11645-3-4 (sjm)
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Subject:
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Input to Letter to XXXXX
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This is in reply to your facsimile transmission, dated July 21, 1995, wherein you asked for input to some questions asked by the above-noted company concerning the Goods and Services Tax (GST) as it applies to imported mail order goods.
In specific, XXXXX has asked the following questions:
1. We wish to collect GST directly from our customers and remit these taxes to Revenue Canada. We were informed that we are able to collect GSTs if we establish a non-resident Business Account with Revenue Canada. Is this correct?
It is first important to identify what are the terms of delivery of the goods being imported. If the terms of delivery are outside Canada, regardless of whether or not the non-resident company is a GST registrant, GST should not be charged or collected on goods delivered or made available outside Canada.
If the shipments are being cleared at Customs as casual importations, the mail order company cannot be considered the importer. It is the customer in Canada who is considered to be the importer and who is liable to pay the GST at time of importation, whether or not that amount of tax is paid by someone else to Customs on their behalf. In this scenario, the non-resident company could pre-collect the appropriate customs duty and GST from the customers, and then remit it to Canada Customs on behalf of the Canadian customer.
If, on the other hand, the mail order company is clearing the goods owned by that company at time of importation as commercial shipments, then as importer and owner, they are liable under the Customs Act for the payment of duties and taxes at time of importation. It should be noted that a commercial importation requires various permits and certificates to be included with the Customs accounting documents. As well, as a commercial importer, the mail order company cannot benefit from the remission relief available under the Postal or Courier Imports Remission Orders.
With respect to the issue of registration for the GST, only non-residents who are carrying on business in Canada, and who make taxable supplies in Canada, are required to be registered. However, if, in the ordinary course of carrying on a business outside Canada, the non-resident company regularly solicits orders for the supply of tangible personal property for delivery in Canada, then this non-resident may be eligible to register voluntarily.
In designing the GST, it was recognized that there may be occasions where non-resident persons engaged in commercial activities outside Canada would incur GST on purchases and imports related to their taxable sales or to sales made outside Canada. Persons electing to register on a voluntary basis are generally eligible to claim ITCs for tax paid on inputs that are used in the course of their commercial activity. For example, a non-resident GST registrant may pay GST at time of importation for catalogues they import to solicit orders, GST paid on the service of advertising they do in Canada and GST paid on Canadian postage. If those costs are incurred in the course of their commercial activity, the GST may be recoverable.
2. What are the steps necessary to establish an account (or accounts) with Revenue Canada (or other agencies) to implement these objectives?
Non-residents who are required or who are entitled to register voluntarily their business with Revenue Canada and who come from the state XXXXX are invited to contact the following Tax Services Office, which has responsibility for their accounts:
XXXXX
Should you have further questions, please contact Susan Mailer, Manager of the GST Imports Unit at 952-9579.
H.L. Jones
Director, General Applications Division
GST Rulings and Interpretations
Policy and Legislation Branch
XXXXX
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