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.
GST/HST Rulings Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 205393
Business Number: […]
Dear: [Client]
Subject: GST/HST RULING
Application of GST/HST on the supply of […][a baked product]
Thank you for your request of [mm/dd/yyyy] concerning the application of GST/HST to the supply of […](the Product). We apologize for the delay in responding.
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
1. […][Information about the vendor][…].
2. […].
3. […][Information about the Product].
4. The Product is available in [...][several] flavours: […].
5. The ingredients of the Product in the various flavours are as follows: […]
6. The Product is [small and] […] in shape and measures […][less than 50mm by 50mm].
7. The Product is packaged loosely in a bag with a total weight of [...] grams per bag.
8. The packaging indicates that the Product is […][baked and crispy].
9. The placement of the Product is in the cracker aisle of supermarkets and grocery stores.
RULING REQUESTED
You would like to know if the supply of the Product is a zero-rated supply under section 1 of Part III of Schedule VI.
RULING GIVEN
Based on the facts set out above, we rule that the supply of the Product is a zero-rated supply under section 1 of Part III of Schedule VI.
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. Zero-rated supplies are subject to the GST/HST at the rate of 0%. Zero-rated supplies are supplies that are included in Schedule VI.
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 to be 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 (f) of section 1 of Part III of Schedule VI to the ETA excludes from zero-rating the following:
“chips, crisps, puffs, curls or sticks (such as potato chips, corn chips, cheese puffs, potato sticks, bacon crisps and cheese curls), other similar snack foods or popcorn and brittle pretzels, but not including any product that is sold primarily as a breakfast cereal.”
Paragraph 56 of GST/HST Memorandum 4.3, Basic Groceries (GST/HST Memo 4.3) outlines the factors that are used to determine if a particular product is similar to a chip, crisp, puff, curl or stick as described under paragraph 1(f). These factors include the properties of the product (ingredients, flavours, texture, cooking process and appearance), its labelling, its packaging, and its marketing.
The Product has different properties than those found in products excluded under paragraph 1(f). More specifically, the Product has wheat flour as opposed to potato, corn or corn meal as its main ingredient and has the look, thickness and texture of a traditional cracker. In addition, the Product is labelled as a cracker and is marketed and packaged in a manner similar to crackers. As neither paragraph (f) or any of the other exclusionary paragraphs of section 1 of Part III of Schedule VI apply, supplies of the Product are zero-rated.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the ruling(s) given in this letter provided that: none of the issues discussed in the ruling(s) are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed. The interpretation(s) given in this letter, including any additional information, is not a ruling and does not bind the CRA with respect to a particular situation. Future changes to the ETA, regulations, or the CRA's interpretative policy could affect the interpretation(s) or the additional information provided herein.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (905) 429-1696. 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,
Siraj Patel, CGA, CPA
Senior Rulings Officer
Basic Groceries and Recaptured Input Tax Credits Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
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