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: 126335
June 6, 2012
Dear [Client]:
Subject: GST/HST RULING
Point-of-sale rebate on books: eligibility for training materials supplied individually and in kits
Thank you for your letter of July 16, 2010, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to supplies of training materials supplied by […] (the Company).
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.
STATEMENT OF FACTS
We understand the facts to be as follows:
1. The Company develops and offers facilitated courses related to workplace learning, productivity, performance, and leadership training solutions.
2. Training materials are supplied individually and in kits. Each kit and items in the kits have identifying numbers. Currently GST/HST is being charged on all items supplied by the Company except books that have ISBN numbers.
3. The Company is not an approved educational institution, and does not offer accredited courses.
4. Training materials submitted for a GST/HST ruling include:
Kit A […] contains three items which may also be purchased separately.
* […] Guide # […] contains the text for a facilitator of the course to perform that role. It has front and back cover pages, a table of contents, [#] numbered pages and is bound by a spiral binding. The item contains an appendix which includes course related exercises and spreadsheets
* […] CD # […] is a computer disc which contains [#] Excel spreadsheets […], [#] PowerPoint presentations […], and a PDF file […].
* […] Kit consists of items that are supplied together and includes:
- a workbook that is folded in the centre and stapled at the fold […];
- a […] document which is a single folded page containing course related information;
- a pad of self-adhesive memo notes; and
- […].
Kit B […]
* […] printed book in [language 1] which is bound by staples. It contains technical information for the course.
* […] is a questionnaire written in [language 1] which is bound by staples. This item substantially contains technical text and has a minimal component for writing on.
Kit C […]
* […] Workbook consists of various exercises on the topic of […]. It is spiral bound, has a table of contents and numbered pages.
* […] is a set of flash cards containing course related information.
* […] is a single sheet of laminated paper containing course related information.
* […] contain suggested discussion topics for course participants or information on how to mark the work of course participants. They are folded sheets of paper which are not bound.
* […] is a pad of identical printed pages used for training evaluation which contains space for writing on.
* […] is a notepad of identical pages designed […] for writing on.
Kit D […]
* The participant workbook consists of information and various exercises on the topic of […]. It is spiral bound, has a table of contents and numbered pages.
* The […] component contains four items:
- […] [a] [#] x [#] printed book which is bound by staples. It contains technical information for the course.
- […] a questionnaire which is bound by staples. This item contains technical text and a minimal component for writing on.
- […] course related information and are single sheets of paper with two folds.
* […] Toolkit contains:
- […] a small laminated piece of paper containing course related information.
- […] a single sheet of laminated piece of paper containing course related information.
- […] a single sheet of folded paper containing course information.
- […] a set of individual unbound pieces of paper (approximately [#] x [#] cm) with one or two words on one side.
- […] course related information and consists of a single folded sheet of paper.
- […] a single sheet of folded paper designed for scoring the results of […] related tests.
- […] a set of flash cards containing course related information.
- […] a notepad of identical pages containing space for writing on that are designed to be used to assist in one on one meetings.
- […] a notepad of identical pages designed for writing on containing information relevant to the course
- […] document bound by staples containing course related information.
- […] a single sheet of paper with two folds.
Kit E […]
* […] consists of information and various exercises on the topic of […]. It is spiral bound, has a table of contents and numbered pages.
* […] is a planner […]. It is spiral bound, has a table of contents and numbered pages and is designed to be written on.
* […] CD contains […] PDF files […], […] related read-me files […].
* […] is a set of […] laminated cards containing course related information and connected with a single metal ring.
RULINGS REQUESTED
You would like to know if the submitted training materials are qualifying books for purposes of point--of--sale rebate on books (the Rebate) when supplied individually or in kits.
RULINGS GIVEN
Based on the facts set out above, we rule the following:
Kit A – […] Guide is a qualifying book for purposes of the Rebate and is eligible for Rebate when supplied individually. The […] CD and the […] Kit are not qualifying books for purposes of the Rebate. When supplied as a kit, the kit is considered a single supply which is not a qualifying book for purposes of the Rebate.
Kit B – […] - The items in Kit B whether supplied individually or as a kit are qualifying books for purposes [of the] Rebate.
Kit C – […] - The […] Workbook is a qualifying book for purposes of Rebate and is eligible for Rebate when supplied individually. The other items in Kit C are not qualifying books for purposes of the Rebate. When supplied as a kit, the kit is considered a single supply which is not a qualifying book for purposes of the Rebate.
Kit D – […] - The […] item is considered to be a qualifying book and is eligible for the Rebate when supplied individually. The other items in Kit D are not qualifying books for purposes of the Rebate. When supplied as a whole, Kit D is considered a single supply which is not a qualifying book for purposes of the Rebate.
Kit E – […] - The […] a qualifying book for purposes of the Rebate and is eligible for Rebate when supplied individually. The other items in Kit E are not qualifying books for purposes of the Rebate. When supplied as a whole, Kit E is considered a single supply which is not a qualifying book for purposes of the 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 its validity, and all relevant facts and transactions have been fully disclosed.
EXPLANATION
Pursuant to subsection 165(2) supplies of goods and services that are made in the participating provinces that are taxable supplies (other than zero-rated supplies) are subject to the HST (15% in Nova Scotia, 13% in Ontario, New Brunswick, Newfoundland and Labrador, and 12% in British Columbia). The participating provinces provide a point-of-sale rebate of the provincial part of the HST payable on supplies of qualifying books.
Schedules 1 through 5 of the Ontario Deduction for Provincial Rebate (GST/HST) Regulations (DPRR) provides a point-of-sale rebate of the provincial portion of the HST on qualifying books, audio recordings, and religious scriptures supplied in the participating provinces. Section 1 of the DPRR provides a legislative link, for the purposes of the rebate, to the definition of printed book under section 259.1. Therefore, the definition of printed book takes on the ordinary meaning subject to specific exclusions set out in subsection 259.1(1). Under section 259.1 a printed book excludes, in part, anything that is, or the main component of which is: an agenda, calendar, syllabus or timetable; and a book designed primarily for writing on.
For purposes of the rebate a printed book contains of a number of printed sheets that are bound together (glue, spiral, three ring binder), and continuous and complete text page to page. It may contain printed words, printed pictures, diagrams and other visual aids including Braille and music. If an item is considered to be within the definition of printed book then it is eligible for the point-of-sale rebate in the participating provinces. Conversely, if an item is excluded from the definition of printed book and if it is not considered to be a printed version of a religious scripture or an audio recording of a printed book, it is not a qualifying book for purposes of the POS rebate.
Where a transaction consists of several elements, there may be a single supply or two or more supplies. This distinction is important, for example, in cases where a combination of elements is supplied, some of which would be qualifying goods for purpose of the Rebate and some of which would not if supplied separately. The kits in question contain a combination of elements some of which are qualifying books for purposes of the Rebate and some of which are not. Where a kit includes a qualifying book, it must be determined whether the kit is a single supply of the book, a single supply of something else, or multiple supplies.
The Canada Revenue Agency uses the following principles to determine whether a transaction consisting of several elements is to be regarded as a single supply or multiples supplies.
* Every supply should be regarded as distinct and independent.
* A supply that is a single supply from an economic point of view should not be artificially split.
* There is a single supply where one or more elements constitute the supply and any remaining elements serve only to enhance the supply.
Please refer to GST/HST Policy Statement P-077R2, Single and Multiple Supplies for a complete discussion on the topic.
Kit A - […]
* […] Guide is a qualifying book for purposes of the Rebate.
* […] CD is a disc containing software and by itself is not a qualifying book for purposes of the Rebate.
* […] is a grouping of items that are not supplied individually. They are: a) a workbook that is [#] x [#] inches, center folded and stapled at the fold comprised of [#] pages and is personalized for the individual user: this item is designed primarily for writing on, and is therefore, not eligible for the POS rebate for books; b) a […] document: a [#] x [#] inch page which has been folded and is not bound in any fashion, c) a pad of self-adhesive memo notes, and d) items called […] which are used in a way particular to the course. None of items under b, c, or d have the physical properties of a printed book, therefore, are not eligible for the Rebate for books.
In characterizing the supply, all elements are essential for the kit to be utilized to accomplish its goals. In order to qualify for the Rebate the kit would have to be considered a supply of a book and it is evident upon examination that the supply of the kit is more than merely the supply of the […] Guide. Kit A is considered to be single supply of a training package and all elements are integral to its intended purpose. Evidence of this can be found in the characterization of the supply as the […] Kit which expresses that the elements comprise the training package of which the book is merely one element. The elements in the kit can be purchased separately. In some instances, this factor can be instrumental in determining that there are multiple supplies but in this instance we see this factor as less significant in that elements of the package may need to be supplemented for reasons such as replacement or when a larger training session is conducted. Since the supply of the kit is not considered to be a single supply of a qualifying book it does not qualify for the Rebate.
Kit B - […]
The items in Kit B qualify for the Rebate for the following the reasons:
* […] is an [#] x [#] printed book in [language 1] which is bound via stapling. It contains technical information for the course and is a qualifying book for the purpose of the Rebate.
* […] is a questionnaire written in [language 1] which is bound via stapling. This item substantially contains technical text and has only a minimal component for writing on. It is not designed primarily for writing on and is a qualifying book for the purpose of the Rebate.
Items in Kit B are qualifying books for purposes of the Rebate. Therefore, the kit as a whole also qualifies for the Rebate.
Kit C - […]
The items in Kit C do not qualify for the Rebate for the following the reasons:
* […] Workbook […] and the […] are designed primarily for writing on and are therefore, excluded from the definition of printed book pursuant to paragraph 259.1(1)(g).
* […] and the […] are as per their names flash cards and a […]. The […] is a single sheet of [#] x [#] inch laminated piece of paper containing course related information. Neither of these items has the physical form to be considered a printed books and the supply of these items is subject to HST does not qualify for the Rebate.
* […] and the […] are folded sheets of printed paper which are not bound with suggested discussion topics for course participants or information on how to mark the work of course participants. There items are not bound in any way and therefore not a printed book.
* […] is a pad of printed pages used for training evaluation. Each page is identical and may be torn off from the pad. The pad does not meet the ordinary definition of a printed book which requires that the text should be continuous and complete from page to page, not a pad of identical sheets of printed paper.
Kit D - […]
* […] contains [#] items, [#] of which are qualifying goods for the Rebate for the following the reasons:
- […] is an [#] x [#] printed book which is bound via stapling. It contains technical information for the course and is a qualifying book for the purpose of the Rebate.
- […] is a questionnaire which is bound via stapling. This item substantially contains technical text and has only a minimal component for writing on. It is not designed primarily for writing on and is a qualifying book for the purpose of the Rebate.
- […] and […] are single [#] x [#] sheets, folded at sides. They are not bound and do not meet the ordinary definition of a printed book.
We consider the […] component to be a single supply of a qualifying book for purposes of the Rebate. Although the […] and […] items are not qualifying books for purposes of the Rebate, they serve only in a supporting role to the item as a whole.
* […] contains individual items that are not supplied individually, including: […]. Although the component […] by itself would be considered to be a qualifying book for purposes of the Rebate, the remaining items in the Toolkit […] are not qualifying books. […] Toolkit […] is not a qualifying book for purposes of the Rebate.
Although as noted one element of Kit D is a qualifying book for purposes of the Rebate, the kit as a whole is a single supply that is not a qualifying book for purposes of the Rebate. In characterizing the supply, all elements are essential for the kit to be utilized to accomplish its goals. In order to qualify for the Rebate the kit would have to be considered a supply of a book and it is evident upon examination that the supply of the kit is considered to be single supply of a training package and all elements are integral to its intended purpose. The preponderance of the elements in the kit are not qualifying books for purposes of the Rebate. The elements in the kit can be purchased separately. In some instances, this factor can be instrumental in determining that there are multiple supplies but in this instance we see this factor as less significant in that elements of the package may need to be supplemented for reasons such as replacement or when a larger training session is conducted.
Kit E - […]
The items in Kit E do not qualify for the Rebate for the following the reasons:
* […] and […], are designed primarily for writing on and are excluded from the definition of printed book pursuant to paragraph 259.1(1)(g).
* […] on CD […] does not meet the definition of printed book.
* […] consists of flash cards and does not meet the definition of printed book.
None of the items in Kit E are qualifying books for purposes of the Rebate. Consequently, the kit as a whole does not qualify for the Rebate.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-952-9585. 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,
Ben Boboski
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
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