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: 247711
Business Number: […]
Dear [Client]:
Subject: GST/HST Ruling
[…][seaweed snacks]
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 […][seaweed snacks] (The Product).
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 Product is sold by […] (the Company), that is a registrant for GST/HST purposes with BN […].
2. The label states that the Product is a product of […][place outside Canada].
3. The Product is packaged in a […] gram pouch, containing […] packs. Each pack weighs […] grams and contains multiple loose […].
4. The Product consists of […] seaweed, […][and other ingredients].
5. The Product is approximately […] millimeters thick and measures approximately […] centimetres in length.
6. The front of the bag describes the Product as “A […] snack.”
7. The back of the bag provides the ingredients of the Product and […][a description of the components, composition, texture and taste of the Product].
8. The Product has the following ingredients: […] Seaweed, […][and other ingredients].
9. The product is sold alongside cracker items and […] seaweed […] snacks.
RULING REQUESTED
You would like to know whether the supply of the Product is zero-rated under section 1 of Part III of Schedule VI.
RULING GIVEN
Based on the facts set out above, we rule that the supply of the Product is excluded from zero-rating under paragraph 1(f) of Part III of Schedule VI to the ETA.
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 listed in paragraphs (a) to (r) of that section.
Paragraph 1(f) of Part III of Schedule VI to the ETA excludes from zero-rating the following:
“chips, crisps, puffs, curls or sticks (such as potato chips, corn chips, cheese puffs, potato sticks, bacon crisps and cheese curls), other similar snack foods or popcorn and brittle pretzels, but not including any product that is sold primarily as a breakfast cereal.”
Paragraph 57 of the GST/HST Memorandum Series 4.3 – Basic Groceries (Memo 4.3) states, “Products that are enumerated in paragraph 1(f) generally have potatoes, corn, or corn meal as a main ingredient. However, inclusion of ingredients not listed above would not preclude a particular product from falling within paragraph 1(f).”
Several factors are to be considered when determining whether products are similar to the products specifically listed in paragraph 1(f). Factors that must be considered are the properties of the product, labelling, packaging, and marketing. As there are many variations in packaging, product names, and in the actual products themselves, each product must be considered individually. Factors such as physical properties, labelling, and marketing may be used to determine if a particular product is similar to a chip, crisp, puff, curl or stick as described in paragraph 1(f).
Paragraph 58 of Memo 4.3 states that it should be noted that no one factor is determinative of the tax status of a product and changes in labelling, packaging and/or marketing would not necessarily result in different tax status.
Although the Product does not have potatoes, corn or corn meal as the main ingredients, the properties, labelling, packaging, and marketing elements considered together provide an overall indication that the Product is a snack food similar to those listed in paragraph 1(f) of Part III of Schedule VI to the ETA. As such, it is excluded from zero-rating as the Product:
- has a salty and savoury taste;
- is crispy and crunchy in texture;
- is packaged in a fashion similar to other snack foods;
- can be consumed directly by just opening the bag;
- is not promoted for use as an ingredient in food preparation;
- is found in the snack aisle; and
- is generally marketed as a healthy snack food to compete with other snack foods like chips.
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.
CONTACT
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 343-596-5955.
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.
Sincerely,
Zoungrana Liliane
A/Rulings Officer
Strategic and Emerging Issues Unit
General Operations and Border Issues Division
GST/HST Rulings Directorate
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