24 July 2003 GST/HST Ruling 44131 - Fish Feeding Equipment

Dear XXXXX:

Thank you for your letter XXXXX (with attachments), concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the facts described below.

Statement of Facts

Our understanding of the facts is as follows:

1. XXXXX (the "Company") is a manufacturer and supplier of fish feeding equipment relating to the aquaculture industry.

2. The Company supplies to the industry a piece of equipment called the XXXXX (the "Autofeeder"). The Autofeeder consists of:

(a) a feed silo;

(b) a feed hopper;

(c) an airlock valve;

(d) a blower;

(e) an injector;

(f) a main feed pipe;

(g) a feed regulator; and

(h) a distribution valve.

3. The Company supplies to the industry underwater cameras and lights ("Cameras"). The Cameras consist of:

(a) a central control unit;

(b) a base station;

(c) video monitors;

(d) cameras; and

(e) a link to centralized feeder software and controls.

4. The Company supplies to the industry XXXXX Feed Spreaders ("Spreaders"). The Spreaders XXXXX spread feed the way fish eat and allow the fish to eat at the same time.

Ruling Requested

You have requested a ruling concerning the application of GST/HST to the supply of:

1. The Autofeeder;

2. The Cameras and Spreaders sold separately from the Autofeeder;

3. The Autofeeder supplied with Cameras and Spreaders sold together as one unit;

4. The Autofeeder supplied with Spreaders sold together as one unit; and

5. The Autofeeder supplied with Cameras sold together as one unit.

Ruling Given

Based on the facts set out above, we rule that,

1. The Autofeeder falls under the zero-rating provision in section 10 of Part IV of Schedule VI to the Excise Tax Act ("ETA");

2. The Cameras and Spreaders sold separately from the Autofeeder do not fall under the zero-rating provision in section 10 of Part IV of Schedule VI to the ETA. The supply of the Cameras and Spreaders is therefore taxable at a rate of 7% GST or 15% HST, as applicable, pursuant to subsection 165(1) of the ETA;

3. The Autofeeder supplied with Cameras and Spreaders sold together as one unit falls under the zero-rating provision in section 10 of Part IV of Schedule VI to the ETA;

4. The Autofeeder supplied with Spreaders sold together as one unit falls under the zero-rating provision in section 10 of Part IV of Schedule VI to the ETA; and

5. The Autofeeder supplied with Cameras sold together as one unit falls under the zero-rating provision in section 10 of Part IV 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 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 the 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%.

Section 10 of Part IV of Schedule VI to the ETA zero-rates a supply of prescribed property relating to agriculture or fishing. The Agriculture and Fishing Property (GST/HST) Regulations lists property, when supplied by way of sale, that is prescribed property for the purposes of section 10 of Part IV of Schedule VI to the ETA.

Paragraph 2(3)(d) of the Schedule to section 2 of the Agricultural and Fishing Property (GST/HST) Regulations lists "automatic netpen feeders" as prescribed property. This term is not defined, however, it is the CCRA's understanding that automatic netpen feeders can vary in complexity.

The Autofeeder you have described consists of a feed silo, a feed hopper, an airlock valve, a blower, an injector, a main feed pipe, a feed regulator and a distribution valve. When supplied together as a single unit, the Autofeeder would be considered a zero-rated supply of prescribed property.

Further, where the Cameras and/or Spreaders are supplied together with the Autofeeder as a single unit, the supply would also be considered a zero-rated supply of prescribed property.

Where the Cameras and/or Spreaders are sold separately from the Autofeeder, the Cameras and/or Spreaders will be taxable at 7% GST or 15% HST, as applicable, as they are not a prescribed property for the purposes of section 10 of Part IV of Schedule VI to the ETA.

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 and Border Issues Division
Excise and GST/HST Rulings Directorate