Telephone #: (613) 954-8585
Fax #: (613) 990-1233
File #: 11640-4(glr)
Sch. VI/V/1
Dear Mr. XXXXX
I refer to your letter of January 22, 1996, addressed to Mr. Garry Ryhorchuk of my staff, concerning the application of the Goods and Services Tax (GST) to the supply of coloured toner by your client, XXXXX for subsequent export to XXXXX[.] Our understanding of the facts (the transactions and the purpose of the transactions) is as follows:
Statement of Facts
1. XXXXX is a corporation which carries on business as a manufacturer and distributor of office equipment and business products (the Business).
2. The head office of XXXXX is located at XXXXX[.]
3. XXXXX is registered for GST purposes - GST Registration No. XXXXX[.]
4. XXXXX is a subsidiary of XXXXX[.]
5. XXXXX[.]
6. In carrying on the Business, XXXXX sells coloured toner it manufactures at its XXXXX[.]
7. At present, coloured toner sold to XXXXX is exported directly to XXXXX warehouse in XXXXX has been zero-rating these supplies under the provisions of Schedule VI, Part V, section 1 to the Excise Tax Act.
8. XXXXX is experiencing storage capacity problems at its XXXXX warehouse.
9. As a result, XXXXX has been reshipping the coloured toner purchased from XXXXX to an off-site third party warehouse (also located in XXXXX[)] for storage.
10. The coloured toner is subsequently shipped back to XXXXX XXXXX warehouse for onward shipment XXXXX distribution centres.
11. XXXXX has determined that continuing to operate in the manner described in paragraphs 9 and 10 above is economically unfeasible due to the significant costs involved in multiple shipments of coloured toner to and from the XXXXX warehouse and then to XXXXX distribution centres.
12. XXXXX has also determined that the most economically feasible way in which to operate its coloured toner distribution activities is to have the toner remain in Canada until it is to be shipped to XXXXX distribution centres.
13. XXXXX does not have sufficient space available at its XXXXX for storage of coloured toner sold to XXXXX[.]
Summary of Proposed Transactions
14. In future, all sales of coloured toner by XXXXX which are destined for foreign markets XXXXX will be stored at a public warehouse in Canada until such time as the goods are ready to be exported.
Proposed Transactions
15. XXXXX will sell coloured toner to XXXXX[.]
16. XXXXX will take delivery of the coloured toner in Canada.
17. The coloured toner will be shipped to a public warehouse where it will be stored until subsequent export to XXXXX distribution centres outside Canada or to XXXXX warehouse for onward shipment to distribution centres.
18. It is anticipated that the length of time between delivery of the coloured toner to XXXXX (in Canada) and export of the coloured toner will not exceed XXXXX months.
19. After the coloured toner is sold by XXXXX and before exportation by XXXXX the toner will not be further processed, transformed or altered.
20. XXXXX will maintain evidence of the exportation of the toner.
21. The circumstances described in paragraphs 15 to 20 above will become the normal business practice of XXXXX[.]
Reasons for Transactions
22. XXXXX desires to eliminate the multiple handling and storage charges it currently incurs with respect to its distribution of coloured toner destined for outside Canada.
Ruling Requested
23. The supplies of coloured toner by XXXXX in the circumstances described in paragraphs 15 to 21 above will be considered zero-rated supplies of tangible personal property under the provisions of Schedule VI, Part V, section 1.
Ruling Given
The supplies of coloured toner by XXXXX will qualify for zero-rating under the provisions of Schedule VI, Part V, section 1.
This ruling is subject to the general limitations and qualifications outlined in Section 1.4 of the GST Memoranda Series. We are bound by this ruling provided that none of the above issues are presently under audit, objection or appeal, there are no relevant changes in the future to the Act, and provided that you have fully described all necessary facts and transactions for which you requested a ruling.
If you have any questions or require further information, please contact Mr. Ryhorchuk at (613) 952-6743 or Mr. Randy Nanner at (613) 952-8810.
Yours sincerely,
H.L. Jones
Director
General Applications Division
GST Rulings and Interpretations
Policy and Legislation Branch
| c.c.: |
R. Nanner GAD #: 2693(GEN)
G. Ryhorchuk
XXXXX |
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