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: 153472
Business Number: [...]
October 18, 2013
Dear [Client]:
Subject: GST/HST RULING
Tax status of Agave Syrup
Thank you for your letter of April 24, 2013, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to [...] (the Product) supplied by [...] (your Company) as described below.
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Effective April 1, 2013, the 12% HST in British Columbia has been replaced by the 5% GST and a provincial sales tax.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
1. From your Company's website [...], our understanding of the facts is as follows:
The Product
• is a [...], natural sweetener [...];
• is marketed as an alternative to sugar, [...];
• [...][Usage description];
• is labelled as [...] agave syrup;
• is available in [...][flavours];
• [...][Packaging information and quantities] ;
• can be used in cooking, baking, and making coffee, tea, or alcoholic beverages;
• [...][Usage of the product];
• [...][Additional description];
• [...][Additional description];
• [...];
• [...][Nutrition factor];
• [...][Additional description]; and
• [...][Additional nutritional properties].
2. The "Nutrition Facts" sheet received from you shows the following: [...]
Ruling Requested
You would like confirmation that supplies of the Product are zero-rated under section 1 of Part III of Schedule VI to the ETA.
Ruling Given
Based on the facts set out above, we rule that supplies of the Product are zero-rated under section 1 of Part III of Schedule VI to the ETA. The Product is not captured by any of the exclusionary paragraphs of (a) to (r) in that section.
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
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, unless the supply is zero-rated (listed in Schedule VI to the ETA and subject to the GST/HST at the rate of 0%) or exempt (listed in Schedule V to the ETA and 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 the GST/HST Memoranda Series 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 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.
Your Company labels the Product as [...] agave syrup, advertises the Product as a pure sweetener, and markets the Product as an alternative to sugar, [...]. The Product is used, recognized, and commonly sold as an ingredient of food. The primary use of the Product is to impart a sweet taste to food and drink to which it is added. Thus, we consider the Product to be an ingredient.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 905-721-5217. 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,
Denise Chan
Basic Groceries & Point-of-Sale Rebates Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
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