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.
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Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
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XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
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Case Number: 61521Subject Code: 11755-19
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XXXXX
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July 5, 2005
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Subject:
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GST/HST INTERPRETATION
Buy-one-jug- XXXXX Get-One -XXXXX -Free coupon
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Dear XXXXX:
It has come to our attention that last year one of your retail stores ("store") XXXXX may have accounted for the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) incorrectly on the subject coupons.
All legislative references are to the Excise Tax Act (ETA) and the regulations therein, unless otherwise specified.
We understand the store at issue accepted the subject coupon with the sale of a jug of XXXXX. The coupon offered one free XXXXX with the purchase of a 4-litre jug of XXXXX. The store retails the XXXXX for $XXXXX.
GST on the transaction was calculated as follows:
| Jug of XXXXX: |
$40.00 (not the real price)
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| XXXXX |
5.99
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45.99
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| GST @ 7% |
3.22
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49.21
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| Coupon - subsection 181(2) |
5.99
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| Customer pays |
$43.22
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The subject coupon does not qualify as a reimbursable coupon under subsection 181(2) of the ETA because the offer of a free XXXXX with the purchase 4L of XXXXX is not a "reduction of the price of the property ... equal to a fixed dollar amount specified in the coupon" as required in that provision of the ETA
Interpretation Given
Based on the information provided, the coupon qualifies under subsection 181(4), which applies to two-for-one coupons, buy-A-get-B-free coupons, among others. As a consequence, GST should have been calculated after the $XXXXX reduction is applied to the combined price of the XXXXX and the XXXXX.
Using the above fictitious price of the XXXXX, GST should have been calculated as follows:
| Jug of XXXXX |
$40.00 (not the real price)
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| XXXXX |
5.99
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| Coupon - subsection 181(2) |
5.99
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40.00
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| GST @ 7% |
2.80
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| Customer pays |
$42.80
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| GST to be remitted by XXXXX |
$ 2.80
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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, Goods and Services Tax Rulings, 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) 954-1433.
Yours truly,
Bao Tran
Specialty tax Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate
2005/06/30 — RITS 61582 — ITC Eligibility for GST/HST Payable
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