9 March 2000 GST/HST Interpretation 25934 - GST Relief Requested Under Exporter of Processing Services Program

Dear XXXXX

Thank you for your letter of February 4, 2000 concerning the application of the Goods and Services Tax (GST) to the operations of your client.XXXXX[.] The company proposes to import concrete pumps from the U.S. to rebuild and upgrade the pumps. While XXXXX will act as the importer of record, the ownership of the pumps will remain with the non-resident.

Interpretation Requested

Do the goods qualify as non-taxable pursuant to subsection 3(b) of the Non-Taxable Imported Goods Regulations and if not, are the goods eligible for relief under the Exporter of Processing Services Program.

Interpretation Provided

On the basis of the information provided in both your original request and our telephone conversation of February 18, the pumps are being entirely upgraded and rebuilt and as such, the operation should be seen as something beyond the "maintenance, overhaul or repair" of the goods. Therefore, non-taxable status under subsection 3(b) of the Non-Taxable Imported Goods (GST) Regulations is not available. We recommend that you contact the local Canada Customs and Revenue Agency (CCRA) Tax Services Office in order to apply for relief under the EOPS Program. The application process is explained in TIB-069, a copy of which is included with this letter for your convenience.

Explanation

1. Goods Imported for Repair

Subsection 3(b) of the Non-Taxable Imported Goods (GST) Regulations provides that the following goods are non-taxable:

goods imported for the sole purpose of maintenance, overhaul or repair of those goods in Canada, where

(i) neither title to nor beneficial use of the goods is intended to pass, or passes, to a person in Canada while the goods are in Canada, and

(ii) the goods are exported as soon after the maintenance, overhaul or repair is completed as is reasonable having regard to the circumstances surrounding the importation and, where applicable, to the normal business practice of the importer;

2. Exporters of Processing Services

Alternatively, under the Exporters of Processing Services (EOPS) Program, certain goods or materials may be imported into Canada without payment of the GST at time of importation. The Minister of National Revenue may issue an import certificate which enables the registrant to import goods without paying tax where the goods are for processing and subsequent export, or where the goods are materials (other than fuel, lubricants, and plant equipment) that will be consumed or expended directly in the processing of such goods. For these purposes, processing means the alteration, assembly, manufacture, modification, production, packaging, or repackaging of goods.

The registrant must not have any ownership interest in the imported or processed goods or materials while the goods or materials are in Canada and the processing must not be done for a closely related non-resident person.

To be eligible for a certificate, the registrant must provide evidence satisfactory to the Minister that:

•   the registrant has entered into an agreement for processing the goods in question under the circumstances described above; or

•   it is a usual practice of the registrant to provide processing services under the circumstances described above.

An application for a certificate must be filed with the nearest Tax Services Office in prescribed form and contain prescribed information.

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.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-8812.

Yours truly,

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