18 March 2002 GST/HST Interpretation 36864 - Eligibility for a Rebate on Printed Books Under Section 259.1 of the ETA

Dear XXXXX:

Thank you for your letter of July 17, 2001 concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to purchases of printed books and other religious material by the XXXXX[.] We apologize for the delay in responding.

The XXXXX under the umbrella of the XXXXX and is a "charity" within the meaning of subsection 123(1) of the Excise Tax Act (ETA).

As outlined in your letter, XXXXX XXXXX purchases Bibles, hymn books, prayer books, and study material for adults and youth. These items are not for resale. Services are held at the three churches every Sunday and Sunday school operates from September to May. A vacation bible school is also held occasionally. The prime objective of XXXXX is providing Christian education through these churches.

Interpretation Requested

You requested that XXXXX be considered a "specified person" for purposes of the book rebate under section 259.1 of the ETA.

We can only issue a ruling as to whether or not XXXXX is considered a specified person, within the meaning assigned under subsection 259.1(1) of the ETA, if we are in possession of all pertinent facts. As we were unsuccessful in reaching you by telephone to obtain more specific information on the location, operations and usage of the books and other printed material, we are unable to provide you with a ruling. However, we provide you with the following interpretation of the relevant provisions of the ETA.

Interpretation Given

Section 259.1 of the ETA provides for a rebate of 100% of the federal portion (7%) of the HST paid by a specified person in respect of the purchase of certain printed books and scripture that are acquired for purposes other than resale.

A charity that operates a public lending library is considered to be a "specified person" pursuant to paragraph 259.1(e) and is eligible to claim a rebate of 100% of the federal portion of the HST paid on qualifying books acquired other than for resale.

For purposes of the rebate, "charity" has the meaning assigned to it under subsection 123(1) of the ETA, that is, a registered charity or a registered Canadian amateur athletic association within the meaning of subsection 248(1) of the Income Tax Act but not including a public institution. As outlined in Technical Interpretation Bulletin entitled Proposed Rebate for Printed Books, Audio Recordings of Printed Books and Printed Versions of Religious Scriptures under the GST/HST (TIB B-076), a copy of which is enclosed, "a public lending library for purposes of this rebate is interpreted to mean a place where a collection of documents and other items such as films and recordings are kept and maintained and which is open to the public for their use. It includes libraries from which these documents and other items can be borrowed, as well as those libraries accessible to the public for research purposes only".

Charities, prescribed by regulation, whose primary purpose is the promotion of literature, are also considered to be a specified person for purposes of the rebate pursuant to paragraph 259.1(e). "Promotion of literacy", as outlined in TIB B-076, means the promotion of basic reading and writing skills. To be prescribed, the charity must make a request to the CCRA and enclose the documents listed in TIB B-076.

As you may be aware, effective April 1, 1997, a point-of-sale rebate of the provincial portion of the HST on certain books, audio recordings of printed books and printed religious scripture became available in the participating provinces, including XXXXX. The rebate of the 8% provincial portion of the HST is available to all persons who purchase these qualifying goods, if HST applies to the sale. The supplier may pay or credit the rebate to the purchaser when qualifying goods are purchased.

In addition to the rebate for printed books referred to above, pursuant to section 259 of the ETA, a charity may apply for a 50% rebate of the GST or the federal portion of the HST they paid out on eligible purchases and expenses. Some charities that are a resident in a participating province are entitled to a 50% rebate of the provincial portion of the HST. Please find enclosed, the GST/HST guide, Public Services Bodies' Rebate, which contains detailed information on rebates.

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 Canada Customs & 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) 954-3158.

Yours truly,

Debra Murphy
Charities, Non-Profit Organizations and Educational Services Unit
Public Service Bodies and Government Division
Excise and GST/HST Rulings Directorate