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
XXXXX
Case Number110453
Attention: XXXXX
February 24, 2009
Subject:
GST/HST RULING
Tax status of XXXXX
Dear Mr. XXXXX:
Thank you for your letter of XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to XXXXX (the Product).
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 Product is available in two varieties: XXXXX (Variety A), and XXXXX (Variety B).
2. The Product consists entirely of XXXXX dried fruit and contains no other ingredients or additives.
3. The Product is sold by the box. Each box contains XXXXX bags, XXXXX of which are Variety A (XXXXX g per bag) and XXXXX of which are Variety B (XXXXX g per bag).
4. The labels of the Variety A and B bags state: "XXXXX".
5. The label of the Product box states: "XXXXX."
6. The Product is not sold primarily as a breakfast cereal.
Ruling Requested
You would like to know how the GST/HST applies to supplies of the Product.
Ruling Given
Based on the facts set out above, we rule that supplies of the Product are zero-rated pursuant to 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 (13% in the participating provinces of Nova Scotia, New Brunswick, and Newfoundland and Labrador) unless the supply is zero-rated. The tax rate in respect of a zero-rated supply is 0%. A zero-rated supply is a supply that is included in Schedule VI.
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.
Paragraph 1(i) of Part III of Schedule VI excludes the following from zero-rating:
"Snack mixtures that contain cereal, nuts, seeds, dried fruit or any other edible product, but not including any mixture that is sold primarily as a breakfast cereal;"
A "snack mixture" is described in GST/HST Info Sheet GI-021, Snack Foods, as a mixture of two or more of the ingredients noted in paragraph 1(i) of Part III of Schedule VI. A product containing two or more types of the same kind of ingredient, such as two or more kinds of dried fruit (e.g., dried apples and pears), would be considered a snack mixture and, therefore, taxable at 5% GST or 13% HST, as applicable.
A product containing only one type of fruit is not considered to be a snack mixture. Therefore, Variety A if supplied individually would not be excluded from zero-rating pursuant to paragraph 1(i) of Part III of Schedule VI.
The Canada Revenue Agency does not distinguish between different varieties of a particular kind of fruit; XXXXX for GST/HST purposes. As a result, packages containing XXXXX only are not snack mixtures for purposes of paragraph 1(i) of Part III of Schedule VI. Consequently, supplies of Variety B would not be excluded from zero-rating.
Generally, where a package contains multiples of similar foods or beverages, more than 50% of which are otherwise zero-rated goods, the supply of the package will be zero-rated. Where a package contains multiples of similar foods or beverages, 50% or less of which are otherwise zero-rated goods, the supply of the package will be taxable at 5% GST or 13% HST, as applicable. Boxes of the Product contain packages of a single fruit (either Variety A or Variety B) that are not considered a snack mixture and are not excluded from zero-rating under paragraph 1(i) of Part III of Schedule VI. As there are no other exclusions that apply, supplies of the Product are zero-rated under section 1 of Part III of Schedule VI.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-952-9585. 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,
Ben Boboski
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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