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: 147162
October 9, 2012
Dear [Client]:
Subject: GST/HST INTERPRETATION
Importation of Aircraft
Thank you for your fax of [mm/dd/yyyy], concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the importation of aircraft.
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.
We understand that a registered Canadian corporation will purchase an aircraft, a […] [Model X] from a company located in […] [Country A]. The closing will take place overseas. The aircraft will be delivered in […], [a participating province].
Upon delivery, […] engines will be removed from the aircraft and shipped to the Canadian corporation’s facility in […] [Country B]. The airframe will remain in Canada for a period time during which time it will be dismantled. […].
[…]
INTERPRETATION REQUESTED
You would like to know whether the Canadian corporation would be subject to GST/HST on the importation.
INTERPRETATION GIVEN
Based on the information provided, it does not appear that there would be any relief from tax payable upon the importation of the aircraft.
Pursuant to section 212, every person who is liable under the Customs Act to pay duty on imported goods, or would be liable if the goods were subject to duty, is required to pay 5% GST on the value of the goods. The value of the goods is determined by the Canada Border Services Agency (CBSA), pursuant to section 215, under the valuation rules of the Customs Act and related legislation. Where the person importing the goods is a resident of a participating province and the goods are not accounted for as commercial goods under section 32 of the Customs Act, the provincial part of the HST at the applicable rate is also payable pursuant to section 212.1.
In certain circumstances, the importation of an aircraft may be relieved from the application of GST/HST. Pursuant to section 1 of Schedule VII to the ETA, goods that are classified under headings 98.01, 98.02 and 98.03 of Schedule I to the Customs Tariff qualify as non-taxable importations to the extent that the goods are not subject to duty under the Customs Tariff. Heading 98.01 addresses importations of foreign-based conveyances or containers engaged in the international commercial transportation of goods or passengers, heading 98.02 addresses the temporary importation of conveyances by a resident to be employed in the international non-commercial transportation of the person and accompanying persons using the same conveyance, and heading 98.03 addresses temporary importations of a conveyance and baggage by a non-resident person for use by the person in Canada. However, these provisions may not apply in the case at hand. At the time of importation and subsequent to it, the aircraft is not being used as a conveyance and the importation is not temporary. It should be noted that the interpretation of these tariff classification headings is the responsibility of the CBSA.
Pursuant to subparagraph 3(i)(i) of the Non-Taxable Imported Goods (GST/HST) Regulations made pursuant to the ETA, a good that is described in, among others, item 16 of the Schedule to the Temporary Importation (Excise Levies and Additional Duties) Regulations under the Customs Tariff is not subject to tax. Item 16 refers to “Articles to be repaired, overhauled, altered or adjusted”. It is questionable whether the removal of the engines and the disassembly and destruction of the airframe qualify as a repair, overhaul, alteration or adjustment. However, the interpretation of a regulation to the Customs Tariff is also the responsibility of the CBSA.
Further information on the relief discussed above or on any duties payable on importation can be obtained from the CBSA by contacting the Border Information Service (BIS) line, free of charge throughout Canada, by calling 1-800-461-9999. If you are calling from outside Canada, you can access the BIS line by calling 204-983-3500 or 506-636-5064 (long-distance charges will apply). You may also contact the CBSA by email at Contact@cbsa.gc.ca.
The Non-Taxable Imported Goods (GST/HST) Regulations under the ETA also provide in paragraph 3(d) that goods that are temporarily imported “for the sole purpose of maintenance, overhaul or repair” are not subject to tax. The removal of engines from the airframe and the destruction of the airframe do not constitute maintenance, overhaul or repair. Furthermore, subparagraph 3(d)(ii) requires that “the goods are exported as soon after the maintenance, overhaul or repair is completed”. The good that is being imported is an aircraft; the good being exported is the engines. The good that was imported is not the good that is being exported.
The foregoing comments represent our general views with respect to the subject matter of your request. These comments are not rulings and, in accordance with the guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, do not bind the Canada Revenue Agency with respect to a particular situation. Future changes to the ETA, regulations, or our interpretative policy could affect this interpretation.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-957-8253. 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,
Gunar Ozols
Goods Unit
Border Issues and General Operations Division
Excise and GST/HST Rulings Directorate
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