31 March 2006 GST/HST Ruling 78332 - Importation of XXXXX

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.

This is in response to your XXXXX to Owen Newell, Manager, General Operations Unit. You have three questions with respect to tax paid in error. It is my understanding that the Border Issues Unit will be responding to your remaining questions.

What is the legal definition of "tax paid in error"?

There is no legal definition of the phrase "tax paid in error" in the Excise Tax Act (ETA). In the context of the GST/HST, the phrase is generally accepted to mean an amount paid as or on account of tax that is not payable under the ETA. For example, if a supplier charges a recipient 15% HST instead of 7% GST on a taxable supply made in a non-participating province and the recipient pays the tax at the rate of 15%, the amount of tax paid in excess of 7% is considered to be tax paid in error.

Is tax paid in error at the time of purchase?

Depending on the nature of the supply, tax may or may not be tax paid in error at the time of purchase. For example, if a consumer buys a loaf of bread at a bakery and pays 7% GST on this zero-rated supply, the tax is considered to be tax paid in error at the time of purchase (when the consumer actually pays the tax).

Can tax become tax paid in error at a time after purchase?

Depending on the terms of the agreement for a supply, an amount may be tax paid in error at a time after the purchase. For example, if a supplier delivers zero-rated goods to a retailer and invoices the retailer for consideration and tax that becomes due 30 days after the time of purchase and the retailer pays the consideration and the tax 30 days after the purchase, it is not tax paid in error at the time of purchase. In these circumstances the amount is not tax paid in error until the retailer actually pays the amount (30 days after the purchase).

Please note that an amount cannot be considered to be tax paid in error until the recipient actually pays it.

Should you have any further questions, please do not hesitate to contact me at (613) 954-7931.

2006/03/13 — RITS 78535 — Precious Metals