26 June 1998 GST/HST Interpretation HQR0001217 - Goods Mailed for Export

                                                                        GST/HST Rulings and
Interpretations
Place Vanier, Tower C, 9th Floor
25 McArthur Avenue
Vanier, Ontario K1A 0L5

                                                                        June 26, 1998

Dear XXXXX:

Thank you for your facsimile message of June 11, 1998, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to goods (i.e., tangible personal property) mailed to employees of the Department of Foreign Affairs and International Trade (DFAIT) who are posted outside Canada.

I understand that employees at certain privileged missions are entitled to receive personal parcels from Canada. DFAIT established this amenity to assist employees and their dependants who are posted to countries where the local postal facilities are unreliable and many essential day-to-day items are not available locally XXXXX The parcels must be addressed as follows:

XXXXX

XXXXX

XXXXX

A DFAIT employee is only entitled to one annual allotment of XXXXX kilograms per full calendar year.

In order for a DFAIT employee to be able to make use of this service, DFAIT's Services Centre must be provided with the names, complete postal addresses and telephone numbers of up to four sources (i.e., parcel nominees) in Canada prior to each posting. Parcels received from unauthorized or unidentified sources, or which are suspected to contain prohibited items, will be examined by the Distribution Services Division of DFAIT and may be returned to the sender. Parcels must not contain the following items:

Interpretation Requested

When a parcel nominee mails tangible personal property to a DFAIT employee at XXXXX the supply will be subject to the GST/HST at 0% (i.e., zero-rated).

Interpretation Given

Under the provisions of Schedule VI, Part V, section 12 to the Excise Tax Act (Act), a supply of tangible personal property is zero-rated where the supplier mails the property for export.

In situations where a retail store, who is a parcel nominee, sells tangible personal property to a DFAIT employee and mails the property to XXXXX, the requirements of Schedule VI, Part V, section 12 are considered to have been met. Therefore, the supply by the retail store to the DFAIT employee may be zero-rated.

Zero-rating could also apply in situations where a friend or relative of a DFAIT employee purchases tangible personal property from the same retail store and has the retail store (the parcel nominee) mail the property to the DFAIT employee.

However, should the friend or relative take physical possession of the property, the supply will be subject to the GST at 7% or the HST at 15%, notwithstanding the fact that the property may eventually be mailed to the DFAIT employee at XXXXX[.]

The foregoing comments represent our general views with respect to the subject matter of your message. Unannounced or future amendments to the Act may result in changes to this interpretation. 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) 952-6743.

Yours truly,

Garry L. Ryhorchuk
Senior Rulings Officer
Border Issues Unit
General Operations and Border Issues Division
GST/HST Rulings and Interpretations Directorate

NCS Subject Code:                 11640-4