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: 200086
[Dear Client]:
Subject: GST/HST ruling
Supply of […][Product A and Product B]
Thank you for your correspondence of [mm/dd,yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to the supply of […] (Product A) and […] (Product B). We apologize for the delay in this response.
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 that:
1. […] (the Company) is a GST/HST registrant […].
2. […]
3. The Company […][supplies Product A and Product B]. The Company packages the products in several different sizes.
4. […]
5. You provided a label for Product A […]
Lignin Sulfonate(Footnote 1) Dehydrated
[…]
6. Product A is […][sold in bulk].
7. Lignin sulfonate dehydrated (International Feed Number 8-02-627) is listed under class 8.30 in Part I of Schedule IV to the Feeds Regulations, 1983. It consists of either one or a combination of the ammonium, calcium, magnesium or sodium salts of the extract of spent sulfite liquor derived from the sulfite digestion of wood of abaca (Musa textilis). It is dried by thermal means so that the moisture content does not exceed 6 percent by weight.
It shall be labelled with the following statement:
“This product is for use in feeds as a pelleting aid in amounts calculated on a dry weight basis not to exceed four percent of the finished pellets. Consult the Compendium of Medicating Ingredient Brochures for acceptable drug compatibilities with this product.”
It shall also be labelled with guarantees for maximum ash and maximum moisture.
8. The Safety Data Sheet (SDS) for Product A indicates that the […] composition of the product is […][lignin sulfonate].
9. […].
10. Product B is [a lignin product sold in bulk that is] intended to be used for industrial and commercial purposes. […].
RULING REQUESTED
You would like to know whether the supply of Product A and Product B are zero-rated for GST/HST purposes.
RULING GIVEN
Based on the facts set out above, we rule that that the supply of Product A and Product B by way of sale are subject to the GST/HST at the applicable rates based on the province in which the supply is made.
EXPLANATION
Section 10 of Part IV of Schedule VI to the ETA provides that a supply of prescribed property is a zero-rated supply. The Schedule to the Agriculture and Fishing Property (GST) Regulations (the "Agriculture Schedule") lists property that, when supplied by way of sale, is prescribed property for the purposes of section 10.
Subsection 1(2) of the Agriculture Schedule provides for the zero-rating of the following supplies:
Feed, when sold in bulk quantities of at least 20 kg (44 lbs.) or in bags that contain at least 20 kg (44 lbs.), that
(a) is a complete feed, supplement, macro-premix, micro-premix or mineral feed (other
than a trace mineral salt feed), all as defined in the Feeds Regulations, 1983,
(b) is labelled in accordance with those Regulations, and
(c) is designed for
(i) .a single species or class of farm livestock, fish or poultry ordinarily raised or kept to produce, or to be used as, food for human consumption or to produce wool, or
(ii) .rabbits.
Subsection 1(3) of the Agriculture Schedule provides for the zero-rating of the following supplies:
By-products of the food processing industry and plant or animal products, when sold in bulk quantities of at least 20 kg (44 lbs.) or in bags that contain at least 20 kg (44 lbs.), that are ordinarily used as feed, or as ingredients in feed, for farm livestock, fish or poultry described in subparagraph (2)(c)(i) or for rabbits, ostriches, rheas, emus or bees.
Paragraph 1(2)(a) of the Agriculture Schedule requires a feed to be a complete feed, supplement, macro-premix, micro-premix or mineral feed (other than a trace mineral salt feed), all as defined in the Feeds Regulations, 1983. Lignin sulfonate is listed as a single ingredient feed. Product A and Product B do not meet the requirements of subsection 1(2).
To fall within the provisions of subsection 1(3), Product A or Product B must meet all of the following requirements:
1. it is either a by-product of the food processing industry, or a plant or animal product;
2. it is ordinarily used as feed, or as ingredients in feed, for farm livestock, fish or poultry;
3. the farm livestock, fish or poultry are ordinarily raised or kept to produce, or to be used as, food for human consumption or to produce wool; and
4. the feed ingredient is sold in bulk quantities of at least 20 kg (44 lbs.) or in bags that contain at least 20 kg (44 lbs.).
Lignin sulfonate is not a by-product of the food processing industry, or a plant or animal product. We consider lignin sulfonate to be a processed or manufactured product. Product A and Product B do not meet the requirements of subsection 1(3) and consequently the supply of Product A or Product B by way of sale is subject to the GST/HST at the applicable rates.
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 343-553-3972.
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,
David Phoenix, CPA, CGA
Industry Sector Specialist
Services and Intangibles Unit
General Operations and Border Issues Division
GST/HST Rulings Directorate
FOOTNOTES
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