26 February 2003 GST/HST Ruling 44332 - Nutritional Supplement 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 XXXXX Nutritional Supplement bars (the Product).

Statement of Facts

Our understanding of the facts is as follows:

1. The Product is manufactured in Canada and is labelled and sold as a nutritional supplement that conforms to the requirements set for nutritional supplements in the Food and Drugs Regulations.

2. The Product is available in XXXXX flavours including: XXXXX[.]

3. Marketing of the Product is targeted to healthy individuals XXXXX[.]

4. The Product is sold XXXXX in Canada.

Ruling Requested

Supplies of the Product are a zero-rated supply pursuant to section 1 of Part III of Schedule VI to the ETA.

Ruling Given

Based on the facts set out above, we rule that supplies of the Product are zero-rated pursuant to section 1 of Part III 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 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 food and beverages for human consumption ("basic groceries") unless one of the exceptions in paragraphs 1(a) through 1(r) applies. It is the CCRA's position that products that qualify and are labelled as nutritional supplements pursuant to the Food and Drugs Regulations are considered basic groceries pursuant to section 1 of Part III of Schedule VI to the ETA and, therefore, are zero-rated.

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 and Border Issues Division
Excise and GST/HST Rulings Directorate