8 December 2003 GST/HST Interpretation 47154 - Application of GST/HST on Meal Replacement Bars

Please note that the following documents, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ces documents, bien qu'exacts au moment émis, peuvent ne pas représenter la position actuelle de l'Agence.

Dear XXXXX

Thank you for your letter XXXXX in response to our ruling XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the supply of XXXXX bars (the product). You have asked the CCRA to reconsider its original response and suggest that the product is zero-rated under the provisions of Part III of Schedule VI to the Excise Tax Act (ETA) as a cereal bar that is suitable as a meal replacement.

Following a review of your letter, we would like to confirm our position that the product is subject to GST at 7% or HST at 15%, as applicable, pursuant to paragraph 1(h) of Part III of Schedule VI to the Excise Tax Act (ETA).

Paragraph 1(h) of Part III of Schedule VI to the ETA excludes from zero-rating the supply of:

"granola products, but not including any product that is sold primarily as a breakfast cereal."

You have indicated that the product is advertised as a breakfast cereal bar. These types of products do not fall under the meaning of "sold primarily as a breakfast cereal" for the purposes of paragraph 1(h) above. The expression "sold primarily as a breakfast cereal" does not apply to products commonly described as "cereal bars" which are packaged in bar format. Rather, this expression refers to products labelled as a cereal that are prepared by adding milk or water and eaten with a spoon.

You also indicated that you believe the product has the nutritional value to replace a meal and is therefore a meal replacement. It is understood by the CCRA that products labeled as meal replacements or nutritional supplements must meet the requirements of both the Food and Drug Act and Regulations and the Consumer Packaging and Labeling Act. It is the position of the CCRA that if a product is represented as being a meal replacement or nutritional supplement as evidenced by its label, then the CCRA will accept this information as fact in determining its tax status.

The product is a granola product in bar format that is not labelled as a meal replacement or nutritional supplement. As such, the product falls within paragraph 1(h) of Section 1 of Part III to the ETA and is taxable at 7% GST or 15% HST, as applicable.

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,

Nicole Thomas
Goods Unit
General Operations & Border Issues Division
Excise and GST/HST Rulings Directorate