Information and Disclaimer
This interpretation letter was issued based on the specific circumstances or situation of a taxpayer or vendor and the law and tax policy in effect at the time the ruling was issued. Specific facts relevant to your situation may change the application of the tax. In accordance with the Freedom of Information and Protection of Privacy Act, all confidential and identifying information has been removed from this interpretation letter. Please be aware that any statute or policy referred to in this letter may have been superseded. Where a letter contains links to a publication, the link is to our current publication on that subject, regardless of the date that the ruling was originally issued, and the current publication may not be reflective of the information originally provided. In no event shall the Government of Ontario be liable for any damages whatsoever arising out of, or in connection with, the use of the information contained herein.
Interpretation Letter MF-0015, June 20, 2001
Thank you for your facsimile dated May 4, 2001 regarding the application of Ontario retail sales tax (RST)
to the sale of chocolate bars for fondue use by your client.
We acknowledge receipt of your client's written authorization to correspond with you on their behalf.
Understanding of Facts
It is our understanding that your client, Company A, is planning on operating a factory of chocolate bars
used for fondues. The factory will purchase semi-sweet chocolates and pure chocolate milk in bulk. The
chocolate will be melted and mixed in an incubator at a temperature of 45°Celsius to ensure crystallization
of the mix. This mix will then be mechanically transferred in a colder incubator to cool the chocolate down
to a temperature of 30° Celsius. At this stage, almonds will be added to the chocolate and chocolate bars
will be moulded and cooled in a cool room. Once this process is complete, the bars will be manually
packaged and sold. Most of the bars will be sold commercially. However, some may be sold to charities
for fund-raising purposes. You provided a copy of a packaging label for our review of the ingredients and
cooking instruction for a chocolate fondue. You enquire as to whether the chocolate bars for fondues
would qualify as food product for human consumption and therefore, be exempt from RST.
Legislation and/or Administrative Policy
Subsection 7(1)1 of the Ontario Retail Sales Tax Act (Act) exempts the sale of food products for human
consumption except,
- candies, confections, snack foods and soft drinks, other than soft drinks sold with
prepared food products from an eating establishment, as defined by the Minister, at a total
price for all soft drinks and prepared food products sold as part of the transaction that
does not exceed four dollars,
Section 1 in Regulation 1013 of the Act provides the definitions of "food products", "candy", "confections"
and "snack foods" as follows:
"food products" includes poultry or other livestock purchased for human consumption, insulin,
vitamins, artificial sweeteners and any dietary supplement or adjunct that is not a drug or medicine,
but does not include liquor, beer, wine, chewing gum, lozenges, cat, dog, bird or other animal
foods, root beer extracts, malt and malt extracts;
"candy" does not include chocolate, sugar or honey sold for cooking purposes;
"confections" includes chocolate coated nuts and preparations of fruits, nuts or popcorn in
combination with chocolate, sugar or honey;
"snack foods" include potato chips, popcorn, salted nuts, pretzels, ice cream bars, popsicles or
individual portions of ice cream, however packaged, or snack cake or pastry packaged by the
manufacturer in individual portions for sale as such off the premises where the snack cake or
pastry is manufactured and includes any food or foods similar to snack cake or pastry but does not
include individual portions of prepackaged snack cake or pastry purchased from an eating
establishment;
Analysis & Conclusion
Chocolate bars that are packaged and sold for cooking purposes, are exempt from RST as food products
whether sold commercially or to others. Therefore, your client is not required to charge, collect and remit
RST on the sale of the chocolate bars.
Please note that your client may qualify as a manufacturer and be entitled to an exemption from RST on the
purchase of production machinery and equipment used directly in the production of chocolate bars.
Please see enclosed Ontario Sales Tax Guide 400 - "Manufacturers" for more information.
We are also enclosing Ontario Sales Tax Guides 500 - "Food Products" and 501 - "Snack Foods,
Beverages and Candies" for your information.
If you have any further questions, please contact our office.
