Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
To:
[Addressee]
From:
Susan Kissner
Insurance and ITC Allocation Unit
Financial Services and Real Property Division
Excise and GST/HST Rulings Directorate
Case Number: 170944
SUBJECT : GST/HST INTERPRETATION
Application of GST/HST […][to the Product Replacement Program] and […][the Company]
The following are our comments […] concerning the operations of […]([…][the Company]) and a […][product replacement program] provided to […][customers] of […] and […]([…][X]). We apologize for the delay in responding to your request.
[…], the following is our understanding of the information that was provided:
[…]
[INTERPRETATION REQUESTED]
[…] [X] and [the Company] have made an election under subsection 177(1.1) of the ETA. As the election indicates, both companies are jointly and severally liable, does [the Company] have to provide books/records to satisfy the CRA that there are no liabilities owing on the extended warranties between the consumers and [X]?
[INTERPRETATION GIVEN]
Where an election under subsection 177(1.1) of the ETA is made, the tax collectible in respect of the supply or any amount charged or collected by the registrant (an agent that makes a supply on behalf of the person, or a billing agent who is only an agent in charging and collecting consideration and tax payable in respect of the supply and not in making the supply) on behalf of the person as or on account of tax in respect of the supply is deemed to be collectible, charged or collected, as the case may be, by the registrant, and not by the person. The agent, therefore, is liable to collect the GST/HST on the supply and include it in determining its net tax.
However, paragraph 177(1.1)(b) states in part that “the registrant and the person are jointly and severally, or solidarily, liable for all obligations under this Part that arise upon or as a consequence of (i) the tax becoming collectible…..” Since both the registrant (that is the agent) and the person are liable pursuant to paragraph 177(1.1)(b), in order for the person to be discharged of the liability to account for the GST/HST collectible on the supply, the person must demonstrate to the CRA that the registrant accounted for this amount in determining its net tax and remitted any positive amount of net tax, otherwise the person remains liable for the GST/HST on the taxable supply. Accordingly in the case in question, [the Company] must demonstrate that [X] is collecting the GST/HST on the taxable supply, accounting for this GST/HST in its net tax calculation and remitting any positive amount of net tax in order for the CRA to be satisfied that [the Company’s] liability to collect the GST/HST on that supply has been discharged.
[…]
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the interpretation(s) given in this letter, including any additional information, is not a ruling and does not bind the Canada Revenue Agency (CRA) with respect to a particular situation. Future changes or amendments to the Act, if enacted, or to the CRA’s interpretative policy could affect the interpretation(s) or the additional information provided herein.
We hope our comments are of assistance to you.
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