28 March 2000 GST/HST Interpretation 7050/HQR0000656 - GST Rebate on Books - Books and Pamphlets

XXXXX

This refers to your letter dated April 22, 1997, with attachments concerning the application of the GST/HST to a ruling request, you received from the XXXXX XXXXX, regarding the types of printed matter eligible for the rebate of the GST or the federal component of the HST paid on qualifying "printed books" pursuant to section 259.1 of the Excise Tax Act ("the Act"). You have asked for guidance in responding to portions of this request so that, as you stated in your letter to XXXXX. XXXXX, you may contact them directly when this issue is clarified. I apologize for the delay in responding to your request.

The XXXXX submitted a ruling request on the section 259.1 rebate and, as per your discussions at that time, with the Goods Unit, you responded on all issues except on the printed matter which could be considered to fall under the exclusion from "printed books" under paragraph (d) of that definition. Paragraph 259.1(1)(d) of the Act excludes a "brochure or pamphlet" from the definition of a "printed book" for purposes of section 259.1 of the Act.

XXXXX

The XXXXX agreed that the overall direction on the definition of "printed book", for purposes of the section 259.1 rebate, be dealt with in a separate policy paper to determine whether to take a narrow or wide policy approach regarding the exclusions from the definition.

Until November 8, 1999, when the policy [P-234, Meaning of "Brochure or Pamphlet" for the Purpose of Paragraph (d) of the Definition of "Printed Book" in Subsection 259.1(1) of the Excise Tax Act], became effective, a "brochure or pamphlet" was considered to be a few pages of printed matter fastened together. This position was set out in the following Technical Information Bulletins (TIB):

1. TIB, B-076, Proposed Rebate for Printed Books, Audio Recordings of Printed Books and Printed Versions of Religious Scriptures under the GST/HST; and

2. TIB, B-085, The Point-of-Sale Rebate on Books.

The purpose of policy statement P-234 is to provide a series of questions designed to ensure that there is an appropriate basis of factual information on which an officer may make an informed determination. If, of course, a publication is excluded under any other paragraph of subsection 259.1(1) of the Act, there is no need to determine whether a publication is a "brochure or pamphlet".

Therefore, some "brochures or pamphlets" may be excluded from the rebate by virtue of being covered under another excluding paragraph. For example, a "brochure or pamphlet", the text of which is advertising or promotional material, is excluded under paragraph 259.1(1)(e) of the Act of the definition of "printed book". Paragraph 259.1(1)(e) of the Act excludes a "sales catalogue, a price list or advertising material". Other exclusions from the definition of "printed book", which could have an impact upon the rebate treatment include paragraphs:

(b) magazine or periodical acquired otherwise than by way of subscription;

(c) a magazine or periodical in which the printed space devoted to advertising is more than 5% of the total space;

(f) a warranty booklet or an owner's manual;

(g) a program relating to an event or performance; and

(h) an agenda calendar, syllabus or timetable.

Therefore, the rebate treatment discussed below is limited to a "brochure or pamphlet", which is not already excluded under any other paragraph; that is, the discussion is limited to the treatment of a "brochure or pamphlet" pursuant to paragraph 259.1(1)(d) of the Act.

In the absence of a legislative definition for the terms "brochure and pamphlet", the common everyday meaning of the term is to apply. Generally, brochures and pamphlets are small publications which contain descriptive information, are usually unbound or loosely bound (i.e., bound with staples, coiled wire, or a loose leaf binder), are encased in soft covers or no covers at all, and are intended for free distribution to the end user. In most cases, it will be clear whether a publication is a brochure or pamphlet. Where it is unclear whether a particular publication is a pamphlet or brochure, it is important to take into account the following six factors, the first three of which are determinative. In other words, if any of the following three factors indicate that a publication is not a brochure or pamphlet, then we can conclude that the publication is not a brochure or pamphlet without any further consideration.

Determinative Factors

1. Does the publication fall under any of the other exclusions to the definition of "printed book"?

(Where a publication falls under one of the other exclusions, it is not a brochure or pamphlet.)

2. Is the publication tightly bound (i.e., with stitching or glue), loosely bound (e.g., with staples), or unbound altogether (i.e., a folded leaflet)?

(A publication bound tightly with stitching or glue is not a pamphlet or brochure.)

3. Is the publication encased in a hardcover, a soft cover, or no cover at all?

(A publication encased in a hard cover is not a pamphlet or brochure.)

Other Factors

If the first three factors do not clearly establish that a publication is not a brochure or pamphlet, then it may be a brochure or pamphlet, and three additional factors must be considered before a proper determination can be made.

4. Are the physical dimensions of the publication small in relation to other publications?

(A publication whose dimensions are medium or large relative to other publications [i.e., publications range in size from one-page leaflets to massive reference books], is unlikely to be a brochure or pamphlet.)

5. Is the publication principally intended to inform with general information or perform some other function other than the conveyance of general information (e.g., intended to entertain, such as a children's story)?

(A publication intended to perform some function other than the conveyance of information is unlikely to be a pamphlet or brochure.)

6. Is the publication made available to the end-user for a nominal charge or no charge at all?

(A publication which is made available to the end-user for more than a nominal amount is unlikely to be a pamphlet or brochure.)

Unlike the first three factors, none of the additional three factors can single-handedly lead to a definitive determination about whether a publication is a brochure or pamphlet within the ordinary meaning of the words (i.e., would "a person in the street" regard it as a brochure or pamphlet). Nevertheless, together they provide the factual basis on which to exercise judgement and make an informed decision. Furthermore, these factors are not exhaustive, and in some cases, it may be worthwhile to consider other factors as well.

Statement of Facts

You have requested guidance on the status of the following publications, of which you submitted photocopies. These publications are understood to be bound in some fashion and contain up to XXXXX pages.

1. XXXXX

Interpretation

Until P-234 was approved, it was our opinion that only number 4 met the criteria as established in the TIB's for "brochures or pamphlets" as that of "a few pages of printed material fastened together"; that is, it was the Canada Customs and Revenue Agency's (CCRA) position that the other publications contained too many pages to qualify as "brochures or pamphlets" according to B-076 and B-085. However, effective November 8, 1999, it is the CCRA's position that only number 1 is considered to be a "brochure or pamphlet" under paragraph 259.1(d) of the Act as explained below.

Number 1 is not tightly bound with stitches or glue as would be a spine of a book but rather with staples or adhesive and, as such, falls within factor 2 of the determinative factors. Although Number 1 falls within factor 2, it is necessary to ensure that it is not removed by any one of the determinative factors. The publication does not fall under any of the other exclusions to the definition of "printed book" (factor 1) and is probably not encased in a hard cover (factor 3).

Number 2 is not considered to be a "brochure or pamphlet". In this case, the determinative factors do not clearly establish that this publication is not a brochure and, for this reason, the three additional factors must be considered before a proper determination can be made. Number 2 is actually a short research report XXXXX indicating that it consists of technical rather than general information (factor 5 of other factors). The publication is, however, small in size XXXXX satisfying factor 4 of other factors. The information submitted indicates that it is bound in some fashion but there is not enough information to determine whether it satisfies any other criteria. Based on the fact that Number 2 consists of technical information, it is not excluded from the definition of "printed book" under paragraph 259.1(1)(d) of the Act.

Number 3 is bound, indicating that it is removed from the determinative factors and , for this reason, it cannot be considered to be a "brochure or pamphlet". However, with respect to factor 4 of the other factors, number 3's physical dimensions are large, XXXXX pages in length, rather than small, in relation to the other publications discussed here. Therefore, based on the size of the publication, it is considered to be a "printed book".

With respect to Number 4, the publication is tightly bound, indicating that determinative factor 2 removes it from the determination of a "brochure or pamphlet". If it is removed from any of the determinative factors, reference cannot be made to the other factors to determine whether it is a "brochure or pamphlet".

Number 5 is issued on a periodic basis. Number 6 has an XXXXX, indicating it is also a periodical. Paragraph 259.1(1)(b) of the Act excludes "a magazine or periodical acquired otherwise than by way of subscription" from the definition of "printed book". According to the determinative factors (factor 1) listed in P-234, if a publication falls under one of the other exclusions, it is not a brochure or pamphlet.

Since numbers 5 and 6 could be excluded from a "printed book" under paragraph 259.1(1)(b) of the Act, it may not be necessary discuss whether they are "pamphlets or brochures". However, if either of these publications were purchased by subscription, then it would be necessary to make a determination as to whether they are considered to be a "brochure or pamphlet" pursuant to TIB, B-076, prior to November 8, 1999, or effective November 8, 1999, by utilizing the new criteria as proposed above. Unfortunately, there is insufficient information to determine whether the new criteria apply to these publications.

It is the CCRA's position that Number 7 does not fall within the exclusions to "printed book". As stated in TIB-076, for purposes of section 259.1 of the Act, the expression "printed book" has its ordinary meaning subject to specific exclusions established by the definition contained in subsection 259.1 of the Act. With respect to the exception listed in paragraph 259(1)(d) of the Act, the publication is too voluminous to meet the criteria established in TIB, B-076 in that, for a publication to be a "brochure or pamphlet", it cannot be more than a few pages fastened together. In addition, this publication does not meet the criteria for the new policy discussed above, i.e., the dimensions of the publication are large (80 pages in length) and, as such, it is not a "brochure or pamphlet".

Furthermore, Number 7 was published with an XXXXX number, indicating that it is considered to be a book by international standards. Although the XXXXX is not one of the determinative factors listed in P-234, the policy allows for the fact that the questions are not exhaustive and, in some cases, other factors may be relevant as well. Therefore, in our opinion, the fact that this publication has an XXXXX number qualifies it as a "printed book", within the meaning of subsection 259.1(1) of the Act and is eligible for the rebate.

Warranty Books and Owner's Manual

Earlier you were advised that auto repair manuals were to be excluded from the definition of printed book under paragraph 259.1(1)(p) of the Act as an item similar to an owner's manual and were, therefore, excluded from the rebate. The policy regarding the treatment of such publications is now P-227, Meaning of Terms "Warranty Booklet" and "Owner's Manual" Pursuant to Paragraph 259.1(1)(f) of the Excise Tax Act. As a result of this policy, these publications may qualify as "printed books".

I hope this provides some assistance in this matter. Should you have any further questions or require clarification on the above matter, please do not hesitate to contact Richard Aronoff at (613) 954-4397.

Cheryl R. Leyton
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate