12 June 2003 GST/HST Ruling 44336 - Application of GST/HST on Certain Meal Replacement Bars

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 tax status of the product XXXXX (The Product).

Statement of Facts

1. The label of The Product states: XXXXX

2. The product is available in the following flavours: XXXXX

3. The Product is packaged and sold in bars weighing XXXXX g.

4. The main ingredients in the XXXXX flavour of The Product include: XXXXX, brown rice syrup, rice flour and crisp rice.

Ruling Requested

What is the tax status of The Product?

Ruling Given

Based on the facts set out above, we rule that The Product is taxable at 7%, (or 15% as applicable) pursuant to section 165 of the Excise Tax Act.

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

Taxable supplies of goods and services made in Canada are generally subject to tax at 7% (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 Excise Tax Act ("the Act").

Section 1 of Part III of Schedule VI to the Act zero-rates supplies of food or beverages for human consumption and sweetening agents, seasonings and other ingredients mixed with or used in the preparation of such food or beverages, unless one of the exclusions set out in paragraphs 1(a) through 1(r) applies.

In accordance with paragraph 1(h) of Part III of Schedule VI of the Act, the following products are taxable at 7%, or 15% if applicable:

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

As The Product falls under this exclusion, it is taxable at 7%, or 15% as applicable.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-9218.

Yours truly,

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