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.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
[Addressee]
Case Number: 136103
June 4, 2012
Dear [Client]:
Subject: GST/HST RULINGS
Point-of-sale rebate entitlement – whether printed books – 6 products
Thank you for your faxes of March 21, 2011, and July 29, 2011, requesting whether there was an entitlement to the point-of-sale rebates for printed books on the provincial component of the Harmonized Sales Tax (HST) to the supply of six products.
HST applies at the rate of 15% in Nova Scotia, 13% in Ontario, New Brunswick, and Newfoundland and Labrador, and 12% in British Columbia. GST applies at the rate of 5% in the remaining provinces and territories.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
[…].
RULING #1
STATEMENT OF FACTS
We understand the relevant facts to be as follows.
1. The supply is a package which contains a […] children’s book entitled […] [Book A] and a […] toy […]. The package retails for $[…]. The ruling request is in respect of the supply of the package. The book when sold separately has a suggested retail price of $[…].
2. The book is a narrative on […]. The […] toy represents the […].
RULING REQUESTED
You would like to know if the point-of-sale rebate for printed books can be claimed for the provincial portion of HST on the consideration for the package.
RULING GIVEN
Based on the facts set out above, we rule that the supply of the package is not a supply of a printed book for purposes of the point-of-sale rebate.
This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect their validity, and all relevant facts and transactions have been fully disclosed.
EXPLANATION
A detailed explanation can be read for ruling #1, ruling #2, ruling #3 and ruling #4 after ruling #4.
RULING #2
STATEMENT OF FACTS
We understand the relevant facts to be as follows.
1. This package contains a hardcover book entitled […][Book B] and [#] […][toys] supplied together for a single consideration of $[…]. The book contains information about […] and has [#] pages.
2. The back of the book states: “Learn all […]. Then, play the […] game […]!”
3. In terms of printed space, the game takes only […] pages of the […] pages. The [toys] are to be used for the game. These […] pages explain the game and no other feature of the book is necessary for playing the game. The game is in addition to the contents of the book […].
4. You have advised us that the value of the [toys] is very minimal in proportion of the book and that the book would have the same value, even if it were sold without the [toys].
RULING REQUESTED
You would like to know if the point-of-sale rebate for printed books is claimable for the provincial portion of HST on the consideration for the package which consists of the book and the [toys].
RULING GIVEN
Based on the facts set out above, we rule that a point-of-sale rebate can be claimed for the provincial portion of HST on the consideration for the package.
This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect their validity, and all relevant facts and transactions have been fully disclosed.
EXPLANATION
A detailed explanation can be read for ruling #1, ruling #2, ruling #3 and ruling #4 after ruling #4.
RULING #3
STATEMENT OF FACTS
We understand the relevant facts to be as follows.
1. This package is comprised of a bound […] book entitled […] [Book C] and a set of […][utensils].
2. The Canadian retail price for the package is $[…].
3. The book is […] for children.
4. With the book are included […] [description of the utensils]. The […] in the book illustrate the correct […] [utensil] to use via an image of the [utensil] in its corresponding colour.
5. You have advised us that the value of the [utensils] is marginal in proportion of the book. The value of the [utensils] is understood to be less than 10% of the value of the package.
RULING REQUESTED
You would like to know if the point-of-sale rebate for printed books is claimable for the provincial portion of HST on the consideration for the package which consists of the book and the [utensils].
RULING GIVEN
Based on the facts set out above, we rule that a point-of-sale rebate can be claimed for the provincial portion of HST on the consideration for the package.
This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect their validity, and all relevant facts and transactions have been fully disclosed.
EXPLANATION
A detailed explanation can be read for ruling #1, ruling #2, ruling #3 and ruling #4 after ruling #4.
RULING #4
STATEMENT OF FACTS
We understand the relevant facts to be as follows.
1. At issue is the supply for a single consideration of different items which are in package comprise of a […] containing […] [test] related material and a book.
2. The book is titled […] [Book D]. In the book are […] [tests] related to [X] as well as instructions to make [tests] on the same theme using the items which are in the […]. The book also explains the […] [results] observed in [tests].
3. On the front cover of the book, the following is written, in addition to the title [Book D]: […] [test materials that are included in the package]
4. The value of the […] [material] which comes in the package with the guide represents more than 10% of the value of the package.
RULING REQUESTED
You would like to know if the point-of-sale rebate for printed books is claimable for the provincial portion of HST on the supply of the package sold for a single consideration.
RULING GIVEN
Based on the facts set out above, we rule that the supply of the items and the book sold together for a single consideration is not a supply of a printed book for purposes of the point-of-sale rebate.
This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect their validity, and all relevant facts and transactions have been fully disclosed.
EXPLANATION
We consider that a printed book and another product packaged together and sold for a single price is considered to be a new product that does not fall within the definition of a printed book as contemplated in section 259.1 of the ETA.
However, where all or substantially all of the value of the items in a package sold for a single consideration is attributable to a printed book which qualifies for a POS rebate, CRA will consider the package to qualify for the POS rebate. “All or substantially all” is interpreted by CRA as meaning 90% or more of the value. In other words, if 10% or less of the value of a package which contains qualifying printed book(s) and other items can be attributed to the value of the other non-book items, the package is considered to qualify for the POS rebate. Reciprocally, if that value exceeds 10%, the package does not qualify for the point-of-sale rebate for the provincial portion of the HST. Each of the books in the fact patterns of ruling request #1, #2 and #3 qualify as a “printed book” for purposes of the POS rebate.
In ruling request #1, the value of […] toy […] exceeds 10% of the total value of the package: as a result, the package does not qualify for POS rebate purposes. In ruling request #2, the value of the [toys] is equal or less than 10% of the total value of the package. As a result, the package qualifies for POS rebate purposes. In ruling request #3, the value of the elements of [utensils] is equal to or less than 10% of the total value of the package. As a result, the package qualifies for POS rebate purposes. In ruling request #4, the value of the elements of the non-book items exceeds 10% of the total value of the package. As a result, the package does not qualify for POS rebate purposes.
RULING #5
STATEMENT OF FACTS
We understand the relevant facts to be as follows.
1. The product is bound in book form and is entitled […] [Book E].
2. The product contains the following: […]. The text of the product is limited to the instructions or suggestions on how to […] use the […] [objects] found in it.
3. The [objects] […] are designed to be pressed out from the product […].
RULING REQUESTED
You would like to know if the point-of-sale rebate for printed books is claimable for the provincial portion of HST on the supply of the product.
RULING GIVEN
Based on the facts set out above, we rule that the supply the product is not a supply of a printed book for purposes of the point-of-sale rebate.
This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect their validity, and all relevant facts and transactions have been fully disclosed.
EXPLANATION
In defining a “printed book” which qualifies for the POS rebate, the applicable provincial legislation or regulations either refer to subsection 259.1(1) or reproduce that definition. The definition of "printed book" at subsection 259.1(1) defines a "printed book" by listing specific exclusions. When determining what a “printed book” is, CRA considers the term to have its ordinary meaning. However, if a product is determined to be a "printed book" in its ordinary meaning, CRA then has to examine whether the product is specifically excluded from the POS rebate under one or many of the exclusions in the definition of "printed book".
We have determined that the product at issue was a "printed book" in the ordinary meaning of the term. However, we also have determined that the product is excluded from the definition of "printed book" under specific exclusions provided for under subsection 259.1(1).
One of the exclusions from the definition of “printed book” for purposes of the rebate is “a cut-out or press-out book” under paragraph (i) of the definition. It is our opinion that paragraph (i) excludes […] [Book E] from being a “printed book” for purposes of the rebate because the publication is a “cut-out or press-out book”.
RULING #6
STATEMENT OF FACTS
We understand the relevant facts to be as follows.
1. The product is entitled: […] [Book F]. The purpose of the product is to permit the user to design and create […] [fashions] […]. It has [#] pages.
2. The product contains: […]. The text in the products consists exclusively in instructions or suggestions on how to use the different elements it contains in order to design and create [fashions] […].
RULING REQUESTED
You would like to know if the point-of-sale rebate for printed books is claimable for the provincial portion of HST on the supply of the product.
RULING GIVEN
Based on the facts set out above, we rule that the supply of the product is not a supply of a printed book for purposes of the point-of-sale rebate.
This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect their validity, and all relevant facts and transactions have been fully disclosed.
EXPLANATION
In defining a “printed book” which qualifies for the POS rebate, the applicable provincial legislation or regulations either refer to subsection 259.1(1) or reproduce that definition. The definition of "printed book" at subsection 259.1(1) defines a "printed book" by listing specific exclusions. When determining what a “printed book” is, CRA considers the term to have its ordinary meaning. However, if a product is determined to be a "printed book" in its ordinary meaning, CRA then has to examine whether the product is specifically excluded from the POS rebate under one or many of the exclusions in the definition of "printed book".
We have determined that the product at issue was a "printed book" in the ordinary meaning of the term. However, we also have determined that the product is excluded from the definition of "printed book" under specific exclusions provided for under subsection 259.1(1).
One of the exclusions from the definition of “printed book” for purposes of the rebate is “a cut-out or press-out book” under paragraph (i) of the definition. Paragraph (n) of the definition also excludes, in part, “an assemblage of patterns or stencils”. Lastly, paragraph (p) of the definition excludes “an assemblage or collection of, or any item similar to items included in any of paragraphs (a) to (o)”. This means that where a printed book contains more than one feature or element excluded from the definition of “printed book”, it is also excluded from being considered a “printed book. It is our opinion that paragraph (p) excludes […] [Book F] from being a “printed book” for purposes of the rebate because the publication contains features or elements of both paragraphs (i) and (n) of the definition of “printed book”.
If you require clarification with respect to any of the issues discussed in this letter, please call me at (613) 952-8815.
Yours truly,
Raymond Labelle
Senior Rulings Officer
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
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