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: 113193
Business Number: XXXXX
Attention: XXXXX
XXXXX
March 31, 2009
Subject:
GST/HST INTERPRETATION
Requirement for Direct Sellers to Apply to Use the Alternate Collection Method for GST/HST
Dear XXXXX:
We are writing to you with respect to the Alternate Collection Method (ACM) used by many direct sellers in the application of the Goods and Services Tax/Harmonized Sales Tax (GST/HST).
All legislative references are to the Excise Tax Act (ETA) and the regulations thereunder, unless otherwise specified.
As you may know, publishers of Canadian daily newspapers (Publishers) may use the ACM to charge and account for the GST/HST on their sales of newspapers to independent sales contractors (carriers) when the newspapers are purchased for resale ultimately to individuals, businesses, or organizations that buy the newspapers for their own use and not for resale (consumers). However, in order to do so, all direct sellers, including Publishers, must apply to, and have approval from, the Minister of National Revenue (Minister) to use the ACM.
We understand there have been many ownership changes of Canadian newspapers over the past decade. We would like to advise you that if a publisher acquires ownership of a Canadian newspaper from another publisher that had been approved to use the ACM for that newspaper, the new owner is required to apply to, and obtain approval from, the Minister to use the ACM if the new owner is not already approved to use the method. If the new owner is already approved to use the method, the new owner should inform the CRA of the acquisition of the newspaper.
XXXXX
If XXXXX is using the ACM when selling newspapers to its carriers, in order to assist your carriers to comply with the ETA, we ask that XXXXX apply to the Minister for approval to use the ACM for their sales of newspapers to carriers. XXXXX may apply to have the ACM rules apply at the publisher's level or it may jointly apply with its distributors to have the ACM rules apply at the distributor's level. A distributor is a carrier that sells some or all of the publisher's newspaper it buys to other carriers.
When approval is granted to have the ACM rules apply at the publisher's level, the publisher charges and accounts for the GST/HST on the suggested retail price of the newspaper as if the publisher had made the sales to consumers. When a joint application is made and approval is granted to have the ACM rules apply at the distributor's level, the distributor is the person responsible for charging and accounting for the GST/HST on the suggested retail price of the newspaper as if the distributor had made the sales to consumers. The publisher charges and accounts for the GST/HST on the wholesale price of the newspapers sold to the distributor.
For your convenience, we have enclosed two templates, Application to Use the Alternate Collection Method and Joint Application to Use the Alternate Collection Method, which you can complete and return to us. Please include a list of all the newspapers that would be under the ACM. XXXXX can enter the day XXXXX and/or its distributors started using the ACM as the effective date of the application.
Please forward the relevant application to:
Canada Revenue Agency
Assistant Director Audit
XXXXX
In closing, if XXXXX, either on its own or jointly with its distributors, chooses to apply to, and obtain approval from, the Minister to use the ACM rules to charge and account for GST/HST, we provide the following additional points to assist XXXXX and its carriers to comply with the ETA:
=> XXXXX or its distributors as applicable should provide a copy of the CRA's letter of approval for XXXXX or the distributors to use the ACM to their carriers for the carriers' records.
=> When XXXXX acquires a newspaper, XXXXX should advise CRA of the fact that the newspaper is under new ownership. The newspaper's carriers should also be provided with a copy of the CRA's letter of approval for XXXXX or the distributors to use the ACM for the carriers' records.
=> Some of the business activities carriers undertake might fall under the ACM, while other business activities are beyond the scope of the ACM. We have enclosed GST/HST Info Sheet GI-019, Newspaper Carriers, for more detailed information on what business activities fall under the ACM.
The foregoing comments represent our general views with respect to this subject matter. 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.
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 at 613-952-8814. 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,
Sylvie Roy
Services and Intangibles Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
Enc.: Application to Use the Alternate Collection Method
Joint Application to Use the Alternate Collection Method
GST/HST Info Sheet GI-019, Newspaper Carriers
GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service
APPLICATION TO USE THE ALTERNATE COLLECTION METHOD
The following is the information that Canadian daily newspaper publishers, that are direct sellers, must provide when applying for approval to use the Alternate Collection Method (ACM) under subsection 178.2(1) of the Excise Tax Act.
Information on Canadian daily newspaper publisher:
Business Number: ________________________ RT __________
Legal name: _______________________________________________
Trading name (if different): _______________________________________________
Street address: _______________________________________________
_______________________________________________
_______________________________________________
Telephone number: ________________________
Contact Person: _______________________________________________
Title: _______________________________________________
We would like this application to be effective on _______________________
YYY-MM-DD)
List of daily newspapers to which this application applies (provide the information on a separate sheet if the space below is not enough to list them all)
1. ________________________________________________
2. ________________________________________________
3. ________________________________________________
4. ________________________________________________
5. ________________________________________________
6. ________________________________________________
7. ________________________________________________
8. ________________________________________________
9. ________________________________________________
10. ________________________________________________
We have met all of the following conditions:
• the Canadian daily newspaper publisher is a GST/HST registrant;
• the publisher sells the daily newspaper through Independent Sales Contractors, namely newspaper carriers, to consumers (i.e., individuals, businesses or organizations that do not intend to resell the newspaper);
• the newspaper carriers are neither agents nor employees of the publisher or of any distributor of the publisher;
• the newspaper carriers have a contractual right to purchase newspapers from the publisher for sale to other carriers or consumers;
• the newspaper carriers do not solicit, negotiate or enter into contracts for the sale of newspapers to consumers primarily at a fixed place of business (other than a private residence).
We understand that the approval to use the ACM may be revoked if the publisher fails to comply with Part IX of the Excise Tax Act (Goods and Services Tax / Harmonized Sales Tax).
If approved to use the ACM, we understand that the ACM may not apply to all of our newspaper carriers or distributors, or that the ACM may not apply to some transactions between the newspaper carriers or our distributors and us.
We will provide a copy of any approval letter to our present and future distributors and carriers for their records.
Certification
I hereby certify that the information given on this application, and any document attached, is true, correct and complete to the best of my knowledge and that I am authorized to sign on behalf of the Canadian daily newspaper publisher.
___________________________________________
Signature of authorized representative of
_______________________
(YYYY-MM-DD)
Canadian daily newspaper publisher
JOINT APPLICATION TO USE THE ALTERNATE COLLECTION METHOD
The following is the information that Canadian daily newspaper publishers, that are direct sellers, and their distributors must provide when jointly applying for approval to use the Alternate Collection Method (ACM) under subsection 178.2(2) of the Excise Tax Act.
Information on Canadian daily newspaper publisher:
Business Number: ________________________ RT _______
Legal name: _______________________________________________
Trading name (if different): _______________________________________________
Street address: _______________________________________________
_______________________________________________
_______________________________________________
Telephone number: ________________________
Contact Person: _______________________________________________
Title: _______________________________________________
Information on distributor:
Business Number: ________________________ RT _______
Legal name: _______________________________________________
Trading name (if different): _______________________________________________
Street address: _______________________________________________
_______________________________________________
_______________________________________________
Telephone number: ________________________
Contact Person: _______________________________________________
Title: _______________________________________________
We would like this joint application to be effective on _______________________
(YYYY-MM-DD)
List of daily newspapers to which this application applies (provide the information on a separate sheet if the space below is not enough to list them all)
1. ________________________________________________
2. ________________________________________________
3. ________________________________________________
4. ________________________________________________
5. ________________________________________________
We have met all of the following conditions:
• the Canadian daily newspaper publisher and the distributor are registrants for GST/HST purposes;
• the publisher sells the daily newspaper through Independent Sales Contractors, namely newspaper carriers, to consumers (i.e., individuals, businesses or organizations that do not intend to resell the newspaper);
• the newspaper carriers are neither agents nor employees of the publisher or of any distributor of the publisher;
• the newspaper carriers have a contractual right to purchase newspapers from the publisher or the distributor for sale to other carriers or consumers;
• the newspaper carriers do not solicit, negotiate or enter into contracts for the sale of newspapers to consumers primarily at a fixed place of business (other than a private residence).
We understand that the approval to use the ACM may be revoked if the distributor fails to comply with Part IX of the Excise Tax Act (Goods and Services Tax / Harmonized Sales Tax).
If the distributor is approved to use the ACM, we understand that the ACM may not apply to all of our newspaper carriers or that the ACM may not apply to some transactions between the newspaper carriers and the distributor.
We will provide a copy of any approval letter to present and future carriers who purchase newspapers from the distributor.
Certification - Publisher
I hereby certify that the information given on this application, and any document attached, is true, correct and complete to the best of my knowledge and that I am authorized to sign on behalf of the Canadian daily newspaper publisher.
___________________________________________
Signature of authorized representative of
_______________________
(YYYY-MM-DD)
Canadian daily newspaper publisher
Certification - Distributor
I hereby certify that the information given on this application, and any document attached, is true, correct and complete to the best of my knowledge and that I am authorized to sign on behalf of the distributor.
___________________________________________
Signature of authorized representative of distributor
_______________________
(YYYY-MM-DD)
UNCLASSIFIED
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