7 March 2002 GST/HST Interpretation 34928 - GST Rebate on Book Purchases

Dear XXXXX:

Thank you for your letter of February 19, 2001, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the purchase of books by XXXXX We apologize for the delay in our response.

We understand from your letter and our telephone conversation of XXXXX, that XXXXX is a registered charity that raises funds for the sole purpose of supporting the school's education plan. XXXXX considers its main function in the School Council to be the promotion of literacy. The school orders books and forwards the invoices to the School Council. XXXXX then pays for the books that the school has purchased. These books are generally textbooks for various courses (e.g., mathematics), to be used by the students. Some of the books are used as classroom resources. The invoices are usually made out to the school. You have previously been advised that XXXXX does not qualify for the 100% GST book rebate.

Without the documentation described below, we are unable to issue a ruling as to whether or not XXXXX is eligible for the book rebate. We hope, however, that the following interpretation will assist you in understanding why you have been advised that XXXXX does not qualify for the rebate.

Interpretation Requested

How does a charity qualify for the 100% GST rebate on books?

Interpretation Given

In accordance with section 259.1 of the Excise Tax Act (ETA), there are certain requirements that must be met for a charity to be able to claim a 100% rebate of the GST payable on certain publications.

First, an organization must be a specified person to be eligible for a 100% rebate of the GST payable on the acquisitions or importations of printed books, audio recordings of spoken readings of such books and printed versions of religious scriptures. The definition of a specified person under section 259.1 of the ETA includes, among others, a prescribed charity, the primary purpose of which is the promotion of literacy.

To be prescribed, a charity must submit its request to the Director of Public Service Bodies and Governments at the address shown above. As stated above, a charity applying for prescribed status must have as its primary objective or purpose the promotion of literacy (basic reading and writing skills). When applying to be prescribed, the charity must supply copies of its governing documents (which would indicate its objectives and purposes). Additional information that is required includes a statement of activities fully describing the activities and programs carried on by the charity to further the objectives or purposes set out in its governing documents. Financial statements are also required.

Secondly, the rebate is available for eligible publications that a specified person has acquired or imported except where the items have been acquired or imported for resale or to be given away permanently (a charity would still be able to claim the 50% Public Service Bodies' rebate for such purchases).

Thirdly, a person may claim a rebate for tax that became payable by the person in a claim period. In other words, it is the person who is legally liable to pay for a purchase who may claim (if eligible) any applicable rebates. Generally, the person who is liable is the person named on the invoice.

Finally, a specified person has to file a rebate claim within four years after the end of their claim period in which the GST became payable.

In conclusion, XXXXX would have to meet each and every one of the above requirements in order to qualify for the rebate. We have enclosed Technical Information Bulletin, B-076 - Proposed Rebate for Printed Books, Audio Recordings of Printed Books, and Printed Versions of Religious Scriptures under the GST/HST, should you require further information on the rebate or prescribed charities.

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the ETA, 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 Canada Customs and Revenue 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) 952-9592.

Yours truly,

Helena Ingr
Charities, NPOs and Educational Services Unit
PSBs and Governments Division
Excise and GST/HST Rulings Directorate