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: 145016
Business Number: [...]
April 22, 2013
Dear [Client]:
Subject: GST/HST RULING
Importation of ammonium nitrate [...]
Thank you for your letter of [mm/dd/yyyy], concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the importation of ammonium nitrate [...] (the Product).
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 (effective April 1, 2013) and 15% in Nova Scotia. The GST applies in the rest of Canada at the rate of 5%.
Effective April 1, 2013, the 12% HST in British Columbia has been replaced by the 5% GST and a provincial sales tax.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
Statement of Facts
We understand the facts to be as follows:
1. [...].
2. The Company supplies the Product with an NPK (Nitrogen-Phosphorus-Potassium) designation of 29-0-0.
3. The Product has a molecular formula of NH4NO3 (Nitrogen Hydrogen, Nitrogen Oxygen).
4. The Product is supplied in bulk quantities greater than 500 kg.
5. The Product's label and guaranteed analysis were submitted with the ruling request.
6. The Company states that the Product is represented and supplied as an explosive.
Ruling Requested
You would like to know if the importation of the Product is zero-rated for GST/HST purposes as a fertilizer.
Ruling Given
Based on the facts set out above, we rule that the importation of the Product is taxable and is not zero-rated for GST/HST purposes.
This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.
Explanation
Section 212 and subsection 212.1(2) provide respectively for the imposition of the GST and the provincial part of the HST in respect of goods imported into Canada. Pursuant to these provisions, every person who is liable under the Customs Act to pay duty on imported goods, or who would be so liable if the goods were subject to duty, is liable to pay the GST on imported goods calculated at the rate of 5% on the value of the goods, or when importing goods into a participating province (i.e Nova Scotia, New Brunswick, Ontario, Prince Edward Island or Newfoundland and Labrador), the HST calculated at the rate for the particular province.
Subsection 212.1(3) provides that subsection 212.1(2) tax does not apply where goods are accounted for as commercial goods under section 32 of the Customs Act. Commercial goods as defined under the Customs Act "means goods imported into Canada for sale or for any commercial, industrial, occupational, institutional or other like use".
Section 213 provides that no GST/HST is payable in respect of goods included under Schedule VII to the ETA. Under section 6 of Schedule VII to the ETA, a non-taxable importation includes, in part, a supply under Part IV of Schedule VI to the ETA other than section 3.1 of Part IV of that Schedule. Section 5 of Part IV of Schedule VI to the ETA provides zero-rated relief for supplies of fertilizer when supplied in bulk or in a container that contains at least 25 kg of fertilizer where the total weight of the supply is at least 500 kg.
GST/HST Info Sheet GI-048 Fertilizers and Pesticides provides guidance on how the GST/HST applies to the supply of fertilizer by outlining four requirements for a supply to be considered a fertilizer:
1. The product directly provides plant nutrients;
2. The product contains one or more of the major or lesser plant nutrients;
3. The product label contains a guaranteed analysis; and
4. The product being supplied is marketed, advertised, packaged, labelled, or sold for use as a fertilizer.
While the Product meets requirements 1, 2 and 3, the Product does not meet requirement 4 as it is supplied and represented as an explosive. Therefore, the supply of the Product is not eligible for zero-rating as a fertilizer. There is no other provision that zero-rates the supply of the Product. Consequently, the importation of the Product is a taxable importation pursuant to section 212 and commercial importations are subject to the 5% GST or the federal portion of the HST in the participating provinces.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-5124. 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,
Angela Stachowski
Goods Unit
Excise and GST/HST Rulings Directorate
Email this Content