18 February 2013 GST/HST Ruling 136192 - Application of GST/HST to the supply of salads

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.

Dear [Client]:

Thank you for your [correspondence] of May 30, 2011, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to supplies of certain products by […] ([…][XYZ]).

HST applies at the rate of 15% in Nova Scotia, 13% in Ontario, New Brunswick, and Newfoundland and Labrador, and 12% in British Columbia. GST applies at the rate of 5% in the remaining provinces and territories.  

All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.

Statement of Facts

Our understanding of the facts is as follows:

1. [XYZ] has submitted information on the following products for a ruling: […] (Product A), […] (Product B), […] (Product C), […] (Product D), […] (Product E), […] (Product F ), […] (Product G), […] (Product H), […] (Product I), and […] (Product J).

2. The Products are not canned or vacuum-sealed.

3. Product A is sold in a large plastic bowl with a re-sealable lid. Product A contains chopped romaine lettuce, dressing in […] containers, […] bags of croutons, […] ounces of loose grated parmesan cheese placed on top of the romaine lettuce, and […] lemon wedges placed on top of the romaine lettuce. Product A is sold and represented as a salad.

4. Product B is sold in a plastic container and is comprised of diced red and green peppers, grape tomatoes, diced red onions, diced cucumbers, diced feta cheese, diced kalamata olives and Greek dressing. Except for the dressing, which comes in a separate container, all of the ingredients are together in the container ready to be tossed. Product B is sold and represented as a salad.

5. Product C is sold in a plastic container and is comprised of spinach, shredded mozzarella cheese, sliced mushroom, sliced hard-boiled eggs, sliced red onion, grape tomato and poppy seed dressing. Except for the dressing, which comes in a separate container, all of the ingredients are together in the container ready to be tossed. Product C is sold and represented as a salad.

6. Product D is sold in a plastic container and is comprised of broccoli, raisins, pine nuts, diced red onions, crumbled bacon, and dressing. Except for the dressing, which comes in a separate container, all of the ingredients are together in the container ready to be tossed. Product D is sold and represented as a salad.

7. Product E is sold in a plastic container and is comprised of chopped romaine lettuce, sliced red peppers, grape tomatoes, sliced cucumber, sliced red onions, shredded carrots, and sun-dried tomato dressing. Except for the dressing, which comes in a separate container, all of the ingredients are together in the container ready to be tossed. Product E is sold and represented as a salad.

8. Product F is sold in a plastic container and is comprised of chopped romaine lettuce, spring mix greens, shredded Gouda cheese, apple wedges, pecans, dried cranberries, diced celery, and balsamic dressing. Except for the dressing, which comes in a separate container, all of the ingredients are together in the container ready to be tossed. Product F is sold and represented as a salad.

9. Product G is sold in a plastic container and is comprised of chopped chicken, diced celery, leaf lettuce, diced white onion, ground pepper, dry parsley, mayonnaise, and sour cream. The ingredients are mixed together. Product G is sold and represented as a salad.

10. Product H is sold in a plastic container and is comprised of cooked and diced potatoes, chopped celery, diced onions, diced carrots and hard-boiled eggs. All of these ingredients are mixed together with a dressing. Product H is sold and represented as a salad.

11. Product I is sold in a plastic container and is comprised of cooked shrimp and a tangy Thai sauce. The sauce is mixed with the shrimp prior to sale. Product I is not sold or represented as a salad.

12. Product J is sold in a plastic container and is comprised of shrimp, cocktail sauce in a separate container, lemon wedges, and chopped romaine lettuce. It is to be consumed by individually dipping the shrimp into the sauce. Product J is not sold or represented as a salad.

Ruling Requested

You would like to know how the GST/HST applies to supplies of the Products.

Ruling Given

Based on the facts set out above, we rule that supplies of Products A, B, C, D, E, F, G, and H are all salads for GST/HST purposes and are taxable at 5% GST or, 12%, 13%, or 15% HST as applicable, pursuant to section 165. Products I and J are not sold or represented as salads and are zero-rated pursuant to section 1 Part III of Schedule VI to the ETA.

This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.

Explanation

Generally, every recipient of a taxable supply made in Canada shall pay tax calculated at the rate of 5% on the value of the consideration for the supply (15% in Nova Scotia, 13% in Ontario, New Brunswick, and Newfoundland and Labrador, and 12% in British Columbia) unless the supply is zero-rated. The tax rate in respect of a zero-rated supply is 0%. A zero-rated supply is a supply that is included in Schedule VI.

Under Part III of Schedule VI, certain supplies of basic groceries are zero-rated. Section 1 of Part III of Schedule VI, zero-rates supplies of food or beverages for human consumption, including sweetening agents, seasonings and other ingredients mixed with or used in the preparation of such food or beverages, other than supplies included in paragraphs (a) to (r) of that section. Paragraph 1(o.1) excludes supplies of salads not canned or vacuum-sealed from zerorating.

Paragraphs 104 to 109 of GST/HST Memorandum 4.3, Basic Groceries, outline how the GST/HST applies to supplies of salads. Paragraph 105 states:

Salads are considered to include ingredients such as chopped, shredded, diced, sliced, or pureed vegetables, meat, fish, egg, or other food supplied with a dressing and/or seasonings(s), whether or not the dressing is mixed with the other ingredients. A combination of one ingredient mixed with a dressing or seasoning(s) that is sold or represented as a salad is also considered a salad. Fruit salads and gelatine salads generally do not need a dressing to be considered a salad.

Paragraph 109 indicates that salad kits are basic groceries and their supply is zero-rated. It states:

A package that contains the ingredients for a salad where the ingredients are not mixed, such as a package containing lettuce, croutons and dressing (i.e., where the ingredients are in separate containers) and that require mixing by the consumer, is not considered to be a salad for purposes of the GST/HST.

Ingredients such as dressing and croutons are typically supplied in separate containers. This recognizes the nature of the ingredients. If these ingredients were mixed together with the other ingredients, the croutons and other ingredients would become soggy and the shelf life of the product would be greatly reduced. The main ingredients of Products A, B, C, D, E, F, G, and H (other than the dressing and croutons) are supplied together and merely require tossing by the consumer if the consumer so desires. Therefore paragraph 109 of Memorandum 4.3 quoted above does not apply in this case.

Products A, B, C, D, E, F, G and H are salads for GST/HST purposes. As a result, supplies of these Products are excluded from zero-rating pursuant to paragraph 1(o.1) of Part III of Schedule VI as they are not canned or vacuumed-sealed.

Products I and J are not considered to be salads for purposes of paragraph 1(o.1). Therefore, supplies of these products are zero-rated as basic groceries.

If you require clarification with respect to any of the issues discussed in this letter, please call me at 613-954-5124. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.

Yours truly,

Angela Stachowski
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate