Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
XXXXX
XXXXX
XXXXX
Case Number: 81475r1Business Number: XXXXX
December 15, 2008
Dear XXXXX:
Subject:
GST/HST RULING
XXXXX
My purpose in writing is to advise you that we have recently reviewed the facts pertaining to the XXXXX and have determined that its supply qualifies for zero-rating under section 14 of Part II of Schedule VI to the Excise Tax Act (ETA). This review was conducted as a result of a request made by its manufacturer, XXXXX.
All legislative references are to the ETA and the regulations thereunder, unless otherwise specified.
Statement of Facts
We understand that:
1. The XXXXX is a XXXXX golf car.
2. XXXXX
3. XXXXX
4. XXXXX
5. XXXXX
6. XXXXX
7. XXXXX
8. XXXXX
9. XXXXX
10. XXXXX
11. XXXXX
12. XXXXX
13. XXXXX
14. XXXXX
15. On XXXXX, you purchased the XXXXX and imported it into Canada. At the time of importation, you paid GST pursuant to section 212 of the ETA as no zero-rating provisions in Part II of Schedule VI applied.
Ruling Requested
You would like to know whether the XXXXX qualifies for zero-rated status under section 14 of Part II of Schedule VI.
Ruling Given
Based on the facts set out above, we rule that the XXXXX qualifies for zero-rated status under section 14 of Part II of Schedule VI.
This GST/HST Ruling supersedes our previous GST/HST Ruling to you dated XXXXX XXXXX wherein we ruled that its supply was subject to the GST/HST.
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
Prior to its amendment, section 14 of Part II of Schedule VI zero-rated "A supply of a chair, commode chair, walker, wheelchair lift or similar aid to locomotion, with or without wheels, including motive power and wheel assemblies therefor, that is specially designed for use by an individual with a disability."
With its amendment, which became applicable to any supply made after February 26, 2008, section 14 of Part II of Schedule VI zero-rates "A supply of a chair, walker, wheelchair lift or similar aid to locomotion, with or without wheels, including motive power and wheel assemblies therefor, that is specially designed to be operated by an individual with a disability for locomotion of the individual."
In our earlier GST/HST Ruling letters to you, as referenced above, we had taken the position that the XXXXX was not zero-rated under section 14 of Part II of Schedule VI because, based on the information provided, we found that it was not "specifically designed for the daily needs and use of people with a disability".
Upon further review, we have determined that the XXXXX was specially designed for use by an individual with a disability because most of its features, qualities and capabilities address the needs of an individual with a disability. As such, the supply of the XXXXX in Canada qualifies for zero-rating status under section 14 of Part II of Schedule VI.
According to our records, effective XXXXX, you registered for GST/HST purposes as a sole proprietor who imports goods into Canada. As the mechanism used to recover the GST by a non-registrant on the importation of a good that is later found not to be payable differs from that of a GST/HST registrant, we offer the following comments.
Importation of goods into Canada
Section 212 imposes the GST at a rate of 5% on goods imported into Canada. It provides that every person who is liable under the Customs Act to pay duty on such goods, or would be so liable if the goods were subject to duty, is liable to pay GST on the value of the goods.
Subsection 212.1(2) imposes the provincial component of the HST at a rate of 8% in respect of certain importations by residents of the participating provinces (Nova Scotia, New Brunswick, and Newfoundland and Labrador). This tax applies in addition to the tax imposed under section 212. Generally, the tax imposed under section 212.1(2) will be collected by the Canada Border Services Agency at the time of importation, unless pursuant to subsection 212.1(3), the goods in question are accounted for as "commercial goods" under section 32 of the Customs Act.
Generally, all goods imported into Canada are taxable for GST/HST purposes unless specifically relieved under section 213. Importations of goods relieved of tax under section 213 are set out in Schedule VII.
Section 6 of Schedule VII provides for the non-taxable importation of goods the supply of which is included in any of Parts I to IV and VIII of Schedule VI, other than section 3.1 of Part IV of that Schedule. An importation of a XXXXX is considered to be a non-taxable importation for GST/HST purposes by virtue of the fact that it qualifies for zero-rated status (taxed at 0%) under section 14 of Part II of Schedule VI. GST/HST status code 57 may be used on the relevant Customs documentation to identify the importation as non-taxable for GST/HST purposes.
Importation as a non-GST/HST registrant
Prior to becoming registered for GST/HST purposes, you imported the XXXXX for your personal use. You paid the GST at the time of importation. To obtain a refund of the GST charged on the importation of the XXXXX, you or your customs broker will have to complete either form B2 Canada Customs - Adjustment Request or form B2-G CBSA Informal Adjustment Request in order to amend the original B3 to indicate GST/HST status code 57 applies to the importation. Refund applications made pursuant to subsection 216(6) through the B2 or B2-G must be made within four years from the date of the original import documentation. Electronic versions of these forms may be found on the Canada Border Services Agency (CBSA) website at www.cbsa-asfc.gc.ca.
We recommend that you contact your local CBSA client services office for assistance in completing the adjustment request. An agent of the CBSA will be able to confirm which adjustment form is relevant in your circumstances.
Importation as GST/HST registrant
Importers who are GST/HST registrants usually recover the GST or the federal component of the HST by claiming ITCs.
Where a GST/HST registrant has claimed an ITC to recover an overpayment of the GST on the importation of the good, no further action is required. In this instance, no penalty or interest will apply, provided a rebate is not claimed for the same amount.
Other Issues
During our telephone conversation of XXXXX, you advised that you are a commissioned salesperson and not an employee of XXXXX. You subsequently advised that you have not been charging GST on the commission you receive as sales representative from XXXXX for the sales it makes in Canada.
Based on our conversation, it is my understanding that XXXXX accepts purchase orders from persons wishing to buy the XXXXX. The payment for the purchase of the XXXXX is made by the purchaser directly to XXXXX.
XXXXX ships the XXXXX to XXXXX where you pick it up and deliver to the purchaser, according to arrangements agreed upon between you and the purchaser. You then import the XXXXX into Canada, pay the GST on behalf of the purchaser, deliver the XXXXX to the purchaser and seek reimbursement from the purchaser for the GST paid on the importation. On one occasion, XXXXX shipped an unsold XXXXX to XXXXX where you picked it up. You paid the GST upon its importation into Canada and claimed an ITC on the GST paid. You subsequently sold this XXXXX and another XXXXX to a person in Canada and charged GST on both sales. The GST on these sales was to be remitted to the CRA in your GST/HST return.
Comments
Generally a supply of a service that is made in Canada is subject to the GST at a rate of 5% or the HST at a rate of 13% if the supply is made in a participating province (Nova Scotia, New Brunswick and Newfoundland and Labrador), unless the supply is exempt or zero-rated.
Pursuant to paragraph 142(1)(g), a supply of a service is deemed to be made in Canada if "the service is, or is to be, performed in whole or in part in Canada." A supply made by a Canadian commissioned sales representative, for example to a non-resident person of promoting the non-resident's products in Canada is deemed to be made in Canada in accordance with paragraph 142(1)(g).
Section 5 of Part V of Schedule VI zero-rates a supply made to a non-resident person of acting as an agent of the non-resident or of arranging for, procuring or soliciting orders for supplies by or to the non-resident, where the service is in respect of a supply to the non-resident person that is zero-rated under Part V of Schedule VI or a supply that is made outside of Canada by or to the non-resident person.
The supply made by a Canadian commissioned sales representative, for example to a non-resident would be zero-rated if the supply of the non-resident's products is deemed to be made outside of Canada. Conversely, if the supply of the non-resident's products were made in Canada and did not qualify for zero-rating under Part V of Schedule VI, the Canadian commissioned sales representative would be required to charge the GST/HST on the consideration payable by the non-resident person for their services. There are no exempting provisions that would apply to this supply.
The general place of supply rule in paragraph 142(1)(a) deems a supply by way of sale of tangible person property to be made in Canada if the property is, or is to be, delivered or made available in Canada to the recipient of the supply. However, where a supply of tangible personal property is made in Canada by a non-resident person who is not registered for GST/HST at the time the supply is made and the supply is not made in the course of a business carried on in Canada by the non-resident person, the supply of the tangible personal property by the non-resident person is deemed to be made outside Canada pursuant to subsection 143(1).
In addition, paragraph 142(2)(a) deems a supply of tangible personal property that is made by way of sale to be made outside of Canada if the property is, or is to be, delivered or made available outside of Canada to the recipient of the supply.
Whether a particular non-resident person is carrying on business in Canada is a question of fact to be determined on a case-by-case basis. Generally, a non-resident must have a significant presence in Canada to be considered to be carrying on business in Canada. GST/HST Policy Statement P-051R2 Carrying on Business in Canada provides greater detail in determining when a non-resident is carrying on business in Canada. The electronic version of this policy can be found on the CRA's website at http://www.cra-arc.gc.ca/E/pub/gi/notice194/README.html.
In summary, using the previous example cited, if products supplied by a non-resident are deemed to be made outside Canada under either subsection 142(2) because they are delivered or made available outside Canada or under subsection 143(1) because the non-resident is not registered for the GST/HST and is not carrying on business in Canada, the service of promoting the products in Canada provided by the Canadian commissioned sales representative to the non-resident would be a zero-rated supply.
We would be pleased to provide you with a GST/HST ruling regarding the tax status of your services to XXXXX. If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-4395.
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,
Lynn Fournier Renner
Municipalities and Health Care Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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