16 November 2006 GST/HST Interpretation 84342 - XXXXX Retirement Residences

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.

Dear XXXXX:

Thank you for your request 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) and the regulations thereunder, unless otherwise specified.

Statement of Facts

Our understanding of the facts is as follows:

1. The Product is sold in XXXXX-gram plastic tray with a cardboard/paper covering.

2. The tray is XXXXX.

3. XXXXX.

4. XXXXX.

5. The Product's labelling indicates that the XXXXX.

6. XXXXX.

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 taxable at 6% GST or 14% HST pursuant to section 165.

This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Goods and Services Tax Rulings. We are bound by this ruling provided that none of the above issues is 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 6% on the value of the consideration for the supply (14% in the participating provinces of Nova Scotia, New Brunswick, and Newfoundland and Labrador) unless the supply is zero-rated, pursuant to subsection 165(3). The tax rate in respect of a zero-rated supply is 0%, where 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(o.3) of Part III of Schedule VI excludes from zero-rating "platters of cheese, cold cuts, fruit or vegetables and other arrangements of prepared food". Consequently, supplies of such food arrangements are subject to the GST at 6% or the HST at 14%. The ETA does not define platter. Generally, a platter is a large flat dish or plate for serving food. The container in which the Product is supplied is not flat, or large and so does not fit the definition of platter.

The phrase "other arrangements of prepared food" is intended to apply to arrangements with characteristics similar to platters of cheese, cold cuts, fruit or vegetables. Policy Statement P-232, Meaning of "Other Arrangements of Prepared Food" (attached hereto), lists 3 criteria describing the characteristics that other arrangements of prepared food must have in order to be considered similar to platters of cheese, cold cuts, fruit or vegetables. Such arrangements should:

•   Be presented on a piece of serving ware (i.e., something on which the prepared food is likely to be served);

•   Be deliberately configured to create a visual effect so that it appears likely to be served in the same form in which it is sold. (note: care is usually taken to make most retail food products visually attractive, but few are deliberately arranged to create a visual effect that indicates they are intended to be set out on a table in the same form in which they are sold); and

•   Require little or no additional preparation (e.g., "cooking" or "heating" would generally constitute additional preparation, whereas "thawing" generally would not).

The shape and configuration of the Product tray enable it to be used as serving ware. XXXXX. As a result, the Product tray is likely to be used to serve the XXXXX.

The configuration of the tray XXXXX creates a visual effect so that the Product will likely be served in the form in which it is sold. XXXXX.

Finally, little preparation is required in order to serve the XXXXX. XXXXX.

Based on the application of Policy Statement P-232, Meaning of "Other Arrangements of Prepared Food" and the criteria contained therein, supplies of the Product are excluded from zero-rating under VI/III/1(o.3) and are taxable at 6% GST or 14% HST as "other arrangements of prepared food".

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 952-9585.

Yours truly,

Ben Boboski
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

2006/11/20 — RITS 85060 — XXXXX Pita Chips - XXXXX