8 August 1994 GST/HST Interpretation 1994-08-08 - Canadian Goods Returned

Dear XXXXX

Thank you for your facsimile received on August 3, 1994, in which you requested that we provide you with the circumstances in which goods classified under Customs tariff item 98.14 may be re-imported into Canada on a duty-free basis. The following represents the application of the Goods and Services Tax (GST) to Canadian Goods Returned and Goods Once Accounted For, Exported and Returned.

The concept of "canadian goods returned" and "goods once accounted for, exported and returned" originate with Customs legislation. These goods are afforded customs duty relief under Customs tariff headings 98.13 and 98.14. At time of implementation of the GST, these tariff items were included in section 1 of Schedule VII of the Excise Tax Act (ETA) and given full relief of the GST. However, due to the value-added-tax nature of the GST that does not exist in customs duty, there was a great risk of goods qualifying for tax-free re-entry into Canada that may have already received relief of tax. This occurs because these tariff items include goods that were previously exported and sold outside Canada and exported in circumstances that qualified the sale as a zero-rated export.

Subsequent changes were made to the ETA, and relief was removed from section 1, and placed in section 8, that would prescribe circumstances in which goods classified under these tariff items could be imported on a non-taxable basis.

The Regulation prescribing these circumstances, the Non-Taxable Imported Goods (GST) Regulations, is currently being drafted by the Department of Finance. The Department of Finance has indicated that Revenue Canada should continue to administer the provisions for Canadian Goods Returned based on the December 18, 1990 Press Release (copy attached).

For your reference, I have also included current guidelines that you may refer to when making this determination for your clients.

Further, while we trust that our comments are of assistance to you, we would advise that this information is based on our understanding of the Department of Finance Press Release of December 18, 1990, as proposed by the Department of Finance. At this time, the proposed amendment as identified above and in Customs Notice N-590, has not been passed into law. As such, this information may change if the final regulations passed into law differ from our understanding of the Press Release as proposed by the Department of Finance.

Should you have any further questions on this subject, please call Susan Mailer, A/Manager of the GST Imports Unit at (613) 952-9579.

Yours truly,

H.L. Jones
Director
General Tax Policy
Policy and Legislation
Goods and Services Tax

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