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: 88902
XXXXX
XXXXX:
February 5, 2009
Subject:
GST/HST RULING
Purchase and sale of the XXXXX
Thank you for your letter of XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the purchase, sale and delivery of the XXXXX (the Newspapers). We apologize for the delay in responding to your enquiry.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
Statement of Facts
Our understanding of the facts is as follows:
1. Your business consists of buying, selling and delivering the Newspapers to home subscribers. The Newspapers are published by XXXXX (the Publisher).
2. You entered into an XXXXX (the Agreement) with XXXXX (the Distributor) for the purchase, sale and delivery of the Newspapers to subscribers. Although the Agreement is not dated, it shows that it was entered into in XXXXX.
3. You never registered for GST/HST purposes as it was your understanding that the GST was charged and accounted for by the Publisher.
4. In XXXXX, your revenues exceeded $30,000 which automatically generated a GST/HST registration. As a result, you were asked to file GST/HST returns. However, you did not file the requested returns which resulted in the Canada Revenue Agency (the CRA) sending you notices of assessment.
5. You contacted a CRA representative who could not determine whether the Publisher had been approved to use the Alternate Collection Method (the ACM).
6. XXXXX the Publisher has received approval to use the ACM.
7. The terms of the Agreement provides that you (the Contractor) agree to purchase from the Distributor and the Distributor agrees to sell to the Contractor the Newspapers. The agreement also includes the following:
a) XXXXX XXXXX the Contractor agrees to pay the Distributor the wholesale price per copy.
b) XXXXX on behalf of the Contractor, the Distributor will cause the Publisher of the Newspapers to collect the retail price plus GST from the subscribers. The Contractor agrees to be bound by the "Direct Seller's Method" for the purposes of calculating and remitting the GST.
c) XXXXX the Contractor's profit or loss is calculated from the difference between the retail price collected from the subscribers and the wholesale price paid by the Contractor.
d) XXXXX the Contractor acknowledges that it is required to register for GST purposes if its business revenue, excluding sales of Newspapers or other exclusive products, exceeds $30,000 annually.
e) XXXXX the maximum retail price and the wholesale price of the Newspapers.
Ruling Requested
You would like to know whether you must charge and account for the GST in respect of the purchase, sale and delivery of the Newspapers.
Ruling Given
Based on the facts set out above, we rule that you are not required to charge and account for the GST in respect of the purchase, sale and delivery of the Newspapers.
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
Based on our review of the Agreement, you are purchasing, selling and delivering the Newspapers to subscribers. As the Publisher is an approved direct seller, these supplies are subject to the ACM rules. Under the ACM, the Publisher is responsible for charging and accounting for the GST on the sale of the Newspapers which you sell to subscribers.
Please note that where an approved publisher uses the ACM, this does not necessarily mean that all of the carriers' activities fall under the ACM. For example, the ACM does not apply when a carrier sells the newspapers to retail stores or newspaper boxes or when a carrier provides delivery services under a service contract. For your convenience, we have enclosed Info Sheet GI-019, Newspaper Carriers which provides additional information on the subject.
XXXXX
If you require clarification with respect to any of the issues discussed in this letter, please call me directly 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
UNCLASSIFIED
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