12 November 1998 GST/HST Ruling HQR0001119 - Children's Books and Computer Books

Dear Sirs:

Thank you for your fax of April 3, 1998, (with attachments), concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transaction(s) described below.

You sell books that are packaged by your supplier with other items. These items accompanying the books are intended to enhance the appeal of the books to the readers (e.g., childrens' books) or to increase the utility of the books by providing a medium for practice or simulation (e.g., computer disk or CD-ROM).

Ruling Requested

An application ruling that the books listed below will qualify under the definition of a printed book given in subsection 259.1(1) of the ETA.

•   The Secret Garden packaged with a key and necklace,

•   Old Mother Hubbard packaged with two cloth hand puppets,

•   Illustrated Father Goose Book and Gosling Box Set (boxed with a stuffed gosling toy),

•   Microsoft Internet Systems Specialist books that include a CD-ROM featuring simulation software

Ruling Given

Based on the facts set out above, we rule that the above books are excluded from the definition of a printed book in subsection 259.1(1) of the ETA and do not qualify for the point-of-sale rebate.

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; that there are no relevant changes in the future to the Act, or to departmental interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Explanation

The word "book" as used in section 259.1 of the ETA, is interpreted in accordance with its ordinary meaning. Common dictionary definitions of the term "book" indicate that the essence of a book is a number of sheets fastened together in some way. Printed books may contain printed words, printed pictures, diagrams, symbols, or other visual aids, including music and Braille. Therefore a book containing printed words and images or even one containing only printed images is a printed book. Absent from common definitions is the concept of different products packaged together with a book.

We consider that a printed book and another product packaged together and sold for a single price is considered to be a new product that does not fall within the definition of a printed book as contemplated in section 259.1 of the ETA. For example, the Tariff Board of Canada, in the case of Walt Disney Music of Canada Ltd., decided that a combined product consisting of a book sold together with a record in an attached sleeve did not qualify for an exemption from Federal Sales Tax (FST) that was available for printed books. The Tariff Board determined that when two goods are packaged together and supplied as one good, the supply is not a supply of the two elements, but rather a new good has been created. In the Disney case the two elements were a book and an audio cassette. The tax implication was that this new product was not considered to be a book for the purpose of the exempting provision under Part VI (FST) of the ETA.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-7931.

Yours truly,

David Crawford
General Operations Unit
General Operations and Border Issues Division
GST/HST Rulings and Interpretations Directorate