Directorate