File #: 11640-4(glr)
February 3, 1997
Thank you for your E-mail message of January 21, 1997, on the above-referenced subject. I will answer your questions in the order raised:
1. In order for a supply of tangible personal property (TPP) to be zero-rated under the provisons of Schedule VI, Part V to the Excise Tax Act (Act), the supply must be made, or deemed to be made, in Canada under the provisions of subsection 142(1) of the Act. If a supply of TPP is made, or deemed to be made, outside Canada under the provisions of subsection 142(2) of the Act, the supply is not subject to the tax under Division II. It is, therefore, not necessary to refer to the zero-rating provisons in Schedule VI, Part V.
For a supply of TPP, such as a vehicle, to be zero-rated under Schedule VI, Part V, section 12, all that is required is that the supplier turn the vehicle over to a common carrier with instructions that the vehicle is for export and where the vehicle is to be shipped. Therefore, the zero-rating provisions of Schedule VI, Part V, section 12 could still apply even in situations where the recipient (or the recipient's employer) arranges for the delivery of the vehicle outside Canada (e.g., Canadian diplomats posted overseas where the supplier is instructed by the diplomat to deliver the vehicle to a moving company that has been contracted for the move by the Department of Foreign Affairs and International Trade). The supplier is, of course, required to maintain documentation to substantiate the export of the vehicle.
If a claim is received from a recipient because the supplier would not zero-rate the supply of TPP, it would be appropriate to request documentation to substantiate the export of the TPP.
Whether or not a claim should be disallowed for lack of proof of export is a decision that must be made based on the facts of the particular case.
2. I do not see the necessity of adding a variant to Case 2-A. The case currently deals with the export of lumber (which is TPP). Adding an identical scenario to deal with the export of a vehicle (which is also TPP) is not necessary.
If you want the case to address both issues, I would suggest that the title be changed to "Canadian resident (consumer) purchases TPP, such as lumber or a vehicle, ..."
3. I suggest that new Case 2-D be deleted. It is not possible for a supplier to turn TPP, such as a sofa, over to a sequence of common carriers. The sofa would be turned over to one common carrier for export. The fact that the carrier may interline the shipment is not relevant.
4. I do not agree with the tentative answer for new Case 2-E. The supply of the vehicle qualified for zero-rating under the provisions of Schedule VI, Part V, section 12 at the time of the supply. The fact that the recipient went to the premises of the moving company to load additional personal goods into the moving van does not negate zero-rating. It would probably be appropriate to delete this case.
5. Whether or not a person is an agent of another person is a question of fact. A Canadian resident can act as an agent of a non-resident and a non-resident can act as an agent of a Canadian resident. I would also like to point out that I have not made the statement, nor have I implied, that the acceptance of powers of attorney or agency agreements is a way to circumvent the Act.
Although Part B of the Visitor Rebate Application (GST 176E) requests the date of arrival in Canada and departure from Canada of the non-resident, there is nothing in Section 252 of the Act which imposes the requirement that the non-resident actually had to be in Canada. Generally speaking, though, the non-resident would have been in Canada when the non-resident purchased the TPP.
For example, the Explanatory Notes to Bill C-62 dated May 1990 state, in part, that:
"Subsection 252(1) provides for a rebate of the GST paid by a non-resident person on goods purchased in Canada and exported or taken by the person out of Canada within 60 days of purchase."
6. If a person pays the GST at 7% on a supply which qualified for zero-rating, that person is usually instructed to go back to the supplier for a refund or credit of the tax paid "in error" (section 232 of the Act). If the supplier refuses to refund or credit the tax, or may have gone out of business, the person is advised to file a claim with the Department (section 261 of the Act) to recover the tax paid "in error". However, there is nothing in the Act that requires the recipient to first go back to the supplier for the refund or credit.
I would also like to point out that the transfer of title is not a determining factor for the place of supply rules in subsections 142(1) and (2). If it was, there would be a reference in the place of supply rules to a transfer of ownership, which there is not.
To determine the place of supply by way of sale of TPP, a determination must be made as to where the TPP is delivered or made available. You should refer to Policy Statement P-078 for additional information. To determine the place of supply otherwise than by way of sale of TPP, a determination must be made as to where possession or use of the TPP is given or made available. You should refer to Policy Statement P-193 for additional information.
Garry L. Ryhorchuk
Senior Rulings Officer
Border Issues Unit
General Operations and Border Issues Division
GST Rulings and Interpretations
Policy and Legislation Branch
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R. Nanner
G. Ryhorchuk |
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