Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
GST/HST Rulings Directorate
5th floor, Tower A, Place de Ville
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 244574
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
Application of GST/HST on the supply of seafood products and […] [a beverage] powder
Thank you for your correspondence of [mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) on the supply of […] (Product A), […] (Product B), and […] (Product C).
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
We understand the following:
1. […] (the Retailer) is a registrant for GST/HST purposes.
2. You are enquiring about the application of GST/HST on supplies of [seafood] Product A, [seafood] Product B, and [beverage powder] Product C.
3. Product A is produced by […][Manufacturer X].
4. Product A comes in a [#] gram bag containing […][individually wrapped items]. Each […][item] weighs approximately [#]g.
5. Product A is sold as a dry grocery item. Directions on the packaging instruct the consumer to refrigerate the product once the outer bag has been opened.
6. The packaging for Product A describes the product […].
7. The ingredients listed on the packaging for Product A are as follows: […]
8. Product B is also produced by the […][Manufacturer X].
9. Product B comes in a resealable [#] gram bag.
10. The packaging for Product B describes the product […].
11. Visually, Product B appears to be shredded, clumpy and stringy.
12. The instructions on the packaging for Product B suggest to keep the product in a cool and dry place away from heat and light.
13. The ingredients listed on the packaging for Product B are as follows: […].
14. Product C is produced by […][Manufacturer Y] and can be described as a […] drink powder mix.
15. Product C is sold in the dry grocery area.
16. Product C comes in a box containing […][the beverage powder] with a net weight of [#] grams.
17. Product C is mixed with water to create a […][carbonated] beverage. The packaging describes the resulting drink […].
18. The ingredients on the packaging for Product C are as follows: […].
RULING REQUESTED
You would like to know how the GST/HST applies to supplies of Product A, Product B, and Product C.
RULING GIVEN
Based on the facts set out above, we rule that, as none of the exclusionary paragraphs to section 1 of Part III of Schedule VI apply, supplies of Product A, Product B and Product C are zero-rated.
EXPLANATION
Section 1 of Part III of Schedule VI to the ETA zero-rates supplies of food or beverages for human consumption, including sweetening agents, seasonings and other ingredients to be mixed with or used in the preparation of such food or beverages, other than supplies excluded from zero-rating by way of paragraphs (a) to (r) of that section.
Product A and Product B are primarily […][seafood]-based products. The composition, texture (chewy, soft), packaging, marketing and format for both Product A and Product B is similar to a loose, jerky-type product. Although paragraph (f) of section 1 applies to some types of snacks, neither Product A nor Product B are captured by paragraph (f). Therefore, as none of the exclusionary paragraphs to section 1 of Part III of Schedule VI apply, supplies of Product A and Product B are zero-rated.
Product C is a powder which, when added to water, forms a […][carbonated] beverage. Although the supply of carbonated beverages are excluded from zero-rating by paragraph (c) of section 1, the exclusion to zero-rating under paragraph (c) does not apply to Product C as it is supplied in a powdered form and only produces a carbonated beverage when added to water. Therefore, as none of the exclusionary paragraphs to section 1 of Part III of Schedule VI apply, the supply of Product C is zero-rated.
DISCLAIMER
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1-4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the ruling(s) given in this letter provided that: none of the issues discussed in the ruling(s) are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 905-429-1696. Should you have additional questions on the interpretation and application of the GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287 or by fax to 1-418-566-0319.
Sincerely,
Siraj Patel
Senior Rulings Officer
Strategic and Emerging Issues Unit
General Operations and Border Issues Division
GST/HST Rulings Directorate
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