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.
[Addressee]
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 128789
January 4, 2011
Dear [Client]:
Subject:
GST/HST RULING
Taxable status of good sold in packages of six [...]
Thank you for your letter of September 23, 2010, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to [names of frozen bars].
HST applies at the rate of 15% in Nova Scotia, 13% in Ontario, New Brunswick, and Newfoundland and Labrador, and 12% in British Columbia. 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. You have requested a ruling regarding the tax status of two products: [...] (Product A), and [...] (Product B).
2. You state that Products A and B are sold packaged containing multiples of six per box, thus they should be taxable at 0% (zero-rated).
3. The Products A and B are [...] bars, sold at the retail level in a square cardboard box package containing six individually packaged [...] with weights of [...]g each.
4. Products A and B are sold ready to serve.
5. Ingredients of Product A are: [...].
6. Ingredients of Product B are: [...].
Ruling Requested
You would like to know how the GST/HST applies to the supplies of Product A and Product B.
Ruling Given
Based on the facts set out above, we rule that Product A and Product B are subject to the GST at the rate of 5% or HST at the applicable rate where the supply is made in a participating province under section 165 of the ETA and paragraph 1(k) 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
Supplies of property or services made in Canada are either taxable supplies or exempt supplies. Exempt supplies are listed in Schedule V and are not subject to the GST/HST. Taxable supplies are either subject to the GST at the rate of 5% or HST at the applicable rate where the supply is made in a participating province, or are zero-rated supplies (taxable at the rate of 0%) listed 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(k) of Part III of Schedule VI excludes from zero-rating: ice cream, ice milk, sherbet, frozen yoghurt or frozen pudding, non-dairy substitutes for any of the foregoing, or any product that contains any of the foregoing, when packaged or sold in single servings. Products such as those itemised in paragraph 1(k) are considered to be "packaged as single servings" if each individual serving is packaged in its own right. Further, they are considered to be "sold in single servings" if they are designed and marketed for sale as single servings.
Paragraph 77 of GST/HST Memorandum 4.3 Basic Groceries explains that for GST/HST purposes, the volume or weight of a single serving of any of the products listed in paragraph 1(k) of Part III of Schedule VI is a package or unit of less than 500 ml when measured by volume, or less than 500 grams when measured by weight.
In paragraph 79 of GST/HST Memorandum 4.3 it states that paragraph 1(k) of Part III of Schedule VI does not differentiate between the supply of an individual single serving and the supply of a package containing multiples of single servings. As long as the products are in single serving sizes, the tax applies regardless of the number of single servings in the package. For example, a box containing twelve ice cream sandwiches where each portion is 75 ml, and where each is individually wrapped, would not be zero-rated. As the product in question is individually wrapped, it is considered "packaged in single servings" and as it is designed and marketed for sale in single servings it is considered to be "sold in single servings". The product therefore is excluded from zero-rating by paragraph 1(k) of Part III of Schedule VI.
For further information on the application of GST/HST to basic groceries, refer to GST/HST Memorandum 4.3, Basic Groceries, which is available on the CRA Web site.
You stated it was your understanding that single servings of food products are zero-rated when sold in quantities of six or more. This provision applies to products which are described in paragraph 1(m) of Part III of Schedule VI, such as cakes, muffins, pies or similar sweetened baked goods. Paragraph 87 to 100 of GST/HST Memorandum 4.3 explains the application of paragraph 1(m).
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,
Angela Stachowski
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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