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
XXXXX
Case Number: 100154
March 4, 2009
Subject:
GST/HST RULING
GST status of XXXXX Gift Pack
Dear XXXXX:
Thank you for XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to an XXXXX Gift Pack.
All legislative references are to the Excise Tax Act (ETA) and the regulations thereunder, unless otherwise specified.
Effective January 1, 2008, the rate of the GST will be reduced from 6% to 5% and the rate of the HST from 14% to 13%. The new rates will apply to supplies for which the GST/HST is paid on or after January 1, 2008, without having become payable before that date. Specific transitional rules will apply to certain supplies, for example, real property. For more information on the transitional rules for the reduction of the GST/HST rate, please refer to GST/HST Notice 226, GST/HST Rate Reduction in 2008 on the CRA Web site at www.cra-arc.gc.ca/E/pub/gi/notice226/README.html.
Statement of Facts
From the information in XXXXX and from the information available on the XXXXX website referred to in your message, we understand the facts of your case are as follows:
1) You purchased the subject gift pack and you were charged GST.
2) The subject pack, listed at a consideration of $XXXXX, includes the following:
(a) XXXXX certificates, valid from XXXXX to XXXXX.
(b) XXXXX on the purchaser's birthday, valid from XXXXX to XXXXX.
(c) Free large XXXXX with the purchase of a XXXXX and a XXXXX.
(d) Free XXXXX with the purchase of a XXXXX, valid from XXXXX to XXXXX.
(e) $XXXXX off a $XXXXX purchase at XXXXX, including XXXXX. Valid from XXXXX to XXXXX.
(f) $XXXXX off a $XXXXX purchase at XXXXX, valid from XXXXX to XXXXX.
(g) $XXXXX off the purchase of any XXXXX specifically-marked XXXXX, valid from XXXXX to XXXXX.
(h) On becoming a XXXXX member earn XXXXX points for joining, valid from XXXXX to XXXXX.
Ruling Requested
You would like to know whether GST is applicable to the gift pack.
Ruling Given
Based on the facts set out above, we rule that the gift pack is subject to GST under subsection 165(1).
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
There are no provisions in the Excise Tax Act that provide an exemption from GST to the supply of the gift pack. The supply is subject to GST under subsection 165(1).
The supply is considered to be one of coupons made for consideration. The qualities of the gift pack that indicate that it is a supply of coupons are as follows: there are conditions enforced upon the use of its components, such as the requirement for the purchase of a specific item in order to receive a free item; there is a requirement for a specific redemption, such as for the XXXXX with the purchase of a specific item; and there is a fixed dollar discount on a purchase made of $XXXXX at specific retailers.
Only when coupons are supplied for no consideration are they free of GST at the time of issue.
For your convenience, find enclosed a copy of GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 957-1175. 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 or at our XXXXX.
Yours truly,
Dwight Kostjuk
Specialty Tax Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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