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: 134819
August 8, 2011
Dear Mr. [Client]:
Subject:
GST/HST RULING
Application of GST/HST to supplies of [...] Stevia products
Thank you for your letter of April 20, 2011, requesting a review of the Canada Revenue Agency's position on the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) with respect to supplies of [...] Stevia products.
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
We understand:
1. [...] Stevia products (the Products) are sold in [...] formats: packages containing [...] called [...] (Product A); packages containing [...] (Product B); and a package containing [...] (Product C).
2. Product A is available in [...] varieties.
3. The Product A label states: [...] [Source and ingredients described]
4. The Product B label states: [...] [Source, uses, benefits and ingredients described]
5. The Product C label states: [...] [Source, uses and ingredients described]
6. Product Website states: [...] [Uses and benefits described]
Ruling Requested
You would like to know how the GST/HST applies to supplies of the Products.
Ruling Given
Based on the facts set out above, we rule that supplies of the Products are taxable at 5% GST or, 12%, 13%, or 15% HST as applicable, pursuant to section 165.
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 (HST applies at the rate of 15% in Nova Scotia, 13% in New Brunswick, Newfoundland and Labrador, and Ontario, and 12% in British Columbia) 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.
The preamble to section 1 of Part III of Schedule VI zero-rates the following:
"Supplies of food or beverages for human consumption (including sweetening agents, seasonings and other ingredients to be mixed with or used in the preparation of such food or beverages, other than supplies of"
Paragraphs 1(a) to (r) contain exclusions from zero-rating. None of the exclusions apply to Product. However, whether or not the exclusions apply is not the issue in this case. The question is whether the Product qualifies as food or a beverage (or an ingredient) for human consumption under the preamble.
The words "food", "beverages" and "ingredients" are not defined in the ETA. GST/HST Memoranda Series 4.3, Basic Groceries, addresses the question of whether products commonly described as "dietary supplements" are zero-rated as foods, beverages or ingredients. It also provides explanations of the meanings of food, beverages and ingredients. Memorandum 4.3 states:
"Food and beverages are usually consumed by an average person to sustain or maintain life, to allay hunger or thirst, or for enjoyment. Ingredients add to the flavour, texture or appearance of the final product. Products commonly referred to as dietary supplements are consumed for their therapeutic or preventative effects (e.g., to correct actual or perceived health problems), or to achieve specific beneficial effects related to performance or physique."
Products commonly described as dietary supplements are not considered to be basic groceries. Dietary supplements include products such as vitamins, minerals, tonics, fibre, protein powders and herbal supplements. These products are generally taken for their therapeutic or beneficial effects and are available in various forms including pill, capsule, tablet, powder, liquid gel, wafer and concentrates. Although these products may contain some essential nutritional elements, they are not considered to be basic groceries.
The status of stevia under the regulations governing the use of food additives in Canada is also a factor which the Canada Revenue Agency must consider. Table IX of Division 16 of Part B of the Food and Drug Regulations of the Food and Drug Act lists sweeteners or sweetening agents that are permitted to be used in foods. We note that stevia is not listed in Table IX, nor is it found in any other part of the regulations that would allow for its sale as a sweetening agent or table-top sweetener.
Health Canada has issued specific guidelines regarding stevia and its use including recommended limits on its consumption. Per Health Canada "Notice" dated September 18, 2009 - Revised Guidelines for the Use of Stevia in Natural Health Products: As a non-medicinal ingredient, it should not exceed 4 mg/kg body weight per day expressed as steviol content.
It is only by virtue of its use as a dietary supplement that the sale of stevia is permissible. Given the regulatory restriction on the sale of stevia, supplies of the Products are not zero-rated.
For your convenience, find enclosed a copy of GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service.
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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