Telephone #: (613) 954-8585
Fax #: (613) 990-1233
File #: 11680-7(dc)
Para. 142(1)(b) & ss. 143(1)
XXXXX
Dear Sir:
I refer to your second request for an application ruling dated August 28, 1996, sent to Mr. H.L. Jones, concerning the application of the Goods and Services Tax (GST) to the supply of tangible personal property, otherwise than by way of sale, made by XXXXX XXXXX (US Co.), an unregistered non-resident person, to Can Co. Mr. Jones has requested that I reply on his behalf.
Without reiterating the reasons why an application ruling cannot be issued at this time, as outlined in Mr. Jones' previous letter of July 23, 1996, the following interpretation determines the application of subsection 143(1) to the above mentioned transaction, where the property was delivered by US Co. to Can Co. in Canada.
US Co., at the time of the above transaction, would have been an unregistered non-resident corporation, carrying on business of leasing heavy equipment in the United States with no presence or commercial activity in Canada.
Five years ago, US Co. entered into a lease agreement with Can Co. to lease a large piece of equipment over a period of 10 years. According to the additional information supplied in your August 28 letter, to clarify any misunderstanding regarding the transactions set-out in your previous request for an application ruling, the piece of heavy equipment would have been physically located in Canada at the time the lease agreement was entered into.
Interpretation:
Paragraph 142(1)(b) provides that where a supply of tangible personal property is made otherwise than by way of sale and possession or use of the property is given or made available in Canada to the recipient of the supply, such a supply shall be deemed to be made in Canada.
According to the additional information you provided, US Co. would have been deemed to have made the supply in Canada by virtue of paragraph 142(1)(b), at the time possession or use of the piece of heavy equipment was given to Can Co.
Notwithstanding the above, subsection 143(1) provides that where a supply of personal property or a service, that is not made in the course of a business carried on in Canada and where, at the time the supply is made, the supplier is not registered for GST purposes, such a supply may be deemed to be made outside Canada. Therefore, subsection 143(1) appears to have been applicable under the circumstances.
Of course, any lease payments made by Can Co. under the lease agreement would not have been subject to GST. This would continue to be the case even if US Co. commences to carry on business in Canada and or becomes a GST registrant during the term of the said lease.
This interpretation is based upon our understanding of the Act and regulations thereunder in their present form. The interpretation does not take into account the effects of any proposed or future amendments thereto or future changes in interpretation.
While we trust our comments are of assistance to you, we would advise that they do not constitute a GST ruling and are, therefore, not binding upon the Department in respect of any particular fact situations.
Should you require further information concerning the above, please contact the undersigned at (613) 957-8220.
Yours sincerely,
Daniel E.B. Chamaillard
Senior Policy Officer
Border Issues Unit
General Application Division
Rulings and Interpretations Directorate
Policy and Legislation Branch
HQR#: 0000194
| c.c.: |
R. Nanner
D. Chamaillard |
Email this Content