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: 127341
October 28, 2010
Dear [Client]:
Subject:
GST/HST INTERPRETATION
Supply by a printer - eligibility for point-of-sale rebate for books
Thank you for your letter of August 6, 2010, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the printing and binding of books.
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 [...] [the Company] prints and binds books for educational publishers, schools and various businesses and associations. [The Company] is a GST/HST registrant. When the clients of [the Company] contract[s] with [the Company], the pre-press steps of book production, such as the graphic design, [are] already done - the client[s] did it [themselves] or had it done by a graphic designer. Very occasionally, minor corrections can be made by the printer (e.g., a date, a typo) if it was identified at the printing stage and when the client's graphic designer is not available. The printing is done using inputs of the supplier (e.g., tools, printing machines, ink, paper). [The Company] is situated in [...], Ontario.
Interpretation Requested
You would like to know whether [the Company's] clients are eligible for a point-of-sale rebate of the provincial component of the HST on the supplies described above. If so, when [the Company] credits the client the rebate for which the client is eligible, you would like to know whether [the Company] can deduct the amount credited in its net tax calculation when determining the amount to be remitted. Also, you would like to know what a "printed book" is for purposes of the point-of-sale rebate.
Interpretation Given
Based on the information provided, the printing and binding of a printed book in the circumstances described above is considered to be the supply of a printed book by [the Company]. The recipient of such a supply is eligible for a point-of-sale rebate of the provincial component of the HST payable. Where [the Company] credits the recipient the provincial component of the HST, [the Company] is entitled to deduct the amount credited in its net tax calculation when determining the amount to be remitted.
Explanation
In the circumstances described above, the client contracts with [the Company] in order to acquire property. Upon printing of the items, the property is transferred to the client. The primary purpose of the transaction is the transfer of goods, e.g. printed books. These goods are not incidental to providing a service, rather, they are the raison d'être of the client's contract with [the Company]. Further, through printing, new property is produced and ownership transferred to the recipient of the supply. The facts support the view that, in the noted circumstances, printing is the supply of tangible personal property and not a service. Where such property is a "printed book" for the purpose of a point-of-sale rebate, the supplier may credit the client the provincial component of the HST and include in its net tax calculation only the federal component of the HST.
Furthermore, where the printer assumes responsibility for the shipping and handling of the books, the shipping and handling fees are considered to be part of the price of the books, even if they are invoiced as a separate item. As a result, the rebate is also available in respect of these fees.
The point-of-sale rebate for printed books is provided for by the combined effect of section 51 of the Ontario Retail Sales Tax Act (RTA) and sections 1 and 2 of the Ontario Regulations 262/10 Point of Sale Rebates (the Ontario Regulations). The Ontario Regulations refer to the definition of "printed book" as found as section 259.1 of the Excise Tax Act for determining what qualifies for the rebate. For purposes of the rebate, the term "printed book" has its ordinary meaning. The common dictionary definition indicates that a book consists of a number of printed sheets that are fastened together in some way. It may contain printed words, printed pictures, diagrams and other visual aids including Braille and music. The usage and the placement of printed material would not change the physical identity of the good. Some printed material is excluded from the rebate, such as a calendar, a brochure or pamphlet, a sales catalogue, etc. The GST/HST Info-Sheet GI-065 - Harmonized Sales Tax for Ontario and British Columbia - Point-of-Sale Rebate on Books outlines the exclusions in more detail and is included for your reference. The info-sheet also shows the invoicing options when applying the rebate and the mechanism for the supplier to remit only the federal component of the HST in respect of the supply of a printed book.
Pursuant to subsection 234(3) of the Excise Tax Act and the Deduction for Provincial Rebate (GST/HST) Regulations, a supplier can deduct a credited prescribed point-of-sale rebate from its net tax calculation for the reporting period in which the amount was credited.
Currently, the 13% HST in Ontario has a federal component of 5% and a provincial component of 8%.
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 613-952-8815. 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,
Raymond Labelle
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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