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: 134819R
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
Revised Rulings for [application of GST/HST to supplies of][…] Stevia Products
We have reviewed our previous GST/HST ruling (134819) regarding the tax status of supplies of […] Stevia Products (the Products) and have taken into account new information made available subsequent to that ruling. We provide the following rulings, which revoke and replace our previous ruling letter issued under case number 134819 and dated August 8, 2011.
The HST applies in the participating provinces at the following rates: 13% in Ontario, New Brunswick and Newfoundland and Labrador, 14% in Prince Edward Island and 15% in Nova Scotia. 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 facts, as confirmed by way of revised product labels submitted on [mm/dd/yyyy], to be as follows:
1. The Products are sold in [#] formats: […] Stevia Extract (Product A) which comes in packages containing […][varying quantities of] […] gram packets; a package containing […] grams of […][a powdered format of] Stevia Extract – For Baking ([…] Product B); a package of […] grams containing […] packets of […] Stevia Extract […][for hot beverages] (Product C); and a package of […] grams containing […] packets of Stevia […][for cold beverages] (Product D).
2. Product C is available in […][various] flavours.
3. Product D contains vitamins and is available in […][various] flavours.
4. The Product A label states: […][description of uses, benefits and ingredients]
5. The Product B label states: […][description of uses, benefits and ingredients]
6. The Product C label states: […][description of uses, benefits and ingredients]
7. The Product D label states: […][description of uses, benefits and ingredients]
* Recommended purpose: Use as an antioxidant and vitamin supplement for the maintenance of good health.
* […]
RULINGS
Based on the facts set out above, we rule that supplies of the Products A, B, and C are zero-rated under section 1 of Part III of Schedule VI to the ETA. The Products are ingredients that are not captured by any of the exclusionary paragraphs of (a) to (r) in that section. Furthermore, we rule that Product D is taxable at 5% GST or, 13%, 14%, or 15% HST as applicable, pursuant to section 165.
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 these rulings 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.
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 to the ETA) are subject to the GST/HST at the rate of 0%. Exempt supplies (listed in Schedule V to the ETA) are not subject to the GST/HST.
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 mixed with or used in the preparation of such food or beverages, other than supplies included in paragraphs (a) to (r) of that section.
The terms “food” and “beverage” are not defined in the ETA. As stated in paragraph 2 of GST/HST Memorandum 4.3, Basic Groceries, we consider a product to be a food or beverage if an average consumer would recognize and purchase the product as such in the ordinary course of buying basic groceries.
The term “ingredient” is also not defined in the ETA. Generally, our view is that an average consumer would consider a product to be an ingredient if the product added to the flavour, texture, or appearance of the final product; that is, if it was integral to the final product. Moreover, in order to be regarded as an ingredient to a food or beverage, the final product, in and of itself, must be a food or beverage.
A review of the tax status of stevia based products has recently been conducted in light of steviol glycosides being added as a table-top sweetener by way of a modification to the List of Permitted Sweeteners published by Health Canada. Prior to the inclusion of steviol glycosides as a table-top sweetener, we had ruled that stevia based products could not be classified as ingredients as the products were only made available in Canada by virtue of their use as dietary supplements. Factors supporting this position included the fact that stevia was not listed in Table IX of Division 16 of Part B of the Food and Drug Regulations of the Food and Drugs Act as a permitted sweetener and the fact that Health Canada had issued specific guidelines regarding stevia and its use, including limits on its consumption. Given the regulatory restriction on the sale of stevia, supplies of stevia products were excluded from zero-rating.
As Health Canada now considers steviol glycosides a table-top sweetener, our policy on the tax status of stevia based products has been expanded and some of these products may now be zero--rated. With respect to the Products A, B, and C, as they are advertised as sweeteners, marketed as alternatives to sugar and artificial sweeteners, employ labelling that do not contain any risk information, and are used, recognized, and commonly sold as ingredients to food, where the primary use of each of the Products is to impart a sweet taste to food and drink to which they are added, we now consider each of the Products to be an ingredient that is zero-rated under section 1 of Part III of Schedule VI to the ETA.
With respect to Product D, as the labelling identifies the product as an antioxidant and a vitamin supplement, makes the claim that it may be used to maintain good health, and includes a recommended dosage ([…]), the product would not be considered an ingredient but instead would be classified as a dietary supplement. As a dietary supplement, Product D would be taxable at 5% GST or, 13%, 14%, or 15% HST as applicable.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 905-721-5220. 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.
Yours truly,
Zubair Patel
Basic Groceries and Point-of-Sale Rebates Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
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