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: 127035
Business Number: [...]
April 19, 2011
Dear [Client]:
Subject:
GST/HST RULING
Eligibility for a Point-of-Sale (POS) Rebate - Books
Thank you for your letter of July 26, 2010, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the provision of the course books and school manuals by [...] (Franchisor) to [...] (Franchisee).
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.
Statement of Facts
We understand the facts to be as follows:
1. [The Franchisor] is a registered Canadian incorporated company.
2. [The Franchisor] developed and is the owner [...] of [...].
3. [The Franchisor] is the Franchisor of [...].
4. Article [...] of the Franchise Agreement (the Agreement) states that [...].
5. Article [...] of the Agreement states that [...].
6. Article [...] of the Agreement outlines the obligations of the Franchisor [...].
7. Article [...] of the Agreement states the Franchisee agrees that all courses [...]
8. The arrangement with the Franchisees is such that the Franchisor develops the courses. [...]
9. As each new course is developed by the Franchisor [...]
10. A course book entitled [...] along with a copy of the course manual for the course was provided with your request.
Ruling Requested
You have requested a ruling regarding whether the course book entitled [...] supplied by [the Franchisor] to its Franchisees is qualifying property for purposes of the POS rebate for books and whether the Franchisees are eligible for the POS rebate.
Ruling Given
Based on the facts set out above, we rule that the course book entitled [...] supplied by [the Franchisor] to its Franchisees is qualifying property for purposes of the POS rebate for books and rule that the Franchisees are eligible for the POS rebate.
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
For GST/HST purposes, most supplies of goods and services that are made in the participating provinces are taxable supplies subject to the HST (15% in Nova Scotia, 13% in Ontario, New Brunswick, Newfoundland and Labrador, and 12% in British Columbia). In general, this includes the sale of most books and other similar publications. However, the participating provinces provide a point-of-sale (POS) rebate of the provincial part of the HST payable on supplies of qualifying property.
Qualifying property includes printed books and updates of printed books, audio recordings all or substantially all of which is a spoken reading of a printed book, and bound or unbound printed versions of scripture of any religion. Section 3 of the Deduction for Provincial Rebate (GST/HST) Regulations (DPRR) provides a point-of-sale rebate of the provincial portion of the HST on printed books. The term "printed book" is not defined in the ETA. Therefore, for purposes of the rebate, the term takes on its ordinary meaning subject to specific exclusions as set out in subsection 259.1(1) of the ETA, such as newspapers, brochures or pamphlets, books designed primarily for writing on, etc. The course book entitled [...] meets the ordinary meaning of the term "printed book" and is not excluded by paragraphs 259.1(1) (a) through 259.1(1) (p).
With respect to the provision of course manuals by [the Franchisor] to its Franchisees, the course manuals are provided for no consideration and form part of the single supply of the right to operate the franchise. There is no provincial component of the HST payable with respect to a supply of a printed book in these circumstances, and therefore no eligibility for a POS rebate.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-5124. 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,
Angela Stachowski
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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