15 March 2001 GST/HST Ruling 30724 - Tax Status of

Dear XXXXX:

This is in reply to your letter of April 5, 2000, sent to our XXXXX office on the above-noted subject. Your inquiry has been forwarded to our office for direct reply. You asked whether the Goods and Services Tax ("GST")/Harmonized Sales Tax( "HST") applies to the chocolate flavoured XXXXX powdered drink mix ("the product"). Our comments are set out below.

Please accept our apologies for the delay in answering your letter.

Statement of Facts

Our understanding of the facts is as follows:

1. Product labelling indicates that the product is marketed as a food supplement, designed to provide users with high-quality protein and carbohydrates, as well as vitamins, minerals and other important micronutrients. The product is available in XXXXX gram packets. Directions for use indicate that a packet is to be mixed with XXXXX milliliters of partly skimmed milk and mixed in a blender or shaker.

2. The XXXXX has information on XXXXX, which is assumed to be the same product described in Item 1, above. Using the XXXXX XXXXX, the product supplies XXXXX grams of high-quality proteins, which includes ion-exchanged whey proteins. The formula also includes XXXXX amino acids, L-glutamine and taurine. Each serving of the product contains XXXXX grams of carbohydrates and only XXXXX grams of fat.

Ruling Requested

Is the chocolate flavour of the product zero-rated, pursuant to section 1 of Part III of Schedule VI to Excise Tax Act ("the Act")?

Ruling Given

Based on the facts set out above, we rule that the chocolate flavour of the product is zero-rated, pursuant to section 1 of Part III of Schedule VI to the Act.

Explanation

Section 1 of Part III of Schedule VI to the Act states that supplies of food or beverages for human consumption (including sweetening agents, seasonings and other ingredients to be mixed with or to be used in the preparation of such food or beverages) are zero-rated, except for the supplies excluded from zero-rating, which are set out in paragraphs (a) to (r) of that section.

We have reviewed all relevant exclusions to zero-rating in section 1 of Part III of Schedule VI and have determined that none apply to the product. Therefore, the chocolate flavour of the product is zero-rated, for the purposes of the GST or HST, as applicable.

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.

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,

Pauline Greenblatt
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate