10 December 1998 GST/HST Interpretation HQR0001390 - Request for Clarification

This refers to your E-mail message dated August 6, 1998, in which you requested clarification of the following issues:

1. Our booklets state for accommodation that "the limit of less than one month applies to each lodging establishment". Is there a ruling that clarifies that, for a stay of say 50 days, the changing of rooms in the same hotel after 25 days doesdoes not qualify for the visitor rebate for the entire amount of tax?

2. Could you please clarify or provide me with the various rulings on the purchases of automobiles by non-residents when they have or have not physically come to Canada. If a non-resident in Germany had his uncle in Canada purchase a new automobile in the non-resident's name and the uncle arranged for the shippingexportation of the vehicle to Germany, would this be a Visitor GST 176 or a General Rebate GST 186?

Our responses are as follows:

1. Based on the definition of short-term accommodation in subsection 123(1) of the Excise Tax Act ("the Act"), an individual may submit a claim for a "residential complex" or a "residential unit". Therefore, a non-resident person may submit a claim for more than one unit in a hotel, providing the occupancy of each unit is less than one month. However, section 252.2 of the Act restricts the total of all rebate claims for short-term accommodation to $75.

2. Subsection 142(1)(a) of the Act deems a supply of tangible personal property (tpp) by way of sale to be made in Canada, if the property is, or is to be, delivered or made available in Canada, to the recipient of the supply. If the supply is deemed to be made in Canada, the recipient of the supply must pay 7% (GST) or 15% (HST) on the value of the consideration for the supply [subsections 165(1) and 165(2) of the Act].

Therefore, if a supplier makes a sale of tpp, in Canada, to either a resident or non-resident recipient, the supply is subject to GST/HST. However, if a supply of tpp is exported from Canada, depending on the status of the recipient, the recipient may either claim a rebate of the GST/HST or the supply may be subject to the zero-rating provisions of Part V of Schedule VI to the Act.

If a non-resident recipient exports the tpp from Canada within 60 days of the date the tpp is delivered to the non-resident, the Minister may pay a rebate to the person of the tax paid on the supply pursuant to subsection 252(1) of the Act, subject to the restrictions in section 252.2 of the Act. Therefore, a non-resident, who purchases an automobile in Canada and exports it from Canada within 60 days, may submit a claim for the GST/HST on a GST form 176.

Although Part B of the Visitor Rebate Application (GST 176E) requests the date of arrival in Canada and departure from Canada of the non-resident, there is nothing in section 252 of the Act which imposes the requirement that the non-resident actually had to be in Canada. Generally speaking, though, the non-resident would have been in Canada when the non-resident purchased the tpp.

For example, the Explanatory Notes to Bill C-62 dated May 1990, state, in part, that:

"Subsection 252(1) provides for a rebate of the GST paid by a non-resident person on goods purchased in Canada and exported or taken by the person out of Canada within 60 days of purchase."

A resident of Canada, who purchases an automobile in Canada, on behalf of a non-resident recipient, may be considered to be an agent of the non-resident (principal). Of course, it is a question of fact as to whether an agency relationship exists between the agent and principal. If the relationship does not fall within the provisions of section 177 of the Act, i.e., both the agent and principal are not registered for the GST, the supply is subject to the general provisions of Part IX of the Act. Therefore, if the supply is deemed to be made in Canada, pursuant to subsection 142(1)(a) of the Act, the non-resident must pay the GST/HST on the supply of the automobile.

However, pursuant to section 12 of Part V of Schedule VI to the Act, a resident of Canada can arrange to export an automobile to a non-resident, provided the supplier of the automobile delivers the property to a common carrier for export. In this case, the supply of the automobile is zero-rated. If the resident of Canada is the recipient of the supply of the automobile and uses the automobile prior to export, the provisions of section 12 cannot apply.

The General Rebate form 186 can only be used for commercial exports, i.e.; the property for which the individual is claiming a rebate is primarily for the use in commercial activities outside Canada.

If you have any questions, please do not hesitate to contact me a 954-5124.

Cheryl R. Leyton
Services and Intangibles Unit
General Operations and Border Issues Division
GST/HST Rulings and Interpretations Directorate