21 June 2000 GST/HST Interpretation 8136/HQR0001742[2] - Non-Resident Importers and Place of Supply

XXXXX

This is in reference to your letter of April 15, 1999 (with attachments) and our response to you dated October 8, 1999 concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to tangible personal property (TPP) supplied by non-residents and imported into Canada.

We are writing to clarify and revise our interpretation of October 8, 1999 regarding the place of supply of TPP sold by a registered non-resident supplier to a resident Canadian purchaser and the entitlement to Input Tax Credit (ITCs) for Division III tax paid on such TPP.

Revised Interpretation

In the case of a supply by way of sale of TPP, a supply is deemed to be made in Canada under paragraph 142(1)(a) of the Act if the TPP is, or is to be, delivered or made available in Canada to the recipient of the supply. The supply is deemed to be made outside Canada under paragraph 142(1)(a) of the Act if the TPP is, or is to be, delivered or made available outside Canada to the recipient of the supply.

As noted in our letter of October 8, 1999, the point at which TPP is delivered or made available to a recipient is a question of fact that must be determined on the particular circumstances of each case. We agree with your comment that the fact that the supplier acts as the importer of record is not conclusive evidence that delivery is made in Canada. All of the relevant facts and circumstances surrounding the transactions must be taken into account in determining where delivery is considered to take place.

Where delivery is in fact made outside Canada, the supply of TPP by way of sale by the non-resident is not subject to Division II tax by virtue of paragraph 142(1)(a) of the Act. However, where the supplier of the TPP in such a case, acts as the "importer of record" and pays Division III tax, the supplier would not be considered to be the importer of the TPP for the purpose of subsection 169(1) of the Act and would not be entitled to an ITC in respect of Division III tax. In such a situation, it is the Canadian recipient that would be considered the importer of the TPP for purposes of claiming an ITC. Therefore, it is the Canadian recipient that would be entitled to claim any ITCs in respect of Division III tax paid at the time of importation provided all the relevant conditions for claiming an ITC are met.

On the other hand, where the TPP being supplied by way of sale is delivered in Canada by a registered non-resident supplier, Division II tax would apply. Where the supplier is the "importer of record" on the importation of the TPP, we would consider the supplier to be the importer of the TPP for the purposes of subsection 169(1). Consequently, the registered non-resident supplier may, in such a situation, claim any ITCs in respect of Division III tax paid, provided that the other relevant conditions are met.

Notwithstanding the above, it is CCRA's position that if Division III tax is paid on the importation of TPP by a registered Canadian recipient of a supply of TPP by way of sale (i.e. the Canadian recipient is the "importer of record"), the Canadian recipient would be considered the importer of the TPP for the purposes of subsection 169(1) of the Act, whether the supply to him is made in Canada or outside Canada. Therefore, the registered Canadian recipient may, in such a situation, claim any ITCs in respect of Division III tax paid, provided that the other relevant conditions are met.

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) 952-8810.

Yours truly,

Ivan Bastasic
Manager
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate