11 January 2002 GST/HST Interpretation 33965 - Application of GST/HST to Gift-wrapping Services

Dear XXXXX

Thank you for your letter of December 8, 2000 concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to gift-wrapping.

The following facts were provided in your letter.

•   A GST/HST registrant offers goods for sale to consumers through a web site.

•   The web site is located in Canada.

•   The goods are located in Canada in a non-participating province.

•   When ordering goods through the Web site, the consumer, at his option, may choose to have the item gift-wrapped for an additional charge of perhaps $1.00 or $2.00.

•   When this option is selected, the gift-wrapping is done at a place in Canada, but not in a participating province.

•   The item is gift-wrapped at the same facility from which the goods originate.

•   The gift-wrapping is supplied by the same supplier who supplies the goods.

•   A separate charge is shown on the invoice for the gift-wrapping.

•   The gift-wrapped item is subsequently shipped from that place to the consumer's address.

Interpretation Requested

Is the additional charge for gift-wrapping considered to be a supply made in a participating province and, as such, subject to HST?

Interpretation Given

Based on the information provided, the supply of the item and the gift-wrapping is considered to be a single supply of tangible personal property ("TPP").

Section 1 of Part II of Schedule IX to the Act states that, subject to section 3 of Part VI, a supply by way of sale of TPP is made in a province if the supplier delivers the property or makes it available in the province to the recipient of the supply. In cases where the item is delivered to a participating province to the recipient of the supply, the supply of TPP is subject to HST. In this case, the supply of TPP is made in a participating province because the supplier delivers the property to a recipient in a participating province.

Pursuant to section 144.1 of the Act, the supply of TPP is deemed to be made in a participating province. Therefore, the supply of TPP is subject to tax at 8% pursuant to subsection 165(2) of the Act in addition to tax at 7% imposed by subsection 165(1) of the Act.

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 and Revenue Agency with respect to a particular situation.

For your convenience, find enclosed a copy of section 1.4 of Chapter 1 of the GST/HST Memoranda Series.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-6743.

Yours truly,

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