GST/HST Rulings and Interpretations
Directorate XXXXX
Place Vanier, Tower C, 10th Floor
XXXXX 25 McArthur Avenue
XXXXX Vanier, Ontario
XXXXX K1A 0L5
April 30, 1998
Dear XXXXX :
Thank you for your letter of August 29, 1997, with attachments, concerning the application of the goods and services tax (GST) harmonized sales tax (HST) to the transactions described below.
Our understanding of the facts, the transactions, and the purpose of the transactions is as follows.
Statement of Facts
1. The Motor Vehicle Safety Act (Act) is an Act "to regulate the manufacture and importation of vehicles and motor vehicle equipment to reduce the risk of death, injury and damage to property and the environment".
2. Subsection 5(1) of the Act states that "No company shall apply a national safety mark to any vehicle ... or import into Canada any vehicle ... of a prescribed class unless
(a) the vehicle ... conforms to the standards prescribed for vehicles ... of its class at the time the main assembly of the vehicle was completed ...
(b) evidence of such conformity has been obtained and produced in prescribed form and manner...
(d) prescribed information is marked on the vehicle ... in prescribed form and manner and on the prescribed place ...
(e) where required by the regulations, prescribed documentation or prescribed accessories accompany the vehicle ..."
Section 2 of the Act defines "national safety mark" as meaning "the expression "Canada Motor Vehicle Safety Standard" or ..., the abbreviation "CMVSS" or ... the symbol set out in Schedule II ..."
3. Section 6 of the Act states that "No person shall import into Canada a vehicle of a prescribed class unless the requirements of paragraphs 5(1)(a), (b), (d) and (e) are satisfied in respect of the vehicle.
4. Subsection 7(2) of the Act states that "Except as otherwise provided by the regulations, a vehicle that has been sold at the retail level in the United States and that fails to satisfy an applicable requirement of section 5 and 6 may be imported into Canada notwithstanding that section if the person importing the vehicles makes a declaration in the prescribed form and manner that, before the vehicle is presented for registration under the laws of a province, the vehicle
(a) will be made to conform to that requirement; and
(b) will be certified in the prescribed form and manner to so conform by such person as may be designated by the regulations."
5. Subsection 12(1) of the Regulations states that "The company contracted to the Department of Transport to establish and operate the national program of vehicle inspection, certification and registration, to be known as the registrar of imported vehicles, is the person designated for the purposes of subsection 7(2) of the Act."
6. Transport Canada put out tender for proposals, with a due date of XXXXX for the establishment and management of an inspection and certification program for vehicles imported from XXXXX under the provisions of the Free Trade Agreement. A tender proposal respecting the Program was submitted by XXXXX
7. On XXXXX HER MAJESTY THE QUEEN IN RIGHT OF CANADA (Licensor) entered into an Agreement (Agreement) with XXXXX (Licensee). This Agreement covers the period XXXXX 19 xx to XXXXX , 19 XXXXX The reddendum clause on page 1 of the Agreement states that "The Licensor, in consideration of the payments, covenants, provisos and conditions hereinafter reserved and contained, hereby grants to the Licensee a license: to establish and operate a national program of vehicle inspection, and certification and registration for used vehicles imported from the XXXXX
8. On XXXXX the Agreement was amended (Amended Agreement). The Amended Agreement covers the perio XXXXX The reddendum clause on page 1 of the Agreement was deleted in its entirety and substituted with the following:
"The Licensor, in consideration of the payments, covenants, provisos and conditions hereinafter reserved and contained, hereby grants to the Licensee a license: to establish and operate a national program of vehicle inspection, and certification and registration for XXXXX specification vehicles imported into Canada."
9. XXXXX of the Amended Agreement states that "The Registrar or its border agents shall verify admissibility of vehicles at designated ports and non-designated ports ..."
10. XXXXX of the Amended Agreement states that "The Registrar shall capture essential data related to the vehicles, which shall be comprised of data collected in a Single Integrated Data Form ..."
11. XXXXX provides that the Registrar's border agents will use their best efforts in collecting the data and that they will also collect all applicable Program fees and related taxes.
12. XXXXX provides that the Registrar will maintain an Operations Centre which receives information electronically concerning vehicles imported and that it may generate an inspection form. This Operations Centre is maintained in the Registrar of Imported Vehicle's Head Office.
13. XXXXX states that "The Operations Centre shall receive vehicle inspection reports, shall issue authorization numbers, and shall prepare the Statement of Compliance Label ... to be sent to the importer ..."
14. XXXXX states that "The Registrar shall maintain approximately XXXXX Inspection Centres across Canada for the inspection and certification of vehicles."
15. XXXXX states that "The Registrar shall maintain a Head Office location or locations in the XXXXX ..."
16. A brochure which provides a guide to importing a vehicle from t XXXXX into Canada indicates that agents of the Registrar located at the designated ports listed will assist in completing paperwork, will check the Vehicle Identification Number and Statement of Compliance label. The agents will accept payment of the Registrar fee, enter the clients' registration of the vehicle into the system and then direct the client back to Canada Customs for final release into Canada. Agents will accept payment of the Registrar fee ($210 Cdn.) at Designated Ports and $262 (Cdn.) at non-designated ports, including GST. The fee includes payment for all aspects of the certification process. However, the importer is responsible for the actual costs of vehicle modification ..."
A detailed description of the inspection, certification and registration process was provided by XXXXX via his facsimile transmission of XXXXX , 19 xx .
Ruling Requested
Does GST/HST apply to the service of inspecting, certifying and registering imported vehicles made by XXXXX , in his capacity as Registrar of Imported Vehicles, to importers of vehicles into Canada pursuant to subsections 7(2) of the Motor Vehicle Safety Act and 12(1) of the Motor Vehicle and Safety Regulations for which the "Registrar fee" is charged?
Ruling Given
Based on the facts set out above, we rule that GST applies to the service of inspecting, certifying and registering imported vehicles made by XXXXX , in his capacity as Registrar of Imported Vehicles, to importers of vehicles into Canada pursuant to subsections 7(2) of the Motor Vehicle Safety Act and 12(1) of the Motor Vehicle and Safety Regulations for which the "Registrar fee" is charged. HST does not apply to this supply as the services of the Registrar of Imported Vehicles are performed outside a participating province.
This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST 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 Excise Tax Act, or to departmental interpretative policy; and that you have fully described all necessary facts and transactions for which you requested a ruling.
Explanation
The payment of the "Registrar fee" by importers of vehicles to XXXXX , in his role as the Registrar of Imported Vehicles, is consideration for a taxable supply of a service of certifying a vehicle and is subject to GST. As the service supplied by XXXXX is performed wholly in a province that is not a participating province, HST does not apply to its supply.
However, it should be noted that any service performed in a participating province (e.g. services of inspections centres located in Newfoundland, New Brunswick and Nova Scotia) and supplied to XXXXX in the course of carrying out his duties as the Registrar of Imported Vehicles is subject to HST.
Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at 954-7952.
Yours truly,
Lynn F. Renner
Rulings Officer
Governments Unit
GST/HST Rulings and Interpretations Directorate
| c.c.: |
E. Vermes, A/Director, Public Service Bodies and Governments Directorate
D. Harding, A/Manager, Governments Unit
Lynn Renner |
ATIP
Legislative References: section 20 of Part VI of Schedule V to the ETA
NCS Subject Code(s): 11848-7 (Transport Canada)
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