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.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 129399
March 14, 2011
Dear [Client]:
Subject:
GST/HST INTERPRETATION
Point-of-Sale Rebate for Printed Books
Thank you for your fax of October 7, 2010, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to supplies of printing by a printer.
HST applies in the participating provinces at the following rates: 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.
Based on your letter and our subsequent telephone conversation, we understand that you are engaged in the business of purchasing and selling books and that as a wholesaler of books, it is your view that you should have the option of receiving the point-of-sale rebate (the rebate) for printed books that you purchase from a printer.
Interpretation Requested
You would like confirmation that the rebate is available where a printer makes a supply of printing books.
Interpretation Given
Based on the information provided, a printer may offer the rebate to a recipient on a supply made in a participating province of printing qualifying books.
In most circumstances, when a customer contracts with a printer for the printing of a book or other item, the customer does so in order to acquire property. Upon printing of the book, the property is transferred to the customer. 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 customer's contract with the printer. Further, through printing, new property is produced and ownership transferred to the recipient of the supply. In these circumstances, printing is the supply of tangible personal property and not a service. Where such property is a "printed book" for the purpose of the rebate, the supplier may credit the customer the provincial component of the HST and include in its net tax calculation only the federal component of the HST.
The supplier has the option to credit the rebate to a customer. It is not mandatory. If the supplier does not credit the rebate, the customer can apply to the CRA to receive the rebate, using form GST189 General Application for Rebate of GST/HST. Information on how to complete and submit the form can be found in the Guide RC4033 General Application for GST/HST Rebates, which can be found on the CRA Web site.
The rebate in Ontario is provided for by the combined effect of section 51 of the Ontario Retail Sales Tax Act and sections 1 and 2 of the Ontario Regulation 262/10 Point of Sale Rebates (the Ontario Regulations) and is administered by the CRA. The rebate allows a supplier to credit an amount equal to the provincial portion of the HST to the purchaser of a printed book where the supply is made in Ontario. Currently, the 13% HST in Ontario has a federal component of 5% and a provincial component of 8%. The Ontario Regulations refer to the definition of "printed book" as found in section 259.1 of the ETA 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.
Each of the participating provinces has provincial legislation similar to Ontario's that allows suppliers to offer a rebate of the provincial portion of the HST to recipients of a supply of printed books made in that province.
Some printed material is specifically excluded from the definition of printed book, such as a calendar, a brochure or pamphlet, a sales catalogue, etc. 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. 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. In addition, more information is available in GST/HST Memorandum 13.4 Rebates for Printed Books, Audio Recordings of Printed Books, and Printed Versions of Religious Scriptures and in GST/HST Technical Information Bulletin B-094 Amendments to the Point-of-Sale Rebate for Printed Books, which are available on the CRA Web site.
Pursuant to subsection 234(3) of the ETA 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.
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.
Charges for other specific services such as graphic design or cataloguing related to the supply of a printed book may be eligible for the rebate if they are considered to be part of a single supply of the book. The determination of whether a transaction consisting of several elements, such as printed books and graphic design is to be regarded as a single supply or multiple supplies is a question of fact. The CRA uses a number a principles to make such a determination. However, because of the variety of situations in which such a determination must be made, it is difficult to provide guidance covering every eventuality. For example, a single invoice for both printing and graphic design services does not automatically mean that there is one supply. Equally, separately identified charges or invoices for printing and graphic design services do not necessarily mean that there are two or more supplies. To assist in making this determination, CRA applies the guidelines set out in policy statement P-077R2 Single and Multiple Supplies, which is available on the CRA's Web site.
[...]
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 613-957-8253. 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,
Gunar Ozols
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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