13 May 1997 GST/HST Interpretation HQR0000492 - International Freight - Canada Post

                                                                        May 13, 1997

Dear XXXXX

This is in reply to the electronic mail transmission of December 11, 1996, from XXXXX of your office concerning the application of the Goods and Services Tax (GST) to section 6 of Part VII of Schedule VI to the Excise Tax Act (ETA). I apologize for the delay in the response.

Interpretation Requested

Section 6 of Part VII of Schedule VI to the ETA zero-rates a supply of a freight transportation service in respect of the transportation of tangible personal property from a place in Canada to a place outside Canada where the value of the consideration for the supply is $5 or more.

You have asked then, should the client ship a SINGLE item internationally for which the postage is less than $5.00, will GST apply? Where the postage for a single item is $5.00 or more, the postage is affixed to the parcel at the time it is purchased, and the parcel is mailed at that time, the supply by Canada Post will be zero-rated.

The issues that remain, however, involve multiple international shipments submitted at the same time to Canada Post, the postage for each item is less than $5.00 and for which a single invoice is issued by Canada Post in an amount of $5.00 or more. What is the tax consequences of this?

Interpretation Given

It is the Department`s position that:

1) Where commercial goods are identified on a single Statement of Mailing, are all destined for outside Canada (international outbound freight), and are being mailed from a single shipper/customer, the Department will consider that to be a single supply of a freight transportation service. Where the total consideration for that supply is $5 or more, the supply will be zero-rated in accordance with section 6 of Part VII of Schedule VI.

2) Where non-commercial goods are transported outside Canada (international outbound freight), are invoiced to a single customer on a single invoice, and the value of the consideration for the transportation is $5 or more, the supply will be zero-rated in accordance with section 6 of Part VII of Schedule VI. Canada Post has added the additional requirement that custody of all the outbound goods must be transferred to Canada Post at the same time.

It is also important to note that this is the way that Canada Post has operated since the implementation of the tax, it is a system that works for their clients, and, is enforceable by them.

Should you have any questions on the foregoing, please contact the undersigned at (613) 952-9579.

Yours truly,

S.J. Mailer
Manager, Industries Unit
General Operations and Border Issues Division
GST Rulings and Interpretations Directorate
Policy and Legislation

Legal References:                   23(1) "supply", SchVIPt7para 1(1) "continuous freight movement", section 6 "Outbound Freight Movement"

b.c.c.:   hard copy - XXXXX