22 July 2003 GST/HST Ruling 44881 - Whether Sales of Qualify for Zero-rating as Fertilizers

Dear XXXXX

Thank you for your letter XXXXX (with attachments), concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the facts described below.

Statement of Facts

Our understanding of the facts is as follows:

1. XXXXX

2. XXXXX used in fertilizer applications.

3. XXXXX would directly provide a plant or crop with nutrients for both growth and crop yield.

4. XXXXX.

5. XXXXX provided a guaranteed analysis for XXXXX.

6. XXXXX is available in:

(a) XXXXX

(b) XXXXX

(c) XXXXX

7. As noted on the Material Safety Data Sheet

XXXXX:

"Product Use: Fertilizer, manufacture of explosives"

Ruling Requested

You have requested a ruling concerning the application of GST/HST to the supply of XXXXX[.]

Ruling Given

Based on the facts set out above, we rule that the supply of XXXXX when supplied in bulk or in a container that contains at least 25 kg of XXXXX, where the total quantity of XXXXX supplied is at least 500 kg, is zero-rated pursuant to section 5 of Part IV of Schedule VI to 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

Generally, every recipient of a taxable supply made in Canada shall pay to Her Majesty in right of Canada tax in respect of the supply calculated at the GST rate of 7% (or HST rate of 15%, as applicable) on the value of the consideration for the supply. Where, however, a supply is a zero-rated supply, the tax rate in respect of that supply is 0%.

Section 5 of Part IV of Schedule VI to the Excise Tax Act zero-rates the following supply:

"A supply of fertilizer (other than a good sold as soil or as a soil mixture, whether or not containing fertilizer) made at any time to a recipient when the fertilizer is supplied

(a) in bulk, or

(b) in a container that contains at least 25 kg of fertilizer

Where the total quantity of fertilizer supplied at that time to the recipient is at least 500 kg."

Pursuant to CCRA's Policy Statement P-235, "Meaning of Fertilizer", XXXXX satisfies the requirements needed to be a fertilizer. Therefore, when XXXXX is sold in bulk or in containers that contain at least 25 kg of XXXXX, where the total quantity of XXXXX supplied is at least 500 kg, XXXXX will be zero-rated.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at 613-952-9585.

Yours truly,

Cliff Lee
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate