GST/HST Notice 91
February 26, 1999

The following interpretation is in response to requests for clarification of the application of the Goods and Services Tax (GST) to supplies made by "Brew on Premises" operators.

WINE AND BEER MAKING SUPPLIES FOR HOME USE

• Sales of wine and beer making kits for home use containing ingredients only are zero-rated (i.e., taxed at 0%).
• The supply of juice or concentrate for home use is a zero-rated ingredient.
• Sales of wine and beer making kits that contain both ingredients and apparatus, equipment or materials, such as a container with valves for the purpose of brewing or fermenting the product in the container are subject to the GST at 7%.

SUPPLIES OF SERVICES AND GOODS FOR USE ON PREMISES

Multiple supplies of ingredients and services

• The wine or beer making ingredients are zero-rated where there is clear evidence that they are sold to the customer prior to the beginning of the wine or beer making process and they are held by the operator in their processed form under a contract of bailment in a clearly segregated and identified manner until they are returned to the customer. In this case, multiple supplies would be considered to have been made (i.e., a supply of ingredients and a supply of services). Amounts charged for the services or the use of equipment/facilities provided by the operator as bailee or otherwise will be subject to GST at 7% including the cost of any additional wine or beer making ingredients that are not held by the operator under the contract of bailment in a clearly identified and segregated manner.
• Where there is combined consideration for a supply of ingredients and services, the consideration attributed to each of the supplies must be reasonable.

Single supply

• Where an operator provides services or the use of equipment/facilities only (i.e., a customer brings in their own ingredients purchased elsewhere), the supplies by the operator are subject to GST at 7%.
• Effective April 1, 1999, unless there is a contract of bailment as described above, the operator will be considered to have made a single supply of a service. This supply would be subject to GST at 7% even though the total amount charged includes the cost of any wine and beer making ingredients and even if the ingredients are listed separately on the invoice.

At present, "Brew on Premises" businesses operate only in the provinces of Ontario and British Columbia.

The term "bailment" means the delivery of property owned by the customer for a particular use or on mere deposit, on the understanding that after the purpose has been fulfilled, the property shall be returned to the customer, or otherwise dealt with according to the customer's direction, as the case may be.

For further information regarding this matter, including information regarding possible excise obligations, please contact your nearest Revenue Canada tax services office.