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: 179050
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
GST/HST status of […][Brand] Granola products
Thank you for your letter concerning the application of the goods and services tax (GST)/harmonized sales tax (HST) to […][Brand] Granola products (the Products). We apologize for the delay in responding.
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
In review of your submission, the Product sample you provided, and of the […](the Producer) website, it is our understanding that:
1. […](the Company) is a GST/HST registrant under Business Number […].
2. The Company acquires the Products for the purpose of resupply at its retail stores.
3. […].
4. The ingredients of the three […][mixes] are as follows:
i) […][Mix 1] – Rolled oats, […][ingredients]
ii) […][Mix 2] – Rolled oats, […][ingredients]
iii) […][Mix 3] – Rolled oats, […][ingredients].
5. The Producer’s website[…][indicates] [Mix 1] […][goes] with yogurt and fruits, [Mix 2] […][goes] with milk or yogurt and […], and [Mix 3] […][can be used] for breakfast […].
6. The Products are contained loose in a pouch/bag containing […] grams, […] grams or […] kilograms.
7. The Products are shelved in the breakfast section of the store with other similar granola products.
8. The Producer’s website contains a page for recipes. […].
RULING REQUESTED
You would like to know whether supplies of the Products qualify for zero-rating as basic groceries under section 1 of Part III of Schedule VI.
RULING GIVEN
Based on the facts set out above, we rule that the supplies of the Products are zero-rated under section 1 of Part III of Schedule VI.
EXPLANATION
Generally, in accordance with section 165 of the ETA, every recipient of a taxable supply made in Canada is required to pay GST/HST on the value of the consideration for the supply, unless the supply is zero-rated (listed in Schedule VI to the ETA and subject to the GST/HST at the rate of 0%).
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) unless an exclusion set out in paragraphs 1(a) through 1(r) applies.
Paragraph 1(h) of Part III of Schedule VI to the ETA, excludes granola products from zero-rating unless they are sold primarily as a breakfast cereal. The Products as described are sold primarily as breakfast cereals and are therefore zero-rated under section 1 of Part III of Schedule VI.
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 at 905-721-5123. 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,
David Nichol CPA-CGA
Basic Groceries and Recaptured Input Tax Credits Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
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