4 February 1999 GST/HST Interpretation HQR0001113 - The Application of the GST/HST to Food Sold on Trays

Dear XXXXX

Thank you for your letter of March 16, 1998, (with attachments), and facsimile messages of March 12 and 23, 1998, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to your operations. We apologize for the delay in our response.

Interpretation Requested

You sent photographs of four distinct food products and asked whether they constitute platters of prepared food for the purpose of the basic groceries provisions of the Excise Tax Act. Each product comprises a flat or nearly flat tray holding several individual servings of prepared food. The trays are either wrapped in cellophane or covered with a clear plastic shell. During our telephone conversation on July 20, 1998, you clarified that at this time you are not seeking a ruling for each of the four products at issue. Rather, you would like an interpretation to help guide your thinking not only about the four products, but about similar products as well.

Interpretation Given

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). Nevertheless, "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.

Section 1 of Part III of Schedule VI, entitled "Basic Groceries", zero-rates supplies of food, beverages, and qualifying ingredients unless one of the exceptions set out in paragraphs 1(a) through 1(r) applies.

Paragraph 1(o.3) of Part III of Schedule VI excludes "platters of cheese, cold cuts, fruit or vegetables and other arrangements of prepared food". Consequently, supplies of such food arrangements are subject to tax at 7% (or 15% where the supply is made in a province participating in the HST).

A cheese, cold cut, fruit or vegetable platter, is a food arrangement served on a dish, plate, or similar piece of servingware (i.e., something on which the arrangement is likely to be served). The arrangement is usually intended to achieve a desired visual effect. It requires little or no additional preparation and is normally served as a whole to two or more people. The composition of the servingware is unimportant; it may be reusable (e.g., metal) or disposable (e.g., plastic). Supplies of such platters clearly fall within the scope of paragraph 1(o.3) and are therefore subject to tax at 7% (or 15% where the supply is made in a province participating in the HST).

Nevertheless, paragraph 1(o.3) also excludes "other arrangements of prepared food". It is the Department's position that, although this wording allows for the inclusion of arrangements other than platters, it is not intended to be construed so broadly as to capture any arrangement of prepared food; rather, it is only intended to apply to arrangements with characteristics similar to those of food platters. Therefore, to fall within the scope of paragraph 1(o.3), an arrangement of prepared food should generally be presented on a piece of servingware (i.e., something on which the prepared food is likely to be served), be intended to achieve a desired visual effect, require little or no additional preparation, and normally be served as a whole to two or more people.

Note that platters and other arrangements of prepared food will fall within the scope of paragraph 1(o.3) regardless of whether they are sold in a form suitable for immediate consumption. For example, a frozen arrangement of prepared food would fall within the scope of 1(o.3) notwithstanding that it must be thawed before it can be consumed.

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the Excise Tax Act, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST/HST Memoranda Series, do not bind the Department with respect to a particular situation.

For your convenience, find enclosed a copy of section 1.4 of Chapter 1 of the GST/HST Memoranda Series.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (403) 231-4104.

Yours truly,

John W. Smith
Goods Unit
General Operations and Border Issues Division
GST/HST Rulings and Interpretations Directorate