Telephone #: (613) 954-8585
Fax #: (613) 990-1233
File #: 11680-1(glr)
s. 142, 143
Sch. VI/V/12
I refer to your E-mail message dated February 8, 1996, addressed to Mr. Garry Ryhorchuk of my staff, concerning the place of supply rules when a person makes a supply by way of sale of tangible personal property (TPP) and ships the TPP by mail or courier (other than in the situations described in section 143.1 of the Excise Tax Act (Act)). You also enquired about the application of Schedule VI, Part V, section 12 to the Act. The issues were raised by Mr. XXXXX of your staff in his E-mail message to you of February 8, 1996.
As requested, the following comments are provided:
1. When TPP is sold and is shipped by mail from a place outside Canada to a place in Canada, the place where the TPP is delivered or made available may be outside Canada. However, this is not always the case.
For example, non-resident stamp companies send stamps "on approval" to their Canadian customers. The supplies only occur at the moment the Canadian customers decide which stamps they want to keep. The non-resident stamp companies will only know which stamps have been sold (in Canada) when the customers return the stamps they did not wish to purchase together with the payment for the stamps that remain in Canada. In these situations, the supplies of the stamps are deemed to be made in Canada under the provisions of paragraph 142(1)(a) of the Act.
When determining the place of supply for TPP shipped by mail from outside Canada, it is necessary to refer to the terms of the contract. If the contract is silent, the place of supply may be outside Canada provided this principle is consistent with the law of the sale of goods in the jurisdiction in which the contract is concluded.
A courier is a transportation company. When goods are shipped by courier from outside Canada, the place of supply may be determined by reference to the terms specified in the contract. If the terms are not specified, the place of supply may be outside Canada provided this principle is consistent with the law of the sale of goods in the jurisdiction in which the contract is concluded.
For additional information, you should refer to Policy Statement P-078 entitled "Meaning of the phrase delivered or made available in (or outside) Canada to the recipient".
2. Although a supply of the TPP is deemed to be made in Canada under paragraph 142(1)(a), the supply may still be deemed to be made outside Canada under the provisions of subsection 143(1) of the Act provided the supplier is a non-resident and the supply is not made in the course of a business carried on in Canada, or the supplier is an unregistered non-resident.
3. The rules outlined in 1 above for determining the place of supply by way of sale of TPP also apply to supplies of TPP made in Canada and shipped by mail or courier to places outside Canada.
4. In order for a supply of TPP to be zero-rated under Schedule VI, Part V, section 12, the supply must be made in Canada. If the TPP is not for export and delivery to the recipient of the supply, the supply of the TPP is subject to the GST at 7% (unless, of course, the supply is already zero-rated under another provision in the Act, such as Schedule VI, Parts III or IV).
For example, the zero-rating provisions of Schedule VI, Part V, section 12 would not apply where a resident purchases a vase at a local store and instructs the store to mail the vase to the resident's relative located in XXXXX[.] 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.
H.L. Jones
Director
General Applications Division
GST Rulings and Interpretations
Policy and Legislation Branch
| c.c.: |
R. Nanner GAD #: 1619(REG)
G. Ryhorchuk |
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