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: 134460
Business Number: [...]
May 10, 2011
Dear [Client]:
Subject:
GST/HST RULING
Temporary importation of leased aircraft
Thank you for the e-mail of April 18, 2011 respecting the request for authorization for partial relief from the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) with respect to the importation of leased aircraft.
We understand that [...] (the "Lessee") has entered into an agreement to lease the following aircraft from [...] (the "Lessor"), a non-resident person with whom the Lessee deals at arm's length.
The details are as follows:
Aircraft Type Model Number Serial Number Registration Number
[...] [...] [...] [...]
• The lease agreement for this aircraft is for a period beginning on [mm/dd/yyyy] and ending on [mm/dd/yyyy].>>This aircraft will be imported at the Airport of Entry ([...] Airport) on [mm/dd/yyyy] and will be exported on [mm/dd/yyyy].
• An engine of this aircraft had an overhaul and upgrade while the aircraft was outside Canada since its last importation in [yyyy].Pursuant to section 212 of the Excise Tax Act (ETA), every person who is liable under the Customs Act to pay duty on imported goods, or who would be so liable if the goods were subject to duty, must pay to Her Majesty in right of Canada tax on the goods calculated at the rate of 5% on the value of the goods.
Subsection 215(1) of the ETA provides that the value of goods shall be deemed to be equal to the total of
(a) the value of the goods, as it would be determined under the Customs Act for the purpose of calculating duties imposed on the goods at a percentage rate, whether the goods are in fact subject to duty, and
(b) the amount of all duties and taxes, if any, payable on the goods under the Customs Tariff, the Excise Act, 2001, the Special Import Measures Act, the ETA (other than Part IX) or any other law relating to customs.
Subsection 215(2) of the ETA provides that notwithstanding subsection (1), the value of goods imported in prescribed circumstances shall be determined in prescribed manner.
Section 14 of the Value of Imported Goods (GST/HST) Regulations (the "Regulations"), allows in certain circumstances that tax does not apply to the full value of temporarily imported leased aircraft. Instead, tax applies to 1/60th of the value for duty of the aircraft for each month or part of a month that the conveyance remains in Canada, provided certain legislative conditions are met.
As indicated in our previous letters with respect to the importation of this aircraft, one of these conditions is that if the leased aircraft is imported more than once, the total number of months in the periods throughout which it is held in Canada under a lease with the same lessor does not exceed 24 months.
As indicated in our letter of September 21, 2010, with respect to the last importation of this aircraft, according to our records, the cumulative number of months that this aircraft (serial number [...]/registration number[...]) has been held in Canada by the lessee under a lease with the lessor is [...] months as of [mm/dd/yyyy], and will therefore exceed the 24 month limit under the current lease agreement (cumulative total will be [...] months on [mm/dd/yyyy]). As a result, the importation does not meet the conditions of section 14 of the Regulations.
As the conditions of section 14 of the Regulations will not be met in this case, partial tax relief with respect to the value of the imported aircraft cannot be granted under that provision. There is no other provision in the ETA or its regulations that would provide for partial tax relief based on a reduced value of the imported aircraft for purposes of subsection 215(1) of the ETA.
Generally, under subsection 169(1) of the ETA, a registrant is entitled to an input tax credit with respect to tax on the importation of goods that is paid or payable by the registrant, if the registrant imports the goods for consumption, use or supply exclusively in the course of its commercial activities. For additional information, please see GST/HST Policy Statement P-125R: Input Tax Credit Entitlement For Tax On Imported Goods available on the CRA website at http://www.cra-arc.gc.ca/E/pub/gl/p-125/README.html.
Furthermore, the importer is required to meet the Customs requirements as outlined in Customs Memorandum D8-1-1 Temporary Importation (Tariff Item No. 9993.00.00) Regulations with respect to the processing and control of temporary import documents and export documentation and procedures.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 957-8220.
Yours truly,
Kevin W. Smith
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
Email this Content