20 October 2003 GST/HST Interpretation 41495[1] - Outbound Postage and Handling Service Charges

Dear XXXXX:

Thank you for your letter XXXXX XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to your XXXXX supplies.

1. You would like clarification of GST/HST XXXXX regarding the applicability of the GST/HST on outbound postage and handling services related to XXXXX.

2. We stated XXXXX that where XXXXX is contracted to supply postage and handling (or just postage for that matter) as part of XXXXX, it is likely that XXXXX is supplying a single supply of a processing service.

3. You indicate that in your industry it is not uncommon for customers to outsource the XXXXX services and have the printer deliver the products directly to the XXXXX. In such a case, the customer coordinates the postage and handling with the XXXXX. As a result, the customer is not required to pay the GST/HST on postage related to a delivery outside Canada. You are of the opinion that this appears inequitable for companies that hire printers to arrange for mailing of their products.

4. In your view, the postage and handling portion of the XXXXX is a distinct service since XXXXX clients can choose not to receive postage and handling from XXXXX but still receive the other listed services. In support of this argument, you provided us with an analysis of the three additional questions in Policy Statement P-077R Single and Multiple Supplies:

Question No. 1

If the recipient did not receive all of the elements, would each element, in itself, and in the context of this transaction, be of any use to the recipient? [If yes, likely multiple supplies; if no, likely a single supply.]

Analysis

XXXXX XXXXX XXXXX XXXXX XXXXX

Question No. 2

Is the provision of a particular element contingent on the provision of another element? [If yes, likely a single supply; if no, likely multiple supplies.]

Analysis:

XXXXX XXXXX

Question No. 3

Is the recipient made aware of the specific elements (in detail) that are part of the package? [If yes, likely multiple supplies; if no, likely a single supply.]

Analysis

XXXXX

Interpretation Requested

You would like to better understand why the Canada Customs and Revenue Agency (CCRA) is of the position XXXXX that postage and handling is likely part of a single supply of a XXXXX since your analysis of the situation, conducted through Policy P-077R, does not provide you with the same result.

Interpretation Given

It has long been the CCRA's position that where a person is contracted to provide a delivered item or delivered information for that matter, the delivery is considered an input of the supply and the GST/HST is applicable.

Our response did not rule on a specific transaction but rather provided a general interpretation of how, in our view, the GST/HST applies on such supplies. We also provided a copy of Policy P-077R "Single and Multiple Supplies" to help you in determining whether a specific transaction is in fact a single supply or rather, multiple supplies.

If you are of the opinion that the interpretation provided does not apply to your specific transaction(s), you may provide us with all the required documentation i.e., a contract, invoices, agreements, purchase orders etc., and we would be pleased to provide a ruling.

With regard to your analysis of Policy P-077R "Single and Multiple Supplies" presented in your letter of XXXXX, we must stress that the determination of whether a transaction consisting of several elements is regarded a single supply or multiple supplies is based on a determination of fact. The questions are provided as guidelines to aid in making a determination but no one question is determinative.

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.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-9700.

Yours truly,

Donato Licursi
Services and Intangibles Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate