9 March 2000 GST/HST Interpretation HQC25974 - Application of GST/HST on the Importation of a Corporate Aircraft

Dear XXXXX

XXXXX has asked me to reply to certain issues concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the proposed temporary importation of a corporate aircraft in the circumstances outlined in your facsimile transmission of January 21, 2000.

Statement of Facts

Your client is a Canadian corporation that intends to operate a corporate aircraft pursuant to an operating agreement.

The registered owner of the aircraft is an American entity and the aircraft will be based in the United States.

On occasion your client intends to bring the aircraft into Canada from the United States without passengers and then use it to transport Canadian residents between points in Canada.

Interpretation Requested

How and when is the tax payable in respect of a US owned corporate aircraft imported into Canada in the above circumstances..

Interpretation Given

Based on the information provided and the questions asked we are pleased to provide you with the following interpretation relating only to the application of the tax on the importation of the aircraft into Canada. Information on the duty application was previously provided to you by the Customs and Trade Administration Branch of CCRA.

(a) When is tax payable?

Response

Section 214 of the Excise Tax Act states that tax on the importation of goods is paid and collected under the Customs Act as if the tax were a customs duty levied on the goods under the Customs Tariff. Therefore the timing of payment and the actual payment is determined by Customs under the Customs Act.

(b) How is GST calculated and upon what is the calculation based?

Response

Section 215 of the Excise Tax Act states that the value of the goods for GST/HST purposes is deemed to be equal to the total of

(a) the value of the goods, as it would be determined under the Customs Act for the purpose of calculating duties imposed upon the goods at a percentage rate whether in fact the goods are subject to duty, and

(b) he amount of all duties and taxes, if any, payable thereon under the Customs Tariff, the Special Import Measures Act, the Excise Tax Act (other than Part IX) or any other law relating to Customs.

(c) Is GST paid as a one time payment or is it payable on each trip?

Response

In the circumstances outlined GST would be paid as a one-time payment.

Please refer to Customs Notice N-118 (copy enclosed) concerning the conditions attached to the re-importation of goods which were previously temporarily imported on a full tax paid basis, and then exported after use in Canada.

(d) If it is payable on each trip is there a cap?

Response

Not applicable, because of the response provided to (c) above.

(e) If GST is paid is there any way our client can recover the amount paid (i.e. input tax credit)?

Response

If your client is registered for GST/HST purposes and acquires goods for consumption, use or supply in the course of its commercial activity then it may qualify for an input tax credit. See section 169 of the Excise Tax Act. However, your client would not be entitled to claim an ITC or otherwise recover the tax paid on the importation of the aircraft in the circumstances set out above.

(f) Are there any rebates available to the American owners of the aircraft?

Response

The circumstances for which rebates on imported goods are available are outlined in Sections 215.1, 216(6), 252, and 261 of the Excise Tax Act. In this case none of these provisions would apply to the American owners of the aircraft.

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 CCRA with respect to a particular situation.

For your convenience, find enclosed a copy of section 1.4 of Chapter 1 of the GST/HST Memoranda Series, Goods and Services Tax Rulings.

Should you have any further questions or require clarification on the above or any other GST/HST matter, please do not hesitate to contact your local Tax Services Office. XXXXX[.]

Sincerely,

Roy McKain
Senior Rulings Officer
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate