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, 11th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 185555
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
[…][The Product] – […][Flavour 1] and […][Flavour 2] [Basic Groceries]
Thank you for your letter of [mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to […][the Product], in the […][Flavour 1] & […][Flavour 2].
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 representative) has been authorized by the manufacturer to obtain this ruling on its behalf.
2. The manufacturer is registered for GST/HST purposes.
3. Sample packages of [Flavour 1] and [Flavour 2] have been provided for our review.
4. The Product samples show the Product to be bite-sized, square pieces that are approximately […] cm in size. The sample also reveals that the Product is baked, crispy in texture, and has a savoury taste.
5. The Product is packaged loosely in a […] gram re-sealable bag that resembles current cracker chip bags.
6. The front of the bag denotes the Product as “[…]”, details the particular flavouring, and indicates that the Product does not contain artificial flavours. The front of the bag also depicts an enlarged image of the Product and identifies the Product as crackers.
7. The back of the bag notes the ingredients of the Product and describes the Product as being “[…]”.
8. [Flavour 1] of the Product has the following ingredients: […].
9. [Flavour 2] has the following ingredients: […].
10. The manufacturer’s Web site, […], states that the Product is […][Product details].
11. The Nutrition Facts displayed on the packaging is correlated to the consumption of […][more than six] “crackers”.
12. While the manufacturer does not control the placement of the Product, the intended placement is in the cracker aisle of supermarkets and grocery stores.
RULING REQUESTED
You would like to know whether the supply of the Product is zero-rated for GST/HST purposes.
RULING GIVEN
Based on the facts set out above, we rule that the supply of the Product is zero-rated for GST/HST purposes.
EXPLANATION
The supply of food and beverages marketed for human consumption (including sweetening agents, seasonings and other ingredients to be mixed with or used in the preparation of such food or beverages), is zero-rated, or subject to the GST/HST at the rate of 0%, unless excluded by the provisions contained in paragraphs (a) through (r) of section 1 of Part III of Schedule VI.
Paragraph 1(f) of Part III of Schedule VI 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 56 of GST/HST Memorandum 4.3, Basic Groceries, (GST/HST Memo 4.3) outlines the factors that are used to determine if a particular product is similar to a chip, crisp, puff, curl or stick as described under paragraph 1(f) of Part III of Schedule VI. These factors include the properties of the product (ingredients, flavours, texture, cooking process and appearance), its labelling, its packaging, and its marketing.
Though the Product is packaged loosely in a bag and is described as a “crisp”, the Product's main ingredients, flavours, and texture differ significantly from snack foods excluded under paragraph 1(f). As the Product is not excluded by any of paragraphs (a) to (r) of section 1 of Part III of Schedule VI to the ETA, supplies of the Product are 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 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 905-721-5218. 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,
Zubair Patel
Basic Groceries and Recaptured Input Tax Credits Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
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