5 April 2000 GST/HST Interpretation 30601 - Application of the GST/HST to Goods Delivered to a Common Carrier for Export

Dear XXXXX

Thank you for your letter of March 28, 2000 concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the operations of your XXXXX client.

Interpretation Requested

Background

A non-resident is purchasing new and used auto parts in Canada for subsequent export to XXXXX. XXXXX[.]

Issue

What is the correct procedure to follow in order to obtain an exemption from the GST for these purchases.

Interpretation Given

Based on the information provided, there are three relevant provisions of the Excise Tax Act (Act) where the purchases by the non-resident will either be zero-rated, ie. no tax is payable on the purchase, or alternatively, eligible for a rebate of the tax paid.

Exports of tangible personal property

Section 1 of Part V of Schedule VI of the Act zero-rates supplies of goods that are delivered in Canada and exported by the purchaser. Under this provision, a supplier is permitted to sell goods in Canada on a zero-rated basis if:

•   the purchaser exports the property as soon as is reasonable and does not consume, use or supply it in Canada before exportation;

•   the property is not further processed, transformed or altered in Canada except to the extent reasonably necessary or incidental to its exportation (This might include, for example, refrigeration, export packing, etc.); and

•   the supplier maintains evidence of export satisfactory to the Minister of National Revenue.

The Canadian supplier will usually require the purchaser to sign a declaration that the goods are in fact being exported and further, provide an undertaking that proof of export will be provided to the supplier when it becomes available.

Canada Customs and Revenue Agency (CCRA) has indicated that any of a number of documents may constitute adequate evidence of export. The required documents in a particular case may vary, depending on the mode of transportation used to export the goods and the nature of the goods. The acceptability of the documentary evidence depends on whether CCRA is able to retrace the entire shipment of the property from its origin in Canada to the point at which the shipment leaves Canada. The necessary documentation may include:

•   purchase agreements or billings from the supplier to the recipient that identify the goods;

•   transportation documents (bill of lading, waybill, pro-bill, Post Office receipt, courier receipt, etc.) showing the point of delivery;

•   customs brokers' invoices relating to the supply; and

•   import documentation required by the country of destination.

Goods delivered to a common carrier for export

Section 12 of Part V of Schedule VI of the Act zero-rates goods supplied to a recipient if the supplier mails the goods, or has a common carrier deliver the goods to that recipient, at an address outside Canada. A common carrier is a person engaged in the business of transporting property from place to place for compensation, and who offers services to the public generally.

Non-Resident rebate in respect of exported goods

If the criteria of either of the above options is not met, section 252 of the Act allows for the rebate of GST paid by a non-resident person on goods purchased in Canada and exported or taken by the person out of Canada within 60 days of purchase. Original receipts for all purchases and proof that the goods were removed within 60 days after their receipt must be included with the rebate application. In this instance, the non-resident completes Form GST189, which is available in the guide "GST/HST General Rebate Application" (enclosed). Each receipt must be for a minimum of $50. and the total of all receipts in the application must be at least $200. (both figures are net of tax). A rebate application must be filed with one year after the date of exportation of the goods and the company may only file one rebate application each calendar month.

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 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) 952-8812. We are also enclosing a copy of our guide "Doing Business in Canada - GST/HST Information for Non-Residents".

Yours truly,

David Liston
Border Issues Unit
General Operations and Border Issues Division Division
Excise and GST/HST Rulings Directorate