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Be aware of GST charges on prepackaged  sweetened baked goods, similar products

Outdoor Silo Trouble

This is article contains information about GST charges incurred on prepackaged sweetened baked goods and similar products. The information came from a Revenue Canada web-site and was found by Fred Tappen:

The vast majority of sweetened baked goods and similar products sold for home consumption such as whole cakes, pies, or family sized packages of cookies, donuts or muffins are zero-rated for GST. However, products such as cookies, donuts, muffins or similar products are taxable at 7% (15% in Nova Scotia, New Brunswick and Newfoundland) where: the goods are prepackaged for sale to consumers in quantities of less than six items each of which is a single serving; or the goods are not prepackaged and are sold as single servings in quantities of less than six.

Bread products such as bagels, English muffins, raisin bread, and croissants are zero-rated regardless of the quantities in which they are packaged or sold, provided they do not have a sweetened filling or coating.

Goods are often prepackaged for sale to consumers by the manufacturer of these goods. In most circumstances, manufacturer's packaging must meet the requirements imposed under the Consumer Packaging and Labelling Act.

Therefore, the packaging must provide information about certain characteristics of the goods such as ingredients and net weight. Goods sold in packages which provide this information are generally considered to be "prepackaged for sale to consumers" for GST/HST purposes.

The presence of a Universal Product Code (UPC) bar, read by scanner-type point-of-sale equipment, provides evidence that a product has been prepackaged for sale to consumers. But, since UPC bars are not required under the Consumer Packaging and Labelling Act, an absence of one does not necessarily indicate that goods have not been prepackaged.

Some goods may have more than one level of packaging. For example, a "twelve-pack" of tarts may contain six packages of two tarts each. Such a product will be considered to be prepackaged for sale to consumers if there is evidence that the "twelve-pack" is intended to be sold as one unit.

If it is not intended to be sold as one unit, for example, if the package is designed for use as a retail display carton from which the "two-packs" are to be sold individually, then the product will not be considered to be prepackaged for sale to consumers. Both the "two-packs" when sold individually, and the "twelve-packs" will be taxable at 7% (or 15% if sold in or delivered to Nova Scotia, New Brunswick or Newfoundland).

Goods which have been bagged or boxed by a retailer for retail purposes are considered to be prepackaged for sale to consumers, provided they are bagged or boxed before they are offered for sale. Where goods are bagged or boxed at the time of sale, they are not considered to be prepackaged.

Prepackaged goods are discussed further in Memorandum 4.3 of the Memorandum Series, Basic Groceries.

Product can build up on the interior wall, filters get plugged solid, mould builds in flour silos, discharge is hampered by lumps or bridging, and the list goes on. However, by taking action now, these things can be remedied.

There are two basic reasons as to why these problems occur: The first is that the silo may not be designed properly in order to provide mass flow characteristics. Mass flow means first-in first-out for the product in the silo.

Many silos experience what is known as core flow discharge, also known in the industry as rat hole or funnel flow. This is when the centre of the silo discharges first before the sides.

The second reason for silo problems with organic products is moisture. This is why the spring and fall seasons play a major role in silo problems.

Delivery trucks use on-board compressors to convey the product into the silo. The spring and fall are wet seasons and occasionally it rains during the filling operation. When the truck conveys to the silo it also compresses the wet ambient air and therefore blows a great deal of water into the silo.

The spring and fall are also seasons of great temperature change which also plays an important role in the problems that can occur.

The wet compressed air is heated by the blower and once inside the silo will rise to the top where it comes in contact with the silo ceiling and condenses into water.

Most silo filling procedures take place during daylight hours. The days can be very nice with enjoyably warm temperatures, however, spring and fall evenings, can be very cold and it is this temperature differential which causes even more condensation troubles inside the silo.

Flour silos, especially those with core flow characteristics will experience mould in the upper area of the silo since this is where the condensation takes place. This moisture also gets right up into the silo filter. And as most are well aware, flour and water will get very hard once it dries out. This can seal the filter and any air vents or safety relief valves that may exist.

When the silo discharges, there is a vacuum created into which air rushes through the filter. It's like drinking from a plastic bottle with a straw, the air rushes into the bottle through the open area around the straw. If you were not to use a straw and sucked the air out of the bottle with your lips sealing the opening, you can create enough vacuum to start collapsing the plastic bottle. The same thing can easily happen to the silo if the air is cut off during discharge. The silo will then pull together and perhaps even collapse.

Even if though such a drastic situation may not occur; it is important to be aware of it and monitor the silo regularly; year round.

If you are experiencing moisture and mould it will build up and drip into the clean flour and form block spots in your production. Infestation becomes a real concern. Down time for cleaning the silo, fumigation, lost production all have their cost, not to mention lost production due to bad batches or product recall.

Sugar silos also have the same problems with moisture condensing on the inside walls of the silo. Sugar dust and water make an incredible build up which will also seal the filter and the danger of creating a vacuum inside the silo also exists here.

A sugar silo must also be designed with mass flow characteristics. Moisture within the product will also condense on the silo walls and start building up sugar layer. The side walls must be scoured clean through the mass flow movement of the sugar.

There are solutions to these problems for both flour and sugar silos. If you are about to purchase either a flour or sugar silo in the near future, you should only deal with a reputable company fully familiar with mass flow technology, as well as having a good reputation in handling food ingredients.

If, on the other hand, you already have one or more silos in either sugar or flour and are experiencing some or all of the above problems, there is a solution. Depending on the design of the existing silo and the specific problems being experienced, there is always an answer. However; such problems suggest the company that supplied the original silo may not have had all the necessary expertise. Quite often the situation can he easily remedied, at other times the cost can be high, it all depends.

The solution should provide you with mass flow discharge, which, if you are going directly to a scaling operation, will greatly improve the scaling accuracy. The mass flow design will also ensure trouble-free discharge with no bridging or core flow. The silo should also be conditioned.

Franz Streiter is vice-president of Reimelt (Canada) Ltd. 

He can be reached at 905-886-2463 or e-mail:

streiter@reimelt.com 

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Last modified: September 30, 2005