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
Ottawa ON K1A 0L5
[Addressee]
Case Number: 125397
June 8, 2012
Dear [Client]:
Subject: GST/HST RULING
Point-of-sale rebate entitlement on cataloguing and processing services
Thank you for your fax of June 15, 2010, concerning whether supplies of printed books which have been processed by your firm would qualify for the point-of-sale (POS) rebate on the provincial component of the Harmonized Sales Tax (HST). You have also asked for confirmation of the GST/HST status of supplies of cataloguing services which you provide relating to the supply of the aforementioned printed books. 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. The federal component of the HST is 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
We understand the relevant facts to be as follows.
1. […] ([…][The Company]) supplies printed books to libraries and similar recipients. [The Company] processes these books in order for them to be suitable for library use. [The Company] also supplies the service of cataloguing the same books.
2. The processing service consists of adding a plastic protector, stamps or seal of a school (if a school library) inside the book, barcodes, spine labels, date due slips, stickers, or other physical elements to make it suitable for library use. The processing of a particular book takes place before title to the particular book is transferred to the recipient.
3. The cataloguing consists, for each book, of supplying electronic information that describes physical or e-books for libraries. The information consists of a description of the book, the name of the author, the date published and any other relevant information about the book.
4. In respect of cataloguing, the information supplied by [the Company] to its clients […] is supplied via download. […].
5. When a client of [the Company] is supplied catalogue information by [the Company] in respect of a particular book, the catalogue information is placed on an electronic file which contains a separate record for each book supplied. If A, B, and C are multiple copies of the same title, and are received in cataloguing at the same time, information pertaining to each copy is supplied in one record. However, [the Company] may not supply a record for all titles within an order.
6. [The Company] has provided [#] separate sample invoices for books and/or processing and cataloguing services supplied to […]. The invoices show that the processing and cataloguing services are not invoiced in a standard manner and are often not on the same invoice as the particular printed book.
7. […]
8. Where the client requests cataloguing and/or processing services, the client does so after the contract is signed, either verbally or by a simple e-mail. A client may require cataloguing without processing, or processing without cataloguing and, even though cataloguing and processing can both be required, this is not mandatory – the three possibilities are offered by [the Company].
RULING REQUESTED
You would like to know whether a POS rebate for printed books is claimable for the provincial component of the HST charged on processing and cataloguing and, if so, what are the documentary requirements for making such a claim.
RULING GIVEN
In the above fact situation, the amount invoiced for processing services is considered to form part of the consideration for the supply of a printed book where the service is performed before title to the particular book is transferred. Where the book is a qualifying printed book for purposes of the POS rebate, the POS rebate would apply to the consideration for the processing service. For the POS rebate to be claimable, it is necessary that the consideration and HST payable for processing services be identified separately and clearly related to the qualifying printed book it relates to. There is no POS rebate claimable on cataloguing services.
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 its validity, and all relevant facts and transactions have been fully disclosed.
EXPLANATION
Where a supplier credits a POS rebate on the provincial portion of the HST on the consideration for a processing of a particular book, the consideration and HST invoiced for the particular processing service must be linked to the supply of a particular qualifying book. If that condition is not met, there is no sufficient evidence to establish the POS rebate entitlement for the provincial portion of the HST relating to an amount invoiced for processing.
CRA administers the POS rebate for a particular harmonized province pursuant to the relevant provincial legislation and regulations. It is the legislation and regulations of each of the harmonized provinces which provide for a POS rebate for printed books. Each of the harmonized provinces provides for a POS rebate on “printed books” and in each of them, the applicable legislation and regulations define “printed book” to have the same meaning as the one assigned in section 259.1 of the ETA. The term “printed book” is not defined in the ETA. Therefore, for purposes of the rebate, the term takes on its ordinary meaning; however, certain types of publications are excluded from the definition of printed book under subsection 259.1(1) of the ETA, and are therefore excluded from the POS rebate.
The ordinary meaning of a printed book is that a book consists of a number of printed sheets that are fastened together in some way, whether by staple, hardcover, or binding. It may contain printed words, printed pictures, diagrams and other visual aids including Braille and music. The usage and the placement of printed material would not change the physical identity of the good. Info Sheet GI 065 Harmonized Sales Tax for Ontario and British Columbia - Point-of-Sale Rebate on Books (http://www.cra-arc.gc.ca/E/pub/gi/gi-065/README.html) and Memorandum 13.4 Rebates for Printed Books, Audio Recordings of Printed Books, and Printed Versions of Religious Scriptures (http://www.cra-arc.gc.ca/E/pub/gm/13-4/README.html ) provide detailed information regarding the POS rebate and the exemptions and their application under subsection 259.1(1) of the ETA.
Processing is performed on a printed book by [The Company] and ownership of a book is transferred after the processing is completed. The nature of the supply is thus a book physically modified by processing. The processing performed by [The Company] discussed in fact #2 above does not alter the status of the printed book where the particular book qualifies for the POS rebate. The amount charged for the processing service is in fact part of the consideration for the particular book.
In applying CRA’s policy statement P-077 Single and multiple supplies to the facts at issue, we determined that cataloguing is a separate supply from the supply of the books. This is based on the fact that the recipient does not have any obligation to order cataloguing when ordering a book, processed or not. It is also based on the fact that the cataloguing service does not result in any physical alteration of the particular catalogued book. Cataloguing and processing are thus not interrelated to a sufficient extent to constitute a single supply. Therefore, there is no entitlement to the POS rebate for the provincial portion of the HST when a client purchases cataloguing services.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-952-8815. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
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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