25 July 2003 GST/HST Ruling 46746 - Zero-rated Supplies of Basic Groceries

Dear XXXXX

Thank you for your fax 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 sells XXXXX (the Product) in its stores.

2. The Product is described as being "XXXXX " and as being XXXXX[.]

3. The Product ingredients are: wheat flour, butter, XXXXX salt, milk protein, dextrose, canola oil and XXXXX.

4. The Product is packaged in a XXXXX gram box, each box contains approximately XXXXX packaged in XXXXX

Ruling Requested

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

Ruling Given

Based on the facts set out above, we rule that the Product is zero-rated.

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 1 of Part III of Schedule VI to the ETA zero-rates supplies of basic groceries subject to the exclusions listed in paragraphs 1(a) through 1(r). As the Product does not meet the criteria for any of the exclusions listed in paragraphs 1(a) through 1(r), the CCRA considers the supply of the Product to be the supply of a zero-rated basic grocery taxable at a rate of 0%.

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