18 November 1999 GST/HST Interpretation HQR0001983 - PROPOSED LAW/REGULATION Disclosure of Goods and Services Tax/Harmonized Sales Tax

Dear XXXXX

Thank you for your letter of September 30, 1999, with attachments, concerning the disclosure requirements under the Excise Tax Act (the ETA) in respect of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST).

Please note that as of November 1, 1999, Revenue Canada became the Canada Customs and Revenue Agency.

Interpretation Requested

In your letter, you requested information with respect to the requirements under the ETA in respect of the disclosure of the GST/HST on invoices issued by suppliers. A copy of an invoice issued by a supplier of vehicle repairs was attached to your letter. You also requested that we provide you with the relevant legislative provisions.

Interpretation Given

It is proposed that subsection 223(1) of the ETA be amended as follows:

"223(1) - Disclosure of tax

If a registrant makes a taxable supply, other than a zero-rated supply, the registrant shall indicate to the recipient, either in prescribed manner or in the invoice or receipt issued to, or in an agreement in writing entered into with, the recipient in respect of the supply,

(a) the consideration paid or payable by the recipient for the supply and the tax payable in respect of the supply in a manner that clearly indicates the amount of the tax; or

(b) that the amount paid or payable by the recipient for the supply includes the tax payable in respect of the supply.".

As indicated above, the legislation provides that the disclosure of the tax can be made either in prescribed manner or in the invoice issued by the supplier. The prescribed manner is provided in the Disclosure of Goods and Services Tax Regulations. The wording of these regulations is included in an appendix attached to this letter. Pursuant to the regulations, a supplier may give clear visible notice to the recipient of a taxable supply at the place where the supply is made. For example, the posting of signs at the supplier's place of business, where supplies are made, that indicate that the total amount payable includes the GST/HST payable would be sufficient to meet the requirements of subsection 223(1) of the ETA. In such case, the supplier would not be required to provide any further disclosure in any invoice issued in respect of the supply for purposes of subsection 223(1).

However, if the supplier does not give clear visible notice at the place where the supply is made and an invoice is the only document issued in respect of the supply (i.e., there is no receipt issued and no written agreement entered into by the parties), the supplier must indicate clearly in the invoice either the amount of the tax or that the total amount paid or payable includes the tax. To ensure that the amount of tax or that the total amount payable includes the tax payable under Part IX of the ETA is clearly indicated on the invoice, a supplier may include the acronyms GST/HST on the invoice.

Proposed subsection 223(1.1) of the ETA requires, in part, that where the tax or the rate of tax is indicated in an invoice, that the supplier must indicate the total tax payable in respect of the supply or the total rate at which tax is payable. For example, if the supply is subject to the HST and the supplier indicates the rate of tax on the invoice, the rate must be indicated as 15% which represents the federal component of the HST (7%) and the provincial component of the HST (8%).

Should the proposed amendments to section 223 of the ETA come into effect, it is proposed that the effective date of these amendments will be retroactive to April 7, 1997. For your information, the wording of subsection 223(1) of the ETA prior to the proposed amendments is also included in the appendix.

In addition to the above disclosure requirements, pursuant to subsection 223(2) of the ETA, a supplier is required, at the request of a person, to provide that person with additional information that would be necessary to substantiate a claim by the person for an input tax credit (ITC) or a rebate in respect of the tax payable for the supply. The information that the person would require to substantiate an ITC claim is provided in the Input Tax Credit Information GST/HST Regulations. The wording of these regulations and the proposed amendments to these regulations are also included in the appendix.

These regulations provide, in part, that a supplier, at the request of a recipient who is a registrant entitled to claim an ITC is respect of the tax payable, is required to indicate on the supporting documentation the total amount of tax payable in respect of the supply if the total amount payable for the supply is $30 or more. Alternatively, where the amount payable includes the tax, the supplier must indicate on the supporting documentation a statement that the tax is included in the amount payable and the total rate at which tax is payable. Supporting documentation includes the invoice, receipt or any other document validly issued or signed by the supplier in respect of the taxable supply.

The foregoing comments represent our general views with respect to the proposed amendments to the ETA and its regulations as they relate to the subject matter of your letter. Any change to the wording of these proposed amendments or any future proposed amendments to the ETA, 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 Canada Customs and Revenue Agency 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) 954-2488.

Marcel R. Boivin
General Operations Unit
General Operations and Border Issues Division
GST/HST Rulings and Interpretations Directorate