29 September 1997 GST/HST Interpretation HQR0000755 - Excise Tax Act, Subsection 242(1)

                                                                        M. Guerra
Case: HQR0000755
File: 11690-04; 11690-14
September 29, 1997

Dear XXXXX

This is in response to your letter of June 27, 1997, concerning the interpretation of subsection 242(1) of the Excise Tax Act (ETA).

Interpretation Requested

You ask if the Minister will agree to deregister a non-resident person in the following situation:

a) the non-resident is not required to be registered for GST purposes;

b) the non-resident voluntarily registered for GST purposes;

c) the non-resident collects and remits GST with respect to supplies that are not made in the course of a business carried on in Canada; and

d) the recipient of the supplies made by the non-resident can properly claim full input tax credits of the GST collected by non-residents on those supplies.

You also stated in your letter that none of subsections 240(1), 240(1.1), 240(2) and 240(4) of the ETA which require registration apply to the non-resident person.

Interpretation Given

Based on the information provided, the Minister may cancel the person's registration provided the Minister is satisfied that the registration is not required under section 240 of the ETA for GST purposes. More specifically, under paragraph 240(1)(c), a non-resident person who does not carry on any business in Canada is not required to be registered for GST purposes. Please refer to policy paper P-051 "Carrying on Business in Canada".

If it is determined that the non-resident makes taxable supplies in Canada but the non-resident is not carrying on business in Canada, the supplies made in Canada by the non-resident will be deemed to be supplies made outside Canada by virtue of subsection 143(1) of the ETA, provided the other requirements therein are met.

On April 1, 1997, the harmonized sales tax (HST) replaced the goods and services tax (GST) and the provincial sales tax (PST) in the three participating provinces of Nova Scotia, New Brunswick and Newfoundland with a harmonized tax rate of 15%. If a person supplies goods that are delivered or made available in a participating province, supplies services to be performed in a participating province or supplies intangible personal property that may be used in a participating province, to the extent that the supplies are taxable supplies, tax must be collected at the harmonized rate.

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the Excise Tax Act, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST Memoranda Series, do not bind the Department with respect to a particular situation.

Should you have any further questions or require clarification on the above or any other GST/HST matter, please do not hesitate to contact me at (613) 952-9577.

Yours truly,

Marilena Guerra,
C.M.A. Rulings Officer
Financial Institutions
and Real Property Division
GST/HST Rulings and Interpretations Directorate
Policy and Legislation Branch