Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.
Excise and GST/HST Rulings
Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
XXXXX
XXXXX
XXXXX
Case Number: 107587Business Number: XXXXX
Attention: XXXXX
November 13, 2008
Subject:
GST/HST RULING
XXXXX
Dear XXXXX:
Thank you for your XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to XXXXX (the Product).
HST applies at the rate of 13% in the participating provinces of Nova Scotia, New Brunswick and Newfoundland and Labrador. GST applies at the rate of 5% in the remaining provinces and territories.
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. XXXXX (the Product) is manufactured by XXXXX.
2. The Product is sold in an assorted format with XXXXX servings of XXXXXg each, packaged in corrugated card by the manufacturer. In the XXXXX package format there are XXXXX varieties: XXXXX.
3. The base ingredients for each flavour are XXXXX
4. The web site for XXXXX provides the following information about the Product:
XXXXX
XXXXX
Ruling Requested
You would like to know how the GST/HST applies to supplies of the Product in multiples of XXXXX -XXXXXg containers pre-packaged by the manufacturer.
Ruling Given
Based on the facts set out above, we rule that supplies of the Product in multiples of XXXXX-XXXXXg containers pre-packaged by the manufacturer are zero-rated under section 1 of Part III of Schedule VI.
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, every recipient of a taxable supply made in Canada shall pay tax calculated at the rate of 5% on the value of the consideration for the supply (or 13% in the participating provinces of Nova Scotia, New Brunswick, and Newfoundland and Labrador) unless the supply is zero-rated. Zero-rated supplies are included in Schedule VI. The tax rate in respect of a zero-rated supply is 0%.
Under Part III of Schedule VI, certain supplies of basic groceries are zero-rated. 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.
In determining the tax status of a particular product, it is the composition of each particular product that must be considered to determine if a particular product is a food or beverage for human consumption which is eligible for zero-rating. Consideration was given that the Product may be yoghurt, as yoghurt supplied in all sizes of servings is generally zero-rated for purposes of section 1 of Part III of Schedule VI, unless there are other exclusions in paragraphs 1(a) to (r) that apply.
Yoghurt is a dairy product produced by bacterial fermentation of milk. Fermentation of the milk sugar (lactose) produces lactic acid which acts on milk protein to give yoghurt its texture and its characteristic tang. Generally, "XXXXX" is prepared using XXXXX, yoghurt bacteria and sometimes additional sweetener, like fructose, glucose, honey or raw sugar. As the Product is not made with milk, we do not consider it to be yoghurt.
Supplies of beverages (other than unflavoured milk), or pudding, including flavoured gelatine, mousse, flavoured whipped dessert product or any other products similar to pudding are excluded from zero-rating under paragraph 1(n) of Part III of Schedule VI, except
(i) when prepared and pre-packaged specially for consumption by babies,
(ii) when sold in multiples, pre-packaged by the manufacturer or producer, of single servings, or
(iii) when the cans, bottles or other primary containers in which the beverages or products are sold contain a quantity exceeding a single serving.
Consideration was given to the Product being included in "other products similar to pudding". The definition of pudding is a dessert of a soft, spongy, or thick creamy consistency. The Product is described as similar in texture and consistency to dairy yoghurt, which has a custard-like consistency. Therefore, the Product is considered to be an "other product similar to pudding" based upon its texture.
As the Product is considered to be similar to pudding, the supply will fall under subparagraph 1(n)(ii) of Part III of Schedule VI. This paragraph does not exclude from zero-rating products similar to pudding when such products are sold in multiples of single servings pre-packaged by the manufacturer. For puddings and similar products, a single serving includes all servings weighing less than 425 grams. The Product is prepackaged by the manufacturer in XXXXX x XXXXXg containers.
As the Product is a food that is not included in any of paragraphs (a) to (r) of section 1 of Part III of Schedule VI, supplies of the Product are zero-rated under section 1 of Part III of Schedule VI.
Please note that the above ruling applies to the supply of the Product when sold in multiples prepackaged by the manufacturer. If the Product is sold in other formats, the GST/HST application may change.
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,
Nancy Jardine
Goods Unit
General Operations and Borders Issues Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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