15 March 2004 GST/HST Interpretation 49327 - Application of GST/HST on the Sale of Fruit Based Snack Foods

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

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 (product A) and XXXXX (product B).

Statement of Facts

Our understanding of the facts is as follows:

Product A

1. The product is available in three flavours: XXXXX.

2. The product label states: XXXXX.

3. The ingredients listed on the product package are: sugar/glucose-fructose, flour, reconstituted fruit juice XXXXX, fructose, hydrogenated vegetable oil, corn starch, citric acid, mono- and diglycerides, natural and simulated flavours, glycerin, sodium citrate, salt, colour, ascorbic acid and potassium sorbate.

4. The product label states: XXXXX.

5. The product is available XXXXX.

Product B

1. The product is available in XXXXX different XXXXX variations: XXXXX.

2. The product label states: XXXXX.

3. The ingredients listed on the product package are: sugar/glucose-fructose, reconstituted fruit juice XXXXX, modified corn starch, pectin, citric acid, hydrogenated coconut oil, sodium citrate, ascorbic acid, malic acid, natural and simulated flavours, colour and carnauba wax.

4. The product label states: XXXXX.

5. The product is available in XXXXX.

Ruling Requested

Is the supply of these products subject to the GST/HST?

Ruling Given

Based on the facts set out above, we rule that all supplies of both products are subject to GST/HST at the rate of 7% or 15%, as applicable.

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 (ETA), 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% GST or 15% HST, as applicable. 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 ETA.

Section 1 of Part III of Schedule VI to the ETA 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.

Paragraph 1(l) excludes from zero-rating, supplies of fruit bars, rolls or drops or similar fruit-based snack foods. "Fruit-based" implies a mixture of fruit and at least one other ingredient. However, snack foods containing 100% fruit in the form of bars also fall within the scope of this provision.

As both Products A and B are considered to be fruit based snack foods for the purposes of this provision, they are excluded from zero-rating by virtue of paragraph 1(l) and therefore taxable at the rate of 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, CMA
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate