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.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 180297
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
Application of the GST/HST to the supply of […][a basic grocery product]
Thank you for your letter dated October 18, 2016, concerning the application of GST/HST to the supply of […](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
Our understanding of the facts is as follows:
1. The Product is manufactured by […](the Manufacturer), who is a registrant for GST/HST purposes.
2. According to the Manufacturer’s website, […], the Product is sold online and can be found at various retail locations throughout Ontario.
3. The Product’s ingredients are as follows: […][list of ingredients including brown rice crisps].
4. The ingredients, which are easily identifiable, are held together by the presence of […]. The size of each individually wrapped piece of the Product is approximately […]cm x […]cm.
5. The Nutrition Facts Table on the packaging indicates that each piece is […] grams.
6. The Product is sold in a resealable package with a total weight of […] grams. The package indicates that the Product is made with […][Product details].
7. There are approximately […][more than six] individually wrapped pieces in each package.
RULING REQUESTED
You would like to know how the GST/HST applies to supplies of the Product.
RULING GIVEN
As the Product is pre-packaged for sale to consumers in quantities of six or more items, we rule that the supply of the Product is a zero-rated supply pursuant to section 1 of Part III of Schedule VI.
EXPLANATION
Generally, in accordance with section 165, every recipient of a taxable supply made in Canada is required to pay GST/HST on the value of the consideration for the supply. Zero-rated supplies (listed in Schedule VI) are subject to the GST/HST at the rate of 0%. Exempt supplies (listed in Schedule V) are not subject to the GST/HST.
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 to be 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(h) of Part III of Schedule VI excludes from zero-rating granola products, but not including any product that is sold primarily as a breakfast cereal. Given the Product’s characteristics, we do not consider the Product to be a granola product and thus it would not be excluded from zero-rating under this paragraph.
Paragraph 1(m) of Part III of Schedule VI excludes from zero-rating cakes, muffins, pies, pastries, tarts, cookies, doughnuts, brownies, croissants with sweetened filling or coating, or similar products where, (i) they are packaged for sale to consumers in quantities of less than six items, each of which is a single serving, or (ii) where they are not prepackaged for sale to consumers and are sold as single servings in quantities of less than six, but not including bread products such as bagels, English muffins, croissants or bread rolls, without sweetened filling or coating.
Given the presence of puffed / crisped brown rice in the Product, it is our position that the Product is considered to be a “similar product” for the purpose of paragraph 1(m). As the Product is sold in packages that hold six or more single servings, the Product would not be excluded under paragraph 1(m) and thus supplies of the Product will be zero-rated.
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 rulings given in this letter provided that: none of the issues discussed in the rulings 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)721-5184. 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,
Siraj Patel, CGA, CPA
Basic Groceries and Recaptured Input Tax Credits Unit
General Operation and Boarder Issues Division
Excise and GST/HST Rulings Directorate
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