29 May 2003 GST/HST Ruling 45243 - Application of GST/HST on Bars in Blueberry and Strawberry

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 facts described below.

Statement of Facts

Our understanding of the facts is as follows:

1. XXXXX[.]

2. The Bars come in two packaging formats; in cartons of XXXXX and XXXXX bars sold to retail grocery store customers.

3. The Bars are individually wrapped XXXXX.

4. The main ingredient of the Bars XXXXX[.]

5. The Bars are labelled, XXXXX.

Ruling Requested

You have requested a ruling concerning the application of GST/HST to the Bars.

Ruling Given

Based on the facts set out above, we rule that the supply of the Bars, sold individually are subject to GST/HST at the applicable rate of 7% or 15% pursuant to section 165. The supply of the Bars, sold in boxes of XXXXX or XXXXX are zero-rated pursuant to section 1 of Part III of Schedule VI to the Excise Tax Act ("ETA").

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%.

The supply of basic groceries, which includes the majority of supplies of food and beverages marketed for human consumption (including sweetening agents, seasonings and other ingredients to be mixed with or used in the preparation of such food or beverages), is zero-rated pursuant to section 1 of Part III of Schedule VI to the ETA, unless one of the exclusions set out in paragraphs 1(a) through 1(r) applies.

According to paragraph 1(m) of Part III of Schedule VI to the ETA, the following products are taxable at 7% or 15%:

(m) 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;

It is the CCRA's position that the Bars are considered "similar products" for the purposes of paragraph 1(m) of Part III of Schedule VI to the ETA. As such, when the Bars are sold in consumer packages containing 6 or more single servings, the supply of these products will be zero-rated. However, when these products are sold individually, or in consumer packages of less than 6 single servings, the supply will be 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 613-952-9585.

Yours truly,

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

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