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: 125625
December 2, 2010
Dear [Client]:
Subject:
GST/HST INTERPRETATION
Application of the GST/HST point-of-sale rebate on children's goods
Thank you for your fax of June 30, 2010, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the point-of-sale rebate (the Rebate) on children's goods.
HST applies at the rate of 15% in Nova Scotia, 13% in Ontario, New Brunswick, and Newfoundland and Labrador, and 12% in British Columbia. GST applies at the rate of 5% in the remaining provinces and territories.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
We understand that [...] sells dance clothing and dance footwear. Types of dance clothing include, for example, skirts, pants, shorts, leg warmers, leotards, unitards, body suits and tutus. Types of dance shoes includes, for example, ballet slippers, ballet point shoes, tap shoes, jazz shoes, ghillies, flamenco shoes, and ballroom shoes.
Interpretation Requested
You would like to know if children's dance clothing and dance shoes are qualifying goods for purposes of the Rebate.
Interpretation Given
The governments of Ontario, British Columbia and Nova Scotia each provide a point-of-sale rebate of the provincial part of the HST payable on qualifying children's goods. The Rebate is available to persons that are recipients of qualifying children's goods sold in Ontario, British Columbia or Nova Scotia, or that are resident in any of those provinces and that import qualifying children's goods in circumstances where the provincial part of the HST is payable on the importation, or that receive delivery or possession of qualifying children's goods into Ontario, British Columbia or Nova Scotia in circumstances where the provincial part of the HST is payable on the children's goods.
The Deduction for Provincial Rebate (GST/HST) Regulations (the Regulations) defines qualifying "children's clothing" to mean:
Garments (other than garments of a class that is used exclusively in sports or recreational activities, costumes, children's diapers or children's footwear) that are
(a) designed for babies, including baby bibs, bunting blankets and receiving blankets;
(b) children's garments
(i) designed for girls and of a size not greater than the size that is girls' size 16 according to the national standard applicable to the garments, or
(ii) designed for boys and of a size not greater than the size that is boys' size 20 according to the national standard applicable to the garments, or
(iii) if no national standard applies to the garments, designed for girls or boys and having a size designation of extra small, small, medium or large; or
(c) hosiery or stretchy socks, hats, ties, scarves, belts, suspenders, mittens and gloves in sizes and styles designed for children or babies.
The Regulations define qualifying "children's footwear" to mean:
Footwear (other than stockings, socks or similar footwear or footwear of a class that is used exclusively in sports or recreational activities) that
(a) is designed for babies; or
(b) is designed for girls or boys and has an insole length of 24.25 centimetres or less.
As a result, children's clothing and footwear will be qualifying items for purposes of the Rebate unless they are not designed for girls or boys, do not meet the size requirements, or can be shown to be of a class that is used exclusively in sports or recreational activities.
Dance is considered to be a recreational activity for purposes of the Rebate. Therefore, any items of dance clothing or dance shoes that are of a class that is used exclusively in dance are not qualifying items for purposes of the Rebate. It is the view of the Canada Revenue Agency that ballet point shoes, tap shoes, flamenco shoes, various types of tutus and tutu ensembles and dance costumes are not qualifying items for purposes of the Rebate.
The nature of items such as dance skirts, pants, shorts, leg warmers, leotards, unitards, bodysuits, tights, ballet slippers, jazz shoes, and ghillies for example, is such that they could reasonably be worn for purposes that are not exclusively for dance. As a result, these items qualify for purposes of the Rebate if the other requirements under the Regulations are met.
Please note that dance accessory items such as make-up, jewellery, hairnets, ballet or point shoe ribbon, toe spacers, or cushion inserts for shoes are not clothing or shoes and therefore, are not qualifying items for purposes of the Rebate.
For further information including how to show the Rebate on invoices and how to account for the Rebate on GST/HST returns please refer to GST/HST Info Sheet GI-063, Point-of-Sale Rebate on Children's Goods, which is available on the CRA Website.
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 613-952-9585. 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,
Ben Boboski
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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