29 June 1999 GST/HST Ruling HQR0001697 - GST/HST Application to Trays of Sushi, Different Slices of Cake, and Box of Individually Wrapped Cookies

Dear XXXXX

Thank you for your letter of February 26, 1999, (with photos of various food items), concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the products described below.

Statement of Facts

Our understanding of the facts is as follows:

Sushi Product

1. You sent us two photographs of a product which consists of a flat (or nearly flat) rectangular black styrofoam platter containing several pieces (approximately twenty-four) of a variety of sushi products.

2. The sushi products are grouped on the tray according to the type of sushi (i.e., there are approximately seven different types of sushi products on the tray with each variety grouped together).

3. The sushi products are placed around a small plastic covered container of sauce which is in the center of the tray.

4. The tray is covered with transparent cellophane wrapping.

5. Writing on the photographs indicates that the tray of sushi products is referenced by XXXXX[.]

Cake Slices Product

1. You sent us one photograph of a product which consists of a flat (or nearly flat) round plastic platter containing fourteen equal-sized pieces of cake of various flavours.

2. There are two slices of each variety of cake which are placed side by side (i.e., there are a total of seven varieties of cake).

3. Each of the fourteen pieces of cake is separated from the other by a piece of wax paper.

4. The platter is covered with a round plastic dome.

5. Writing on the photograph indicates that the platter of cake is referenced by XXXXX[.]

Cookies Product

1. You sent us two photographs of a box of cookies with a logo that says "XXXXX"[.]

2. You stipulate in your letter that this product consists of several packages (forty-eight units with a weight of 37g per unit) of individually wrapped cookies (two per unit).

3. You also stipulate that the product bears all of the required information under the Consumer Packaging and Labelling Act.

4. In addition, you stipulate that the box may be used by retailers as a display box, from which consumers may help themselves to the cookies.

Ruling Requested

1. You request a ruling as to whether the sushi product falls within the scope of paragraph 1(o.3) of Part III of Schedule VI of the Excise Tax Act as an "other arrangement of prepared food".

2. You request a ruling as to whether the product consisting of several pieces of cake falls within the scope of paragraph 1(o.3) of Part III of Schedule VI of the Excise Tax Act as an "other arrangement of prepared food".

3. You request a ruling as to whether the product consisting of several packages of two individually wrapped cookies contained in a display box falls within the scope of paragraph 1(m) of Part III of Schedule VI of the Excise Tax Act as a supply of cookies "prepackaged for sale to consumers in quantities of less than six items each of which is a single serving".

Ruling Given

Based on the facts set out above, we rule that:

1. Supplies of several pieces of sushi products placed around a plastic covered container of sauce which is in the center of a flat (or nearly flat) rectangular black styrofoam tray and covered with transparent cellophane wrapping are zero-rated as they do not fall within the scope of paragraph 1(o.3) of Part III of Schedule VI of the ETA as an "other arrangement of prepared foods".

2. Supplies of a product which consists of a flat (or nearly flat) round platter containing fourteen equal-sized pieces of cake of seven different flavours with a piece of wax paper separating each slice of cake from the other are zero-rated as they do not fall within the scope of paragraph 1(o.3) of Part III of Schedule VI of the ETA as an "other arrangement of prepared foods".

3. Supplies of a product which consists of several packages (forty-eight units with a weight of 37g per unit) of individually wrapped cookies (two per unit) contained in a box which may be used by retailers as a display box from which consumers may help themselves to the cookies falls within the scope of paragraph 1(m) of Part III of Schedule VI of the ETA as a supply of cookies "prepackaged for sale to consumers in quantities of less than six items each of which is a single serving" and, as such, are subject to the GST/HST.

Explanation

Ruling #3 (Cookies Product)

Cookies and pastries are potentially subject to the GST/HST under paragraph 1(m) of Part III of Schedule VI to the ETA. Under the provision, the following is subject to the GST/HST:

"cakes, muffins, pies, pastries, tarts, cookies, doughnuts, brownies, croissants with sweetened filling or coating, or similar products where

(i) they are prepackaged for sale to consumers in quantities of less than six items each of which is a single serving, or

(ii) they are not prepackaged for sale to consumers and are sold as single servings in quantities of less than six, but not including bread products, such as bagels, English muffins, croissants or bread rolls, without sweetened filling or coating;"

Under this provision, when cookies are prepackaged for sale to consumers in quantities of less than six (e.g., a cellophane package of two single serving cookies as in the cookie product described), the supply is taxable at 7% or 15%.

If two or more packages are supplied in a larger consumer package (containing the required information under the Consumer Packaging and Labelling Act), where the total number of single servings is six or greater, the supply is zero-rated under paragraph 1(m). However, the larger package must be a consumer package, not a shipping carton or display box designed for use by retailers, for the supply to be zero-rated.

In the case of the cookies product, the product consists of several packages of two individually wrapped cookies contained in a box which may be used by retailers as a display box. As such, the cookie product falls within the scope of paragraph 1(m) of Part III of Schedule VI to the ETA and is subject to the GST/HST.

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act, or to departmental interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 957-8253.

Yours truly,

Gisèle Prévost
Goods Unit
General Operations and Border Issues Division
GST/HST Rulings and Interpretations Directorate