11645-4-2 (ms)
XXXXX October 10, 1995
This is in response to the memorandum dated July 24, 1995, from XXXXX , Interpretations Officer, to Susan Mailer, Manager, Imports Unit, regarding the above-referenced subject.
We have reviewed the draft response and have the following comments, based on the information available to us.
The facts, as stated in the draft ruling, are as follows:
• XXXXX is a developer of application software;
• XXXXX supplies programs to its clients via a CD ROM medium;
• XXXXX clients access the specific programs they require of the CD ROM by using passwords provided by XXXXX
• XXXXX and its clients enter into license agreements for certain products or services;
• the license agreement between the client and XXXXX authorize the use of only the specific programs required by the client. (Note: The submission on behalf of the applicant states that the license agreement is not modified for any individual client.)
Our view is that the imported software in question has the characteristics of "off-the-shelf" software, rather than "custom" software. The software is not created or modified for any individual customer, nor is there a specific license agreement with an individual customer. In addition, there does not appear to be any ongoing license payments.
We have also consulted with Customs Valuation Division regarding this matter. For Customs purposes and for Division III tax, an importation of this nature would be valued at the full contract price (i.e. the price ultimately payable for the imported goods), even though the total amount is not known at the time of importation. The importer would be required to submit amending customs documents once the full price is determined, and pay additional customs duties and GST as appropriate.
Based on the facts you have provided to us, we suggest that the ruling should indicate that the software is considered to be tangible personal property upon importation and therefore Division III tax would be payable on the value for tax. This amount is based upon the price payable for the goods, under normal Customs valuation rules.
We would also suggest that the ruling should be explicitly limited to this one type of imported computer software that is imported under the specific circumstances indicated. As well, the subject line of the reply should refer to "imported computer software", not "intangible property".
Our opinion is based on the limited information available to us. If your office has additional information which would support the position taken in your draft response, we would be pleased to give this matter further consideration.
Should you have any questions regarding this matter, please contact Mark Seigel of the Imports Unit at (613) 952-1512.
H. L. Jones
Director
General Applications Division
GST Rulings and Interpretations
Doc. 1370 (REGL)
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