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: 140122
September 13, 2012
Dear [Client]:
Subject GST/HST RULING
Application of the Point-of-Sale Printed Book Rebate to Supplies of Knitting Publications
Thank you for your letter of [mm/dd/yyyy], concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to supplies of knitting publications. This ruling revokes the ruling of [mm/dd/yyyy], effective as of that date to the extent that it pertains to printed books containing knitting instructions, such as the goods described below as “Products C, D, and E”.
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) is registered for GST/HST purposes under Business Number […] and provides, among other supplies, knitting publications and various types of yarn.
2. The Company provided the following knitting publications (the Products) for rulings to determine if they qualify for the point-of-sale printed book rebate;
* Product A, […], is a leaflet from the series entitled […]. The series features leaflets which give detailed instructions on how to knit the garment pictured on the leaflet using […] yarn. Product A is a single, glossy, […]” x […]” page, which has been folded into three sections. The front of the leaflet has a picture of the garment for which the publication provides instructions on how to knit.
* Product B, […], is a leaflet from the series entitled […]. The series is comprised of leaflets each of which gives detailed instructions on how to knit a particular garment using […] yarn. Product B is a single, glossy, […]” x […]” page, which is folded in half. The front of the leaflet has a picture of the garment for which the publication provides instructions on how to knit.
* Product C, […], is comprised of [#] pages that are bound with a glued spine. Product C contains the following clothing designs: […]. For each design, there is a photograph(s) of the finished garment and detailed knitting instructions on how to create the garment using […] yarn.
* Product D, […], is [#] pages that are bound with staples in the spine. Product D contains the following designs: […]. For each design, there is a photograph(s) of the finished garment and detailed knitting instructions on how to create the garment using […] yarn.
* Product E, […], is [#] pages that are bound with staples in the spine. Product E contains the following designs: […]. For each design, there is a photograph(s) of the finished garment and detailed knitting instructions on how to create the garment using […] yarn.
3. […].
4. The Company has requested a review of a ruling dated [mm/dd/yyyy], where it was ruled that the following products do not qualify for the point-of-sale rebate for printed books pursuant to paragraph 259.1(1)(n) in that they were “an assemblage of blueprints, patterns or stencils”.
* […], is a knitting instruction publication for […] in a leaflet format similar to Products A and B.
* […], is a knitting instruction publication in a leaflet format similar to Products A and B.
* […], is a knitting instruction publication in a leaflet format similar to Products A and B.
* […], is a bound […] page publication with knitting instructions for […] garments, similar to Products C, D, and E.
* […], is a bound knitting instructions publication with knitting instructions for […] garments, similar to Products C, D, and E.
* […], is a bound knitting instructions publication with […] pages, similar to Products C, D, and E.
5. The Company quoted information contained in Ontario Retail Sales Tax Guide 507 issued by the Ministry of Finance for Ontario which stated that “knitting and crochet pattern books” were exempt from retail sales tax. The Company advocates that as per this publication Products A, B, C, D, and E should qualify for the point-of-sale rebate for printed books.
RULING REQUESTED
You would like to know if the Products qualify as printed books for purposes of the point-of-sale rebate in respect of the provincial component of the HST.
RULING GIVEN
Based on the facts set out above, we rule that Products A and B do not qualify for the point-of-sale rebate for printed books, whereas, Products C, D, and E qualify for the point-of-sale rebate for printed books.
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
For GST/HST purposes, most supplies of goods and services that are made in the participating provinces are taxable supplies subject to the HST (15% in Nova Scotia, 13% in Ontario, New Brunswick, Newfoundland and Labrador, and 12% in British Columbia). This includes the sale of most books and other similar publications. However, the participating provinces provide a point-of-sale rebate for printed books (the Rebate) for the provincial portion of the HST payable on supplies of qualifying property.
Qualifying property includes a printed book and updates of a printed book, an audio recording all or substantially all of which is a spoken reading of a printed book, and a bound or unbound printed version of scripture of any religion.
The term “printed book” has its ordinary meaning subject to specific exclusions. Generally, a “printed book” consists of a number of printed sheets that are fastened together in some way, whether by staple, glue, or other method. It may contain printed words, printed pictures, diagrams and other visual aids including Braille and music. To be classified as a “printed book”, the text should be continuous and complete from page to page, chapter to chapter, section to section, etc. Generally, the pages of a printed book are numbered. In the ETA the term “printed book” is defined only by its exclusions as set out under subsection 259.1(1). For Rebate purposes a book must meet the ordinary meaning of a printed book and not be excluded by any of the paragraphs to the definition of “printed book” under subsection 259.1(1).
In the [previous] ruling of [mm/dd/yyyy], products similar to the Products were ruled to be not qualifying for the Rebate by virtue of paragraph 259.1(n). This paragraph excludes an “assemblage of blueprints, patterns or stencils.” After reviewing the case, we have determined that your publications are not excluded by any of the paragraphs to the definition of “printed book” under subsection 259.1(1). However, in order to qualify for the Rebate, a publication must also meet the ordinary meaning of “printed book. Products A and B are not bound in any way and do not meet the ordinary meaning of “printed book” and, therefore, do not qualify for the Rebate. As Products C, D, and E meet the ordinary meaning of a printed book and are not excluded by subsection 259.1(1), therefore, supplies of Products C, D, and E qualify for the Rebate.
[…]. Regardless of whether you have collected the provincial portion of the HST in respect of a particular taxable supply, you have an obligation to remit the correct amount of tax on your HST Return for the reporting period in which the supply occurs. In order to rectify this, you may file an amended return for any reporting period where you have under reported your HST liabilities.
On July 1, 2010, the federally administered Harmonized Sales Tax (HST) replaced the Ontario Retail Sales Tax (RST). As a result, RST provisions (including those described in Ontario Retail Sales Tax Guide 507) ended on June 30, 2010. For information regarding the point-of-sale rebate on books, please refer to Info Sheet GI-65, Harmonized Sales Tax for Ontario and British Columbia – Point-of-Sale Rebate on Books.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-5124. Should you have additional questions on the interpretation and application of the GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Angela Stachowski
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
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