This is to acknowledge receipt of your letters dated May 19, 1995, and June 12, 1995, concerning the payment of the Goods and Services Tax (GST) payable by your customer, XXXXX I must apologize for the delay in replying to your request.
At the time you initially spoke to my officer, Cheryl Leyton, by telephone, we were in the process of formulating a policy with respect to the collection and remittance of GST by publishers and subscription agents. This policy has now been finalized and we are able to respond to your query regarding the application of GST to subscriptions to journals purchased by subscription agents registered for the GST.
Based on the information provided in your letters, my understanding of the facts is as follows:
1. XXXXX is a non-resident, registered subscription agent, located in XXXXX
2. XXXXX is a non-resident, registered publisher, located in XXXXX
3. XXXXX arranges with XXXXX to purchase subscriptions to journals to be shipped to its client, XXXXX (customer).
4. XXXXX charges GST to XXXXX based on the value of the subscription and remits the GST to Revenue Canada.
5. XXXXX has refused to pay the GST based on advice received from Revenue Canada during a GST Forum meeting at the P XXXXX held in XXXXX on March 12, 1991.
6. XXXXX submitted a fact sheet indicating that, based on the advice received from Revenue Canada, their company charges GST to their Canadian customers. All subscription purchase orders to publishers on behalf of their Canadian customers only will automatically carry a narrative at the top of the order quoting their GST number for publishers to quote on their mailing label.
Ruling Requested
XXXXX collects GST from XXXXX , pursuant to subsection 221(1) of the Excise Tax Act, when XXXXX purchases publications that are shipped from XXXXX in the U.S. to XXXXX customer.
Ruling Given
Based on the facts set out above, we rule that XXXXX is not obligated to collect the GST from XXXXX pursuant to subsection 221(1) of the Excise Tax Act, when XXXXX purchases publications that are shipped from XXXXX in the U.S. to XXXXX customer.
This ruling is subject to the general limitations and qualifications outlined in GST Memoranda Series (Chapter 1.4). We are bound by this ruling provided that none of the above issues is currently under audit, objection or appeal, that there are no relevant changes in the future to the Excise Tax Act, and that you have fully described all necessary facts and transactions for which you requested a ruling.
Rationale
Providing the subscription agent is registered for the GST, the subscription agent will be responsible for the collection and remittance of GST from the Canadian customer. Considering the subscription agent is responsible for the collection and remittance of GST, the publisher is not required to collect GST from the subscription agent and remit it to Revenue Canada. However, as requested by XXXXX on their purchase orders, their registration number must be quoted on all packages mailed to their Canadian customers to properly document that XXXXX is responsible for collecting the GST.
Since the foregoing is a departure from your current billing practice, I would encourage you to contact Cheryl Leyton at (613) 954-5124 if you have any questions concerning the policy.
XXXXX
Director
General Applications Division
GST Rulings and Interpretations
Domus 2231 (General)
| c.c.: |
S.J. Mailer
C.R. Leyton
Imports Unit Case File XXXXX |
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