22 December 1998 GST/HST Interpretation HQR0001488 - Importation into Canada of a Mobile Editing Facility

Dear Sirs:

Thank you for your letter of November 20, 1998 addressed to Mr. Adrien Venne concerning the application of the Goods and Services Tax (GST) to your operations. This letter has been forwarded to the undersigned for response.

Interpretation Requested

You have advised that you lease one or more mobile editing facilities (the "Facility") which is designed to allow production companies to take their editing equipment with them when they go on location. The Facility is located in XXXXX[.] Your company, XXXXX, is based in XXXXX[.] Periodically, you are approached by a company undertaking TV or film production work in Canada, and is interested in leasing this Facility.

You ask whether a lease of this Facility in Canada by a resident Canadian lessee could be considered for 1/60th GST relief under the Excise Tax Act (the "Act").

Interpretation Given

Generally, a person who is liable under the Customs Act to pay duty on imported goods into Canada or who would be liable if the goods were subject to duty, is required to pay the 7% GST on the value of the goods at the time of importation (section 212 of the Act). As such, GST will be required to be paid by the importer upon the importation into Canada of the Facility.

Every person, not including a small supplier (see page eight of the attached guide), who makes a taxable supply in Canada in the course of a commercial activity engaged in by the person in Canada is required to be registered under the Act. Once required to be registered, the person is termed a registrant under the Act. A GST registrant is required to collect the GST on its sales and leases but is then entitled to claim an input tax credit for the GST required to be paid on its purchases and on GST paid on the importation into Canada of equipment such as the Facility, provided that the equipment is imported for consumption, use, or supply in the course of the registrant's commercial activities. As a result, a GST registered person would not need the 1/60th GST relief.

Whether 1/60th relief of the GST is available at the time of importation can be determined by reference to Revenue Canada Customs Memorandum D8-1-1 titled "Temporary Importation Regulations". Where the importation of your Facility does not fall within the schedule to Appendix D of this memorandum, special requests for the 1/60th relief of GST are considered by the Department of Finance on a case by case basis. Generally, it is the importer of the goods who makes the request.

However, it is only in extraordinary situations that these special requests are granted and it is unlikely that a request with respect to the importation of the Facility will be approved. Companies that do business in Canada are therefore encouraged to register for GST purposes whereby, as mentioned above, they are entitled to claim input tax credits for GST paid on goods imported or acquired for use in their commercial activities.

If you wish to import the Facilities into Canada and then lease them to Canadian companies issues to consider are registration, non-resident security, and the collection and remittance of tax. Much of this information is contained in the enclosed Revenue Canada publication "Doing Business in Canada - GST/HST Information for Non-Residents".

Should you wish to obtain further information on the issue of registration, Revenue Canada Customs Memorandum D8-1-1 or any other GST issue, it is suggested that you contact our XXXXX[.] This office is also responsible for the actual registration.

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the Excise Tax Act and Customs 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/HST 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 matter, please do not hesitate to contact me at (613) 954-2560.

Yours truly,

Richard Aronoff
Border Issues Unit
General Operations and Border Issues Division
GST/HST Rulings and Interpretations Directorate