Telephone #: (613) 954-8585
Fax #: (613) 990-1233
File #: 11690-8(dc)
Para. 240(3)(b)
XXXXX
I refer to XXXXX inquiry of May 14, 1996, from your staff, which was sent to me by fax, concerning the legislative amendment brought to section 240 of the Excise Tax Act (Act), in connection with the voluntary registration available to non-residents for GST purposes.
More specifically, XXXXX requests an explanation of the proposed amendment to paragraph 240(3)(b) of the Act as it relates to mail order companies who ship goods through the courier stream for delivery in Canada.
Under the existing legislation, non-residents who are not required to be registered for the GST and who, in the course of a business carried on outside Canada, regularly solicit orders for the supply of tangible personal property to be delivered in Canada, are entitled to register voluntarily even though those activities may not constitute the carrying on of a business in Canada. This provision applies to mail order companies.
The recent legislative amendments tabled in the House on April 24, 1996, clarify that non-residents who, in circumstances described above, export personal property to Canada (as well as deliver the property in Canada) may register voluntarily for the GST. In addition, non-residents are entitled to register voluntarily if they enter into agreements to supply:
• services to be performed in Canada, or
• intangible personal property to be used in Canada, or that relates to real or tangible personal property situated in Canada, or to services to be performed in Canada.
These agreements do not necessarily have to be negotiated or concluded in Canada.
The above mentioned amendment does not substantially change or alter the voluntary registration for mail order companies. They have always had the option to register for the GST pursuant to section 240, provided they were soliciting orders for the supply of tangible personal property to be delivered in Canada.
Should mail order companies decide to register under the current rules they would be entitled to recover the tax paid at time of importation by way of an input tax credit, subject to the requirements provided under section 169 of the Act. Should they not wish to register and not be included in the Canadian tax system, they would continue to apply for refunds under Customs' rules if the goods are re-exported.
For any information concerning the above, please contact Mr. Randy Nanner at (613) 952- 8810 or Mr. Daniel Chamaillard at (613) 957-8220.
H.L. Jones
Director
General Operations & Border Issues
GST Rulings and Interpretations Directorate
Policy and Legislation Branch
GOBI#: 2989(GEN)
| c.c.: |
R. Nanner
D. Chamaillard |
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