13 January 1999 GST/HST Interpretation HQR0001535 - Customs Bonded Warehousing - Import/Maintenance of Antique Cars

I refer to your facsimile transmission of November 30, 1998, seeking our comments on a request from XXXXX on the application of GST/HST and Customs duty on the importation of several vintage racing and collector.

Statement of Facts

1. A non-resident client is contemplating the purchase of several vintage racing and collector cars that are intended to become a XXXXX collection of these types of vehicles.

2. The collection is intended to consist of cars originally manufactured in Europe that are more than 15 years old. Currently, the non-resident is focusing on several XXXXX that were manufactured in the 1950s and 1960s.

3. Prior to being imported into Canada, the vehicles will be or have been registered in the U.K.

4. The cars are intended to be displayed and/or raced periodically. primarily in the U.S., at special racing events and exhibitions.

5. It was originally envisaged that the car collection would he based in the U.K. however, we are encouraging our client to consider storing and maintaining these cars in the XXXXX area.

6. Transport Canada has informed the client that vehicles which are more than 15 years old and which were manufactured in Europe could be brought into Canada. Customs has indicated that the vehicles previously mentioned, for purposes of storage and maintenance, could be stored in a bonded warehouse for a period of up to four years without the requirement to pay either customs duty or GST at the time of entry into Canada.

7. Revenue Canada Customs and Excise has informed the company that the Canadian duty on European manufactured cars is 6.7% and the current rate of GST is 7%. However, since these cars would be stored at a bonded warehouse, they would be treated as not having been imported into Canada and therefore neither customs duties nor GST would be applicable at the time of entry and storage at the bonded warehouse.

8. The collection has an initial value of XXXXX, and a security deposit equal to the value of the duties and GST that would otherwise be payable must be arranged through an approved bonding company. The security deposit would be for approximately XXXXX[.] An annual license fee of XXXXX would also be required.

9. Each vehicle cannot remain in Canada (at the bonded warehouse) for a period of more than four years at any one time. Therefore, if a particular car in the collection is to be raced or displayed outside of Canada, we understand that it can be removed from the bonded warehouse and transported (or driven) to the destination outside of Canada. No duties or taxes would be exigible at the time that the vehicle leaves Canada and the proof of export from Canada would constitute proof that the vehicle in question has exited Canada. When the car is brought back into Canada (after the race or exhibition), it would be stored once again at the bonded warehouse and the four-year period would recommence.

10. If a car is to be raced and/or displayed at a racing event in Canada a temporary admission permit E-29B, must be obtained to authorize the removal of the car from the bonded warehouse and its use in Canada without the levying of duties and GST. The car would then be returned to the bonded warehouse by virtue of the same permit. This would not require the four-year time limit and therefore the vehicle must ultimately exit Canada prior to the expiry of four years.

11. Under the term of the bonded warehouse arrangement, the cars can be displayed, inspected, tested, cleaned, repaired, maintained and serviced. These activities would provide economic benefit to the XXXXX region.

Information Requested

1. The deferral of GST and customs duties in the circumstances outlined are correct.

2. Each car can remain in the bonded warehouse for up to four years.

3. The four year period recommences when the vehicle is returned to Canada.

4. Each vehicle can be used in Canada for display and/or racing under the temporary admission permit, E-29B.

5. The security deposit and bonding arrangements outlined therein are acceptable arrangements.

Information Given

All goods imported into Canada are taxable unless a relieving provision in the Excise Tax Act (the Act) applies. There are no relieving provisions in the Act to grant tax free-status to vintage and/or collector cars at time of importation. However, the GST may be deferred on goods placed in a bonded warehouse licensed by Customs pending the presentation of a formal entry for consumption of the goods in Canada or export of the goods from Canada.

Section 214 of the Act states that the GST on imported goods is paid and collected under the Customs Act, and any interest and penalties are imposed, calculated, paid and collected under the Customs Act, as if the tax were a customs duty levied on the goods under the Customs Tariff and for those purposes, the Customs Act with such modifications as the circumstances require applies to the importation. Since, the licensing, security, controls, operations, time limits etc are all dealt within the Customs Bonded Warehousing Regulations, the information requested is within the purview of Customs to respond.

However, in dealing with goods stored in a bonded warehouse it should be noted that while goods stored in the bonded warehouse may be subject to tax on being ex-warehoused, services which are performed in whole or in part in Canada are deemed to be made in Canada under the provisions of paragraph 142(1)(g) of the Act. Under subsection 165(1) of the Act, these services are subject to the GST at 7% (when supplied in a non-participating province) unless there are zero-rating provisions in Schedule VI, Part V to the Act, or other provisions in the Act to deem the services to be made outside Canada.

If you have any questions or require further information, please contact me at 952-4294.

Roy McKain
Border Issues Unit
General Operations and Border Issues Division
GST/HST Rulings and Interpretations Directorate