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Attention: XXXXX
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November 2, 1994
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Dear XXXXX
This is further to my letter of August 27, 1993, in which I provided an interim response to your letter dated May 4, 1993.
In your letter, you requested our opinion as to whether relief from payment of GST on importation is available to a registered non-resident (Company A) who sells books to another registered non-resident (Company B) and is the importer of record of its own bulk shipment of individually-addressed packages of books for distribution by mail or courier to the clients of Company B in Canada. You also stated that Company A did not believe that they should have to pay GST at the time of entry since they are not able to charge GST on any of their sales.
According to section 143.1 of the Excise Tax Act (Act), if Company A sells books to Company B, then Company B is considered to be the recipient of the supply from Company A (the supplier). If both companies are outside Canada, the supply is deemed not to be made in Canada.
A legal opinion was sought with respect to section 143.1 of the Act, as mentioned in my previous letter. According to the opinion, section 143.1 of the Act does not apply to the supply of prescribed publications between Company A and Company B if that supply is made outside Canada. Therefore, if the publications are delivered or made available outside Canada, Company A should not charge GST on their sales to Company B.
As provided in section 7.1 of Schedule VII to the Act, publications are non-taxable on importation if they are sent, by mail or courier, to the recipient of the supply at an address in Canada and the supplier is registered for GST purposes at the time the publications are imported. This provision also applies to a bulk shipment of individually-addressed packages, or to a bulk shipment destined for a labelling and wrapping operation in Canada, that is sent to Canada by any mode of transportation and is ultimately destined for the mail stream in Canada for delivery to the various addressees.
In the situation described in your letter, a bulk shipment of individually-addressed packages of books is non-taxable on importation if the shipment is sent to Canada by mail or courier, or is sent to Canada by any mode of transportation and the packages are destined for the mail stream in Canada, and evidence of Company B's registration is provided in a prescribed manner. Company B is the supplier for purposes of section 7.1, i.e. the person making the supply to the recipients in Canada. Company A should not pay GST at the time of importation provided evidence of Company B's registration is provided when the package is submitted to Canada Post or a customs officer. A copy of the Publications Supplied by a Non-resident Registrant Regulations is attached and contains details on the manner in which evidence of registration should be provided. For your information, GST status code 65 should be used on Customs accounting documents.
For your information, I am enclosing a copy of the guide entitled, Information for Non-Resident Suppliers of Publications. I am also enclosing an April 1994 edition of Doing Business in Canada - A Guide for Non-residents.
You also asked what goods and circumstances are prescribed for purposes of section 8 of Schedule VII to the Act. The Non-Taxable Imported Goods (GST) Regulations prescribe certain goods that are non-taxable on importation, in certain circumstances. A copy of these regulations is attached for your information.
Should you have any further questions on these issues, please call Cheryl Leyton at (613) 954-5124.
Yours truly,
H.L. Jones
Director
General Tax Policy
Policy and Legislation
Goods and Services Tax
XXXXX
Attachments
c.c.: S.J. Mailer
C.R. Leyton
XXXXX
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