31 October 2000 GST/HST Interpretation 31659 - Supply of Services Performed in Canada for Non-resident Health Care/Medical Providers in Connection With the Retention of Their Records and Files

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Thank you for your letter of May 29, 2000 concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST), and more particularly section 4 of Part V of Schedule VI to the Excise Tax Act (the Act), to the supply of services performed in Canada by Storageco for non-resident health care/medical providers in connection with the retention of their records and files. I apologize for the lateness of this response.

Transactions

Storageco is a GST/HST registrant that provides record and file retention services in Canada, primarily to residents of Canada. It also makes such supplies to non-residents of Canada that are engaged in health care and related medical fields in the U.S.

Some records/files are, from time to time, imported into Canada and are stored in Storageco's warehouse. These records/files may, from time to time, be returned to the non-resident health care provider and any such records/files may or may not be returned to Storageco's warehouse, depending if the non-resident wishes to preserve the files at its location.

Due to the nature of the records/files involved, it may be necessary to retain them in Storageco's warehouse for prolonged periods of time, which may extend up to as many as six to seven years. However, the records/files are ordinarily situated outside Canada when the storage services supplied by Storageco are no longer required.

Storageco may, from time to time, upon receiving instruction from the non-resident, destroy records/files that are no longer required to be maintained by the non-resident. Any resulting waste from such destruction may either be retained in Canada, or exported to the U.S. for future processing.

Interpretation Requested

Whether section 4 of Part V of Schedule VI to the Act would apply to zero-rate the following services supplied by Storageco:

1. The storage in Canada of records and files that are ultimately repatriated to the U.S. and which are not returned at any subsequent time for storage in Canada.

2. The storage in Canada of records and files that are repatriated to the U.S. and which are subsequently returned for further storage in Canada.

3. The storage in Canada of records and files that are not at any time repatriated to the U.S. and which remain in storage in Canada until their destruction is required.

4. Any services relating to the destruction of records on behalf of non-resident customers if the resulting debris is subsequently exported from Canada.

Interpretation Given

Section 4 of [P]art V of Schedule VI to the Act, generally provides for the zero-rating of a service in respect to tangible personal property that is ordinarily situated outside Canada, which is temporarily imported for the sole purpose of having the service performed, and which is exported as soon as is practicable after the service is performed. Also included is any tangible personal property that is supplied in conjunction with the service.

The term "temporarily", as found in section 4 of Part V of Schedule VI, is the adverb of "temporary", which is defined by the Shorter Oxford Dictionary as..."lasting or meant to last for a limited time only; not permanent."

Temporary importation of tangible personal property is a matter that falls under Customs. It should be noted that records/files are not included in Schedule VII to the Act, as a non-taxable importation, nor do they come within the ambit of the Non-Taxable Imported Goods (GST) Regulations.

Customs Memorandum D8-1-1, entitled "Temporary Importation Regulations", provides for guidelines and general information on temporary importation of tangible personal property in Canada. Generally, all goods being imported temporarily, so long as they are not being imported for sale, lease, further manufacturing or processing, will qualify for duty-free entry under tariff item No. 9993.00.00.

Generally, goods imported temporarily under the above tariff number may remain in Canada for up to 18 months. At the time of release by Customs, the importer must identify the period of time the goods are expected to remain in Canada. If the goods cannot be exported before the date identified, the importer may apply to the nearest Customs office for an extension. If an extension is approved by Customs, the temporary importation may be extended in six month increments to a maximum of 48 months (18 months plus a maximum of 5 extensions of 6 months each).

With respect to the application of section 4 of Part V of Schedule VI to the Act to the previously mentioned four particular situations, I am providing you with the following comments:

1. If the temporary importation of the records/files is in accordance with Customs rules, as mentioned earlier, section 4 of [P]art V of Schedule VI to the Act would have the effect of zero-rating the supply of the records/files retention services made by Storageco to the non-resident health care/medical providers.

2. Again, if the temporary importation of the records/files is in accordance with Customs rules, section 4 of Part V of Schedule VI to the Act would zero-rate the supply of the records/files retention service made by Storageco to non-resident health care /medical providers, including whether the records/files are repatriated to the U.S. and subsequently re-imported for further storage in Canada, so long as each occurrence of temporary importation does not exceed the time limit imposed by Customs.

3. If the sole purpose of the temporary importation is for records/files retention and destruction of such records/files, then section 4 of Part V of Schedule VI to the Act would zero-rate the supply of storage and destruction services made to Storageco's non-resident customers.

4. Again, if the sole purpose of the temporary importation is for the retention of records/files and their eventual destruction, then section 4 of Part V of Schedule VI to the Act would zero-rate the supply.

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the Excise Tax Act, 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) 947-8220.

Yours truly,

Daniel E.B. Chamaillard
Senior Technical Analyst
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

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