January 23, 1997
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Subject:
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Subsection 252(1) of the Excise Tax Act (Act)
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This is in response to your letter of October 10, 1996, in which you requested our interpretation of a number of issues pertaining to visitor rebates. I will respond to the issues in the order in which they were requested by you.
1. Definition of "group"
Q. What constitutes a "group" within our Revenue Canada context in regards to page 5 of the July 1996 "Goods and Services Tax Refund for Visitors" - "A family or group can apply for the refund under one name." XXXXX was asking whether they all have to be members of a specific organization or can they just be a random grouping of people not necessarily associated with each other - say a collection of individual clients of XXXXX who travelled to Canada in a certain time period?
A. In cases where a word is not defined in the Act, one must look to the common ordinary meaning of the word.
In light of the dictionary definitions, I am of the opinion that a group is any assemblage of individuals with certain similarities or common goals. For example, a group of senior citizens who volunteer at a children's hospital and arrange for group trips to Canada.
2. Definition of Non-Resident Business
Q. Where we use the term "non-resident business", what companies/businesses are NOT eligible for this refund? Are all financial institutions, state/federal government departments/commissions, schools, universities, churches eligible for this "non-resident business" refund? This is a question from one of the XXXXX companies inquiring into the GST Visitor Rebate Program.
A. Section 123(1) of the Act provides definitions of "non-resident" and "business". In addition to the definitions, the Department relies on a number of policies pertaining to business as follows:
P-167 - Meaning of the First Part of the Definition of "Business"
P-205 - Meaning of the Second Part of the Definition of "Business" and Whether it Applies to Activities Regardless of Whether there is an Expectation of Profit
Section 132 also provides information on the question of residence for GST purposes.
3. Interpretation of photo packages
Q. The procedures we have from Ottawa (printed 95/05) concerning photo packages state "All types of photo packages are eligible for a tax refund under the Visitor Rebate Program". We're just wondering about this because a photo package usually has a fairly substantial amount of service included in a package price. For example, a photo package could include an album, negatives, prints, developing and the photographer's hourly rate. So when we see photo package - XXXXX GST - XXXXX should we question the components of the package and try and determine which elements are tangible goods that were exported from the country and calculate the rebate on that basis? Or should we simply rebate the full amount of GST paid on the package as a whole? Should we rebate 50% of the GST charged (like we do with travel packages) when the detailed breakdown is not there?
A. A supply of photofinishing is considered to be a supply of goods and, for this reason, a person is entitled to claim a visitor rebate on the entire photo package.
4. Interpretation of XXXXX per receipt.
Q. A phone call was received from a Duty Free Shop asking about the XXXXX minimum amount per receipt. The scenario is that an individual who has several purchases from the same store, on the same date and when the time is entered on the receipt, is only a few minutes apart. This occurs in large department stores like the XXXXX where there are different departments in the store and you must pay for the item before leaving the department. When you combine all purchases, you attain the minimum of XXXXX of GST paid. Could you review this scenario and advise us if we can accept these receipts as one.
A. The legislation is very specific in that the rebate must be substantiated by a receipt for an amount that includes consideration totalling at least $50.00 for goods for which the person is eligible for a rebate. An individual is not entitled to the visitor rebate if each receipt does not total at least $50.00 for goods. In this case, it is evident that there is more than one receipt.
5. Lease Buyouts
Considering you did not provide me with any specifics, my response will be in general terms. I will make the assumption that the person leased a vehicle in Canada and subsequently exported the vehicle from Canada. The person exercised a buyout option and purchased the vehicle while outside of Canada.
At the time the person entered into the lease agreement, the vehicle was located in Canada (and the person obtained physical possession of the vehicle in Canada). Therefore, the supply of the vehicle was deemed to be made in Canada under the provisions of paragraph 142(1)(b) of the Act. Under the provisions of subsection 165(1) of the Act, the person who leased the vehicle was required to pay the tax equal to 7% of the consideration of the supply for all lease payments.
If, at the time the buyout option was exercised, both parties knew that the vehicle was outside of Canada, the place of delivery would probably be outside of Canada (depending on any existing sale of goods act in the province in which the agreement for the vehicle was signed). This being the case, the supply of the vehicle would be deemed to be made outside Canada under the provisions of paragraph 142(2)(a) and not subject to the GST under Division II.
If you have any questions or require additional information, please contact Cheryl Leyton at 954-5124 or Randy Nanner at 952-8810.
C.R. Leyton
Policy Officer
Border Issues Unit
General Operations and Border Issues Division
GST Rulings and Interpretations
c.c.: R. Nanner
R. Leyton
Telephone #: (613) 954-8585
Fax #: (613) 990-1233
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