16 December 1998 GST/HST Ruling HQR0001299 - and GST/HST INTERPRETATION Exports of Formed

Dear Mr. XXXXX

I refer to your letter of August 18, 1998 (with attachments), as well as subsequent correspondence, and our meeting in Vancouver on November 27, 1998, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to supplies of formed XXXXX made to your client, XXXXX XXXXX for export.

The following information and statements are contained in the aforementioned letter and in previous information submitted to the Department:

•   XXXXX is an unregistered non-resident that markets and sells formed XXXXX exclusively to overseas buyers. The XXXXX facilities in XXXXX[.]

•   XXXXX is not responsible for forming any XXXXX purchased in Canada.

•   The formed XXXXX is exclusively for export and cannot be for consumption in Canada.

On December 10, 1998, the Honourable Jim Peterson, Secretary of State (International Financial Institutions), on behalf of the Honourable Paul Martin, Minister of Finance, tabled a Notice of Ways and Means Motion that proposes amendments to the Excise Tax Act (Act). The proposed amendment to Schedule VI, Part V, section 12 to the Act has a direct bearing on supplies made to XXXXX[.] For this reason, a ruling is being provided for supplies which are not affected by the Notice of Ways and Means Motion and an interpretation is being provided to cover those transactions which will be affected by the Notice of Ways and Means Motion.

Copies of the proposed amendment to Schedule VI, Part V, section 12 to the Act, as well as the explanatory notes, are attached.

Ruling Requested

As the formed XXXXX exclusively for export and cannot be consumed in Canada, the supplies of the formed XXXXX to XXXXX by the Canadian producers qualify for zero-rating under the provisions of Schedule VI, Part V, section 12 to the Act.

Ruling Given

As all formed XXXXX is for export only and cannot be consumed in Canada, for the period up to and including April 30, 1999, the supplies of the formed XXXXX to XXXXX qualify for zero-rating under the provisions of Schedule VI, Part V, section 12 to the Act when delivered to a common carrier.

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection or appeal, there are no relevant changes in future to the Act or to departmental interpretative policy, and that you have fully described all necessary facts and transactions for which you requested a ruling.

Interpretation Given

Effective for supplies made after April 1999, Schedule VI, Part V, section 12 to the Act is proposed to be amended to ensure that a supply can be zero-rated under this section only if the supplier ships the property, or sends it by mail or courier, to a destination outside Canada on the supplier's own behalf or if the supplier retains a common carrier or consignee on behalf of the recipient to ship the property to a destination outside Canada.

To the extent that the transactions between XXXXX and its suppliers remain unchanged, supplies of formed XXXXX made to XXXXX on and after May 1, 1999, will not qualify for zero-rating under the provisions of Schedule VI, Part V, section 12 to the Act. These supplies will be subject to the GST at 7%.

The foregoing comments represent our general views with respect to the proposed amendment to Schedule VI to the Act as it relates to the subject matter of your letter. Any change to the wording of this proposed amendment or any future proposed amendments to the Act or Schedules, 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/HST Memoranda Series, do not bind the Department with respect to a particular situation.

Please contact me at (613) 954-7959 to discuss the implications of the proposed amendment.

Yours truly,

J.A. Venne
Director
General Operations and Border Issues Division
GST/HST Rulings and Interpretations Directorate
Policy and Legislation Branch

Attachments

Note: Not to be used as a reference with respect to the application of section 13 of Part III of Schedule V. For additional information refer to RITS Cases # 59528, 101761 and 135640 on the HQ GST/HST Rulings letter database.