Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
[Addressee]
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 121125
January 23, 2012
Dear [Client]:
Subject:
GST/HST INTERPRETATION
Recovery Of Amounts Paid [as tax] In Error [by custom brokers] on Imported Goods
Thank you for your fax of January 27, 2010, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the recovery of amounts paid [as tax] in error by customs brokers.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
We understand the following circumstances;
• A customs broker pays the GST to Canada Border Services Agency (CBSA) with respect to an importation of goods on behalf of a non-resident, non-registered client;
• The customs broker paid the GST amount in error;
• The customs broker files a B2 correction form with the CBSA;
• The customs broker has not been reimbursed for the GST paid in error.
Interpretation Requested
In referring to GST/HST Notice 245: Supreme Court Of Canada Decision- United Parcel Service Canada Ltd. V. Her Majesty The Queen [2009], you would like to confirm whether a customs broker in the above-referenced circumstances is eligible to claim input tax credits (ITCs) for the GST it paid in error on behalf of its non-resident, non-registered client.
Interpretation Given
As described in GST/HST Notice 245, we would like to confirm that subject to the exceptions described in the Notice, where a customs broker or other agent, who does not have a liability to pay tax in respect of an importation of goods, pays an amount as tax in error in respect of an importation of goods, the person will be entitled to recover the amount in the manner described in the Notice where the following conditions are met:
1. the person has not been reimbursed the amount by the person who would have had the obligation to pay tax in respect of the importation or supply if tax had been payable; and
2. with respect to an amount paid as tax in error on imported goods, the person has first undertaken the necessary legislative steps under the Customs Act to establish that the amount was not payable and that an overpayment of tax was consequently made.
As noted in GST/HST Notice 245, the recovery of an amount paid as tax in error on imported goods described above is not available where section 178.8 of the ETA applies. Section 178.8 of the ETA applies where a "specified supply" of the goods has been made outside Canada to another person who is the "constructive importer" of the goods.
A "specified supply" is defined in the subsection 178.8(1) of the ETA to include a supply of goods that [...][is] imported after the supply of the goods is made. For GST/HST purposes, the entering into of an agreement to provide property or a service is deemed to be a supply of the property or service made at the time of the entering into the agreement and the actual provision of the property or service is deemed to be part of that supply. A supply of goods will therefore qualify as a "specified supply" if the agreement for the supply is entered into before the goods are imported.
A "specified supply" is also defined to include a supply of goods that have been imported where the supply is deemed to have been made outside Canada because the goods are delivered or made available in Canada to the recipient before their release.
The "constructive importer" of the goods for purposes of section 178.8 of the ETA is the recipient of a specified supply of the goods made outside Canada who has not made a supply of the goods outside Canada before their release. For examples of how to determine the person who would be considered to be the constructive importer in various circumstances, refer to GST/HST Policy Statement P-125R Input Tax Credit Entitlement for Tax on Imported Goods available on the CRA Web site.
Where section 178.8 applies, the imported goods are deemed to have been imported by the constructive importer, and any amount paid or payable as or on account of tax on the importation is deemed to have been paid or payable, by or on behalf of the constructive importer and not by or on behalf of any other person.
Where a customs broker pays an amount as tax in error on goods imported on behalf of a constructive importer of the goods, the constructive importer will be deemed to be the only person who has paid the amount for purposes of recovering the amount. In this case, any recovery of the amount by the broker from the customer is a matter that must be resolved between the parties.
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 at 613-957-8220. 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,
Kevin W. Smith
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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