18 September 2002 GST/HST Interpretation 41771 - Security Deposits on Temporary Importations

This letter is in reply to your letter dated XXXXX concerning security deposits on temporary importations. You would like us to provide you with the legislative provision in the Excise Tax Act (Act) which authorizes the collection of a security deposit in respect of these importations of an amount that includes the Goods and Services Tax (GST) and or the Harmonized Sales Tax (HST).

Under section 213.1 of the Act, for the purposes of Division III, the Minister may require a person mentioned in section 212 or 212.1 who imports goods to provide security, in an amount determined by the Minister and subject to such terms and conditions as the Minister may specify, for the payment of any amount that is or may become payable by the person under this Division, where provisions of the Customs Act, the Customs Tariff or any other laws relating to customs under which security may be required do not apply to the payment of that amount.

Generally, the tax on imported goods is imposed under Division III of the Act. Section 212 of the Act imposes the GST on goods imported into Canada. It provides that every person who is liable under the Customs Act to pay duty on such goods, or would be so liable if the goods were subject to duty, is liable to pay GST on the value of the goods. Section 212.1 of the Act imposes the provincial component of the HST in respect of certain importations by residents of participating provinces. This tax applies in addition to the tax imposed under section 212 of the Act. Generally, the tax imposed under section 212.1 of the Act will be collected by Customs at the time of importation, unless the goods in question are accounted for under section 32 of the Customs Act as "commercial goods".

Should you have any further questions, please do not hesitate to contact me at (613) 952-4294.