1 December 1996 GST/HST Interpretation 11640-3[4] - Grain Storage Charges

I refer to your E-mail messages of November 1, 1996, and our telephone conversation on December 17, 1996, concerning the application of the Goods and Services Tax (GST) to charges for the storage of grain.

You provided the following facts:

1. A grain elevator operator charges the GST at 7% to Canadian residents for the service of storing the residents' grain. The residents may be farmers or food processing companies.

2. In many instances, the grain remains in storage for two months before an export sale is made by the residents.

3. Once non-resident customers are identified (i.e., the grain is to be shipped out of Canada), an adjustment is made to zero-rate the storage service (i.e., subject to the GST at 0%) supplied to the residents.

Under the provisions of paragraph 142(1)(g) of the Excise Tax Act (Act), the supply of the storage service is deemed to be made in Canada. As there are no zero-rating provisions in Schedule VI, Part V to the Act which could apply, the supply of the storage service to the residents is subject to the GST at 7% pursuant to subsection 165(1) of the Act.

Please contact me at (613) 952-6743 if you require further information.

Garry L. Ryhorchuk
Senior Policy Officer
Border Issues Unit
General Operations and Border Issues Division
GST Rulings and Interpretations
Policy and Legislation Branch