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: 108225
Code: 11755-23
Attention: XXXXX
July 27, 2009
Subject:
GST/HST INTERPRETATION
Application of GST/HST to Supplies of Dutiable Spirits
Dear XXXXX,
Thank you for your letter of XXXXX, concerning the application of the Goods and Services Tax (GST) to supplies of dutiable spirits received in-bond by XXXXX.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
We understand that when domestic spirits are received in-bond by XXXXX, GST/HST is calculated on the total of the price charged for the merchandise by the supplier to XXXXX plus the amount of excise duty that would have been payable on the spirits if the shipment was not made in-bond.
The following is an example supplied by you to demonstrate this calculation:
PO# XXXXX
Merchandise was shipped in-bond from XXXXX to XXXXX.
Total charge for merchandise
XXXXX
Total amount of excise applicable if the goods were not sent in-bond
XXXXX
Total value on which GST is calculated
XXXXX
GST @7%
XXXXX
The amount paid to XXXXX by XXXXX
For merchandise
XXXXX
For GST
XXXXX
Total Paid to XXXXX
XXXXX
Interpretation Requested
You would like to confirm if the above treatment is correct.
Interpretation Given
GST is calculated on the consideration for a supply in accordance with section 154 of the ETA. In the case of dutiable alcoholic beverages, when the supply is made in bond where no excise duty is payable on the supply, the consideration upon which GST is calculated does not include excise duty. Where the beverages have been taken out of bond and excise duty is imposed, the consideration upon which GST is calculated includes excise duty.
Example of basic transaction and GST/HST consequences:
Spirits supplied in-bond from XXXXX to XXXXX. Duty is not payable. GST payable is calculated on the value of the consideration, excluding duty.
Spirits supplied duty-paid from XXXXX. Duty has become payable. GST payable is calculated on the value of the consideration, including duty.
Over-remittance of GST/HST:
If a XXXXX or XXXXX has charged and remitted an amount on account of GST in excess of the amount of GST payable in respect of the supply, paragraph 232(1)(a) of the ETA permits the XXXXX or XXXXX to issue a credit note to the recipient in respect of the excess amount of tax charged but not collected, or where the excess amount was collected, refund or credit the excess amount to that other person and make an adjustment on its return. To the extent that the amount has been included in determining an input tax credit in a preceding reporting period the amount shall be added in determining your net tax for the reporting period in which the credit note is received.
In respect of the adjustment, the rules set out at subsection 232(3) states that there is a two-year time limit that begins on the date the amount was collected and the registrant (in this case, the XXXXX or XXXXX) must issue a credit note within a reasonable time after the adjustment was made.
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 613 952 9220. 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,
Lawrence Springstead
Industry Sector Specialist
Specialty Tax Unit
Excise and GST/HST Rulings Directorate
Canada Revenue Agency
UNCLASSIFIED
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