21 October 2004 GST/HST Interpretation 38435 - Permanent Establishment

Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.

Dear XXXXX:

Thank you for your letter XXXXX concerning the application of the Goods and Services Tax (GST) to the supply of storage services under subsection 179(2) of the Excise Tax Act (ETA). We apologize for the delay in replying.

Interpretation Requested

Given the amendment to subsection 179(2) of the ETA effective February 28, 2000 removing the exclusion for storage services, do subsections 179(2) and 169(2) of the ETA apply to a GST/HST registrant who imports tangible personal property (TPP) of an unregistered non-resident into Canada for the purpose of providing a taxable supply of a storage service in respect of the non-resident's TPP where a portion of the storage fees are paid by a Canadian registrant who will subsequently purchase the TPP from the non-resident?

Interpretation Given

Pursuant to subsection 169(2) of the ETA, where a GST/HST-registrant imports TPP of an unregistered non-resident for the purpose of providing storage services to the non-resident in respect of the TPP, an input tax credit (ITC) for the Division III tax is available to the registrant for the Division III tax payable by the registrant on the importation of the goods into Canada.

Where physical possession of the TPP is transferred at a place in Canada to the registrant (the 'consignee') purchasing the goods from the non-resident, and the consignee gives the registrant storage service provider a drop-shipment certificate, the provision of storage services to the non-resident is deemed under subsection 179(2) of the ETA to have been made outside of Canada and thereby not subject to Division II tax.

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the Excise Tax Act, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST/HST Memoranda Series, do not bind the Canada Revenue Agency with respect to a particular situation.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 957-8220.

Yours truly,

Kevin W. Smith
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

2004/10/15 — RITS 41211 — Fees for Automated Banking Services (ATM)