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XXXXX
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File: 11995-1Doc: 911March 1996
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Dear XXXXX
I refer to your letters dated May 3, 1994, and July 18, 1994, in which you have requested an interpretation of whether XXXXX (hereinafter referred to as XXXXX should charge GST on its storage fees.
XXXXX[.] The marine terminal is used to unload XXXXX from transatlantic ships and reload the product onto smaller ships for delivery to destinations inside and outside Canada. The product may be blended at the terminal before it is reloaded (or as part of the reloading process). There are large storage tanks in which product is stored for approximately two weeks to four months. Generally, the average length of storage is less than 30 days.
I understand that commencing August 1, 1994, the final destination of XXXXX of the XXXXX is expected to be a foreign destination (primarily XXXXX[.] The remainder will have Canada as the final destination.
In the same year (1994) the final destination of XXXXX of the XXXXX and XXXXX of the XXXXX is expected to be a foreign destination with the remainder destined for Canada. Furthermore, it is also expected that in 1994, XXXXX of the XXXXX flowing through the terminal will be XXXXX[.] As a result, I understand that approximately XXXXX of the total throughput will have a final destination in Canada. Storage is leased to clients on the basis of the product flowing through a tank once and the volume held in the tank. A service fee for the storage is charged on a per barrel basis.
XXXXX has previously been advised that the storage services it supplies to unregistered non-residents may be zero-rated under Schedule VI, Part V, section 4 to the Excise Tax Act (Act) provided the conditions outlined in the zero-rating provision are met. Specifically, where XXXXX products are temporarily imported into Canada for the sole purposes of having the storage services performed and then exported as soon as is practicable after the service is performed, the supply of the storage services will be zero-rated under Schedule VI, Part V, section 4.
XXXXX Storage services in respect of XXXXX products which are destined for the Canadian market do not qualify fro zero-rating under Schedule VI, Part V, section 4. In addition, these services would not qualify for zero-rating under Schedule VI, Part V, section 7 to the Act as they are primarily for consumption, use or enjoyment in Canada and they are in respect of tangible personal property that is situated in Canada at the time the service is performed.
The storage services may not be deemed to be made outside Canada under the provisions of subsection 179(2) of the Act as this provision specifically excludes a service of storing property.
Therefore, as there are no other provisions which could apply to zero-rate the storage services, or deem the supply of the storage services to be made outside Canada, the supply of the storage services is subject to the GST at 7%.
I trust this satisfies your request. If you require any further information, please contact Garry Ryhorchuck, Senior Policy Officer at 952-6743.
The foregoing comments represent our general views with respect to the subject matter of your letter. Unannounced, proposed or future amendments to the legislation may result in changes to our interpretation. These comments are not rulings and, in accordance with the guidelines set out in GST Memorandum 100-3, do not bind the Department with respect to a particular situation.
Yours truly,
J.A. Venne
Director
Tax Policy - Special Sectors
GST Policy and Legislation
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