25 March 2002 GST/HST Ruling 39151 - Hatching Eggs Used for Influenza Vaccine Production

Dear XXXXX:

Thank you for your letter of February 12, 2002 (with attachments), concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the importation of hatching eggs used for the production of influenza vaccine.

Statement of Facts

Our understanding of the transactions, and the purpose of the transactions are as follows:

TRANSACTIONS

Your client,XXXXX is importing XXXXX dozen fertilized (hatching) eggs to be used in the production of vaccine.

The eggs are produced by XXXXX (the 'Producer') and shipped to your client in Canada.

The eggs are XXXXX hatching eggs. They are not different than eggs used to produce broiler (meat) chickens.

The eggs are classified under the Customs tariff under code XXXXX.

Ruling Requested

Are the fertilized eggs a zero-rated supply pursuant to section 165 of the Excise Tax Act (ETA)?

Ruling Given

Based on the facts set out above, we rule that the fertilized eggs are a zero-rated supply pursuant to section 165 of the ETA.

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%.

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

Section 4 of Part IV of Schedule VI of the ETA allows the supply of poultry eggs that are produced for hatching purposes to be zero-rated for the purposes of the GST/HST.

The Producer produces eggs for hatching purposes. The eggs supplied to your client are not differentiated from other supplies of hatching eggs made by the Producer.

Although the client is not intending to use the supply with the objective of hatching the eggs, section 4 of Part IV does not specify an end use for the supply of hatching eggs.

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
Rulings Officer
Goods Unit
General Operations and Border Issues (GOBI) Division
Excise and GST/HST Rulings Directorate