Fertilizer and Pesticides

GST/HST Info Sheet GI-048
June 2008

This info sheet explains how the goods and services tax/harmonized sales tax (GST/HST) applies to supplies of fertilizer and pesticides.

In this publication, "taxable" means subject to the GST at 5% or the HST at 13%. "Zero-rated" means subject to the GST/HST at the rate of 0%.

For detailed information on how the GST/HST applies to agriculture, see GST/HST Memorandum 4.4, Agriculture and Fishing.

Fertilizer

Fertilizer is zero-rated when it is supplied in bulk quantities or in containers of at least 25 kg, where the total amount of the fertilizer supplied is 500 kg or more.  Fertilizer in bags containing less than 25 kg is taxable regardless of the total quantity sold.

A product is considered to be a fertilizer if it meets the requirements listed below:

• the purpose of the product is to provide plant nutrients (see Requirement 1);
• the product contains either (see Requirement 2)
  • one or more of the major plant nutrients; or
  • one or more lesser plant nutrients;
• the product label contains a "guaranteed analysis" that is verified by a laboratory analysis, and if the product contains major plant nutrients, the "grade" is displayed as part of the product name (see Requirement 3); and
• the product being supplied is marketed, advertised, packaged, labelled, or sold for use as a fertilizer (see Requirement 4).

Requirement 1 – the product directly provides plant nutrients

Fertilizer is intended to provide a plant or crop directly with nutrients for its growth and crop yield. A supplement that improves the physical condition of soil or aids in plant growth or crop yields does not meet this requirement because the supplement indirectly (rather than directly) benefits plant and crop health.

Requirement 2 – the product contains one or more of the major or lesser plant nutrients

The major plant nutrients are nitrogen (N), phosphorus (P) and potassium (K). The lesser plant nutrients, which must be present in the required minimum levels noted, are as follows:

Note: All nutrients are expressed by weight. The per cent represents the amount of individual plant nutrients in relation to the total product by weight. The exceptions are for calcium (Ca), magnesium (Mg) and sulphur (S), which are guaranteed as a minimum amount expressed in per cent on an elemental basis.

Requirement 3 -- the product label contains a guaranteed analysis

A guaranteed analysis should be displayed on the label of a fertilizer product. A guaranteed analysis is a legal representation by the supplier of the product guaranteeing the stated percentage of each individual plant nutrient claimed to be in the product, by weight of the total product, for both major and lesser plant nutrients. In the case of supplies in bulk, this guarantee would be displayed on the invoice, on a shipping bill, or on a statement accompanying the supply.

A guaranteed analysis is to be verified by a laboratory analysis. The principal criterion in determining whether the laboratory analysis is acceptable is that the conclusions be supported scientifically. In this regard, the following are factors to consider when deciding whether or not the laboratory conclusions are acceptable:

• a written report is prepared and signed by an individual employed by the laboratory with the authority to sign and issue such reports;
• the procedures employed by the laboratory are based on acceptable standards for this type of industry and analysis; and
• the conclusions are properly documented and supportable.

A variation between the quantity of individual plant nutrients in a product as stated in the guaranteed analysis and that revealed by a laboratory analysis will not automatically exclude the product from zero-rating unless the quantities determined to be present by the laboratory analysis are so minimal as to be ineffective. For example, if a product contains only one lesser plant nutrient and the percentage of this lesser plant nutrient is determined to be less than the minimum requirement noted in the table above, then the product would not be zero-rated as it does not meet the requirements of a fertilizer.

Where a fertilizer product contains major plant nutrients, the "grade" is to be displayed as part of the product name.

The "grade" is a set of three numbers that represent the minimum guarantee, in order, for the per cent of total N, P, and K in the product, by weight of the total product, in a hyphenated numerical series (N-P-K), (e.g., 15-10-0).

Requirement 4 -- the product being supplied is marketed, advertised, packaged, labelled, or sold for use as a fertilizer

Where a fertilizer product has multiple uses and is packaged differently for each use, only the product that is packaged and marketed as a fertilizer is zero-rated. However, if there is no differentiation in packaging, all fertilizer product is zero-rated. A fertilizer product that is marketed with no indication as to the product's use is considered to be marketed or sold for use as a fertilizer.

Products considered fertilizer under the Fertilizers Act

Any product that meets the requirements to be considered a fertilizer under the Fertilizers Act is considered to meet all the requirements noted above and is zero-rated.

Manure

Animal and vegetable manures in their natural condition are considered to be fertilizers and will be zero-rated when sold in quantities of 500 kg or more, although they may not meet all of the requirements noted above.

Peat

Peat is considered to be a soil conditioner not a fertilizer, and may be sold as soil or as a soil mixture. Peat is taxable regardless of the amount sold.

Combinations of bulk and bagged fertilizer

When a combination of bulk and bagged fertilizer is supplied, it is zero-rated provided the total quantity supplied is at least 500 kg and the bagged fertilizer is in bags containing at least 25 kg. For example, a supply of twelve bags containing 25 kg of fertilizer and 200 kg of bulk fertilizer is zero-rated since the total quantity supplied is 500 kg.

Pesticides

A pesticide is zero-rated if it is labelled in accordance with the Pest Control Products Regulations (PCPR) under the Pest Control Products Act as having a purpose that includes agricultural use and a product classification other than "DOMESTIC".

A pesticide is any product (referred to as a "control product" in the PCPR) that is used as a means for directly or indirectly controlling, preventing, destroying, mitigating, attracting, or repelling any pest. Pesticides include herbicides, insecticides, fungicides, disinfectants and rodenticides.

With respect to the phrase "that includes agricultural use", the term "agricultural" is not defined for GST/HST purposes.  It is the CRA's current position that the common meaning of "agriculture"  includes horticulture.  Further, the provision indicates the use is to "include" agricultural use.  Pesticides may be labelled as having a purpose that includes more than one use.  Provided one of the uses is considered to be agricultural use, the pesticide will be considered to meet this criterion.
 
In general, all pesticides are taxable unless they meet the requirements above. Once it is determined that a particular product meets the requirements, it is unconditionally zero-rated. The tax status of a pesticide does not depend on the volume purchased, alternative uses, or the actual use by the purchaser.
The product label of a pesticide labelled in accordance with the PCPR will include the product name, class designation, precautionary symbols/hazard warnings, directions for use, storage and disposal, an indication of the active ingredient, the registration number under the PCPR, net contents, and the name and address of the manufacturer.

There are four product class designations of control products under the PCPR: DOMESTIC, COMMERCIAL, RESTRICTED, and MANUFACTURING. Products within the commercial class may be labelled with a more descriptive term such as AGRICULTURAL, INDUSTRIAL or INSTITUTIONAL, although this is not required. Where a product is labelled as "COMMERCIAL", without a more descriptive term, further information on the intended use is used in determining its tax status.

For example, a root inhibitor labelled as "AGRICULTURAL" and intended to prolong the storage life of seed potatoes is zero-rated.

Active ingredients

The active ingredients used in the manufacture of pesticides are not considered to be pesticides because they are not marketed to the consumer in that state. Active ingredients for purposes of manufacturing pesticides are taxable.