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: 145689
Business Number: [...]
June 14, 2013
Dear [Client]:
Subject: GST/HST RULING
Tax Status of [...] [the Product]
Thank you for your letter of July 3, 2012, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to [...] [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Effective April 1, 2013, the 12% HST in British Columbia has been replaced by the 5% GST and a provincial sales tax.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
Our understanding of the facts is as follows:
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. [...].
4. The Product consists of bite-sized toasted pieces of [...] pita bread that have been flavoured and baked. The Product is currently sold [...] in [#] flavours: [...].
5. The Product is packaged loosely in a [...] gram bag [...].
6. The representative has provided sample bags of the [...] flavour ([...] grams) and the [...] flavour ([...] grams) for our review.
7. The front of the bag denotes the Product as [...], details the particular flavouring, and indicates that the Product is [...]. The front of the bag also includes [...].
8. The back of the bag notes the ingredients of the Product and contains the following descriptive statements: [...].
9. The Product is sold under the [...] brand name. The pieces are thin, rectangular, and measure approximately [#] centimetres in length. [...].
10. The [...] flavour of the Product has the following ingredients: [...].
11. [...].
12. [...].
13. [...].
14. The manufacturer's Web site, [...], states the following: [...]
15. [...][website information]
16. [...] [website information].
Ruling Requested
You would like to know whether the Product is considered "snack foods" or "other similar snack foods" and therefore excluded from zero-rating under paragraph 1(f) of Part III of Schedule VI to the Excise Tax Act (ETA) or whether the Product is zero-rated as a "basic grocery".
Ruling Given
Based on the facts set out above, we rule that the supply of the Product is not zero-rated under section 1 of Part III of Schedule VI to the ETA.
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
The Product is considered to be a "similar snack food" for the purposes of paragraph 1(f) of Part III of Schedule VI to the ETA based on its properties. As such, supplies of the Product are not zero-rated for GST/HST purposes. The Product is available in flavours commonly associated with snack foods. Also, the appearance (small thin slice) and the texture (crunchy) are similar to those products enumerated in paragraph 1(f). Finally, the Product is labelled and marketed in a manner similar to products enumerated in paragraph 1(f). Although we consider placement of a product in store aisles as a relevant consideration, it alone is not considered a determinative factor. Therefore, based on these factors, supplies of the Product are taxable at the appropriate GST/HST rate pursuant to subsections 165(1) and 165(2) and the place of supply rules.
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 GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Zubair Patel, CGA
Basic Groceries and Point-of-Sale Rebates Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
Email this Content