25 June 2003 GST/HST Ruling 44625 - Application of GST/HST to Protein Bars

Dear XXXXX:

Thank you for your letters XXXXX, with attachments, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to XXXXX Protein Bars (the product).

Statement of Facts

1. The product is distributed in Canada by XXXXX[.]

2. The product is sold in XXXXX gram bar form and may be consumed immediately.

3. The product is individually wrapped in boxes of XXXXX and is intended for sale by the box, not individually. XXXXX[.]

4. The box promotes the product as a healthy, nutritional snack that is an alternative to candy or fast food and provides a good source of protein.

5. Each bar provides XXXXX calories or XXXXX Kilojoules and contains XXXXX grams of protein and in view of the Recommended Daily Intake of protein being XXXXX grams, the recommended daily serving is XXXXX bars per day.

6. The XXXXX also promotes the product as being a useful aid in weight loss.

7. The product is available in XXXXX flavour and has a coating that is similar in texture and substance to chocolate.

8. The box states that the product XXXXX[.]

Ruling Requested

What is the tax status of the product?

Ruling Given

Based on the facts set out above, we rule that the product is taxable at 7%, (or 15% as applicable) pursuant to section 165 of the Excise Tax Act.

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 our interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Explanation

Taxable supplies of goods and services made in Canada are generally subject to tax at 7% (or 15% where the supplies are made in one of the provinces participating in the HST). However, "zero-rated" supplies of goods and services are subject to tax at 0%. A zero-rated supply is any supply included in Schedule VI to the Excise Tax Act ("the Act").

Section 1 of Part III of Schedule VI to the Act zero-rates supplies of food or beverages for human consumption ("basic groceries") and sweetening agents, seasonings and other ingredients mixed with or used in the preparation of such food or beverages, unless one of the exclusions set out in paragraphs 1(a) through 1(r) applies.

In accordance with paragraph 1(e) of Part III of Schedule VI of the Act, the following products are taxable at 7%, or 15% if applicable:

"candies, confectionery that may be classed as candy, or any goods sold as candies, such as candy floss, chewing gum and chocolate, whether naturally or artificially sweetened, and including fruits, seeds, nuts and popcorn when they are coated or treated with candy, chocolate, honey, molasses, sugar, syrup or artificial sweeteners."

As noted in the statement of facts, the product is promoted as an alternative to candy and has a coating that makes the bar similar in texture and substance to a chocolate bar. As such, the product falls under this exclusion and is taxable at 7%, or 15% as applicable.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-9218.

Yours truly,

Nicole Thomas
Goods Unit
General Operations & Border Issues Division
Excise and GST/HST Rulings Directorate