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: 149458
April 18, 2013
Dear [Client]:
Subject: GST/HST INTERPRETATION - Tax status of Yogurt Based Products
Thank you for your fax of November 27, 2012, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the supply of yogurt bowls.
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Effective April 1, 2013, the 12% HST in British Columbia has been replaced by the 5% GST and a provincial sales tax.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.
It is our understanding that the yogurt based products are packaged by grocery stores on-site in single serving sized clear plastic cups or bowls with a lid. The products are generally marketed as yogurt with various names some of which include yogurt cups, yogurt bowls and yogurt parfaits. The products have yogurt as their primary component and may also include fruits (e.g., strawberries, blueberries, or blackberries), oats and almonds. Ingredients are usually visibly layered but may, to a varying extent, be mixed with the yogurt.
Interpretation Requested
You would like to know how the GST/HST applies to the supply of yogurt bowls.
Interpretation Given
Generally, every recipient of a taxable supply made in Canada shall pay tax calculated at the rate of 5% of the value of the consideration for the supply (15% in Nova Scotia, 13% in Ontario, New Brunswick, and Newfoundland and Labrador, and 14% in Prince Edward Island) unless the supply is zero-rated. The tax rate in respect of a zero-rated supply is 0%. Taxable supplies that are zero-rated for GST/HST purposes are described in Schedule VI to the ETA.
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 mixed with or used in the preparation of such food or beverages, other than supplies included in paragraphs (a) to (r) of that section.
For GST/HST purposes, a good is considered to be yogurt if its primary component (i.e., greater than 50% by weight) is yogurt regardless of layering or mixing of non-yogurt ingredients. Although yogurt is considered to be a basic grocery for GST/HST purposes and its supply is generally zero rated, there are exceptions. The following supplies are subject to GST/HST and are not zero-rated under the following paragraphs in section 1:
• Yogurt supplied via catering pursuant to paragraph 1(o.5);
• Yogurt supplied through a vending machine pursuant to paragraph 1(p);
• Yogurt supplied in an establishment such as a restaurant or a lunch counter within a business pursuant to paragraph 1(q);
• Drinkable yogurt products are considered beverages for the purposes of paragraph 1(n). Therefore, the supply of an individual single serving of a yogurt beverage would be subject to the GST/HST while a manufacturer's package containing two or more single servings or any serving greater than a single serving would be zero-rated; and
• Pursuant to paragraph 1(o.4), the supply of any beverage which is dispensed at the place where it is sold is subject to the GST/HST regardless of the serving size. Therefore, the supply of a dispensed yogurt beverage is subject to the GST/HST.
The foregoing comments represent our general views with respect to the subject matter of your request. These comments are not rulings and, in accordance with the guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, do not bind the Canada Revenue Agency with respect to a particular situation. Future changes to the ETA, regulations, or our interpretative policy could affect this interpretation.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 905 721 5219. 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,
Elizabeth Onsiong
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
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