Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
DATE March 24, 2014
FROM
Ben Boboski
Senior Rulings Officer
Goods Unit, General Operations and Border Issues Division
TO
[Client]
FILE
155000
SUBJECT : GST/HST INTERPRETATION
Application of section 215.1 of the ETA and GST/HST Rebates
You have asked whether an importer who paid Division III tax on the importation of books which were exported within 60 days of importation can obtain a rebate/refund of the GST paid under a provision in the Excise Tax Act (ETA).
FACTS
1. A non-registrant imported two separate shipments of books into Canada from his publisher. One shipment of [#] books was imported from […][Country X] at no cost and another shipment of [#] books was imported from […][Country Y] at a reduced cost.
2. Invoices were sent with the shipments.
3. The importer paid GST on the importation of the books.
4. The importer exported all of the books from Canada to […][individuals outside Canada] for nil consideration within 60 days of their importation.
Generally, all goods imported into Canada are taxable for GST/HST purposes unless specifically relieved under section 213 of the ETA. Importations of goods relieved of tax under section 213 are set out in Schedule VII to the ETA. Section 8 of Schedule VII to the ETA deems prescribed goods that are imported into Canada in prescribed circumstances to be non-taxable for GST/HST purposes. Goods that are prescribed, together with their terms and conditions for relief, are listed in the Non-Taxable Imported Goods (GST/HST) Regulations made pursuant to section 8 of Schedule VII. None of these provisions apply to relieve the books from the GST/HST.
[INTERPRETATION REQUESTED]
You have suggested that one of the subsections under section 215.1 of the ETA might apply to allow a rebate of the GST/HST which was collected on the importation of the above noted books. All of the conditions in each of the particular subsections must be met in order for the provision to apply to allow a rebate.
[INTERPRETATION PROVIDED]
For purposes of paragraph 215.1(1)(a), it’s clear that the books were not acquired on consignment, approval, or on a sale-or-return basis. The final phrase in the paragraph “or other similar terms” relates to the meaning of the terms consignment, approval, and sale-or-return basis. The terms are not defined in the ETA. Therefore, we must look to dictionary definitions of the terms.
* Consignment means placing any material in the possession of another person, but retaining ownership until the goods are sold by the other person.
* Approval means a good being subject to examination by a potential purchaser without the obligation to buy it after which title passes.
* Sale-or-return means an arrangement by which a recipient pays only for goods sold, returning those that are unsold to the wholesaler or manufacturer.
Each of the three types of terms of sale gives the recipient (as the case may be) the option to return the goods. However, the purpose of each term of sale is to supply the goods to the recipient. Therefore, we can reasonably assume that an “other similar arrangement” would also contemplate a supply of goods to the recipient but with an option for return if no supply were to take place.
In the case at hand the books are being exported to third parties and are not being returned to the foreign supplier as is required in paragraph 215.1(1)(a), which states, in part: “the goods are,…exported by the person for the purpose of returning them to the supplier…”. As the conditions of subsection 215.1(1) are not satisfied, there is no rebate available for the goods in the case at hand pursuant to this provision.
Subsection 215.1(2) provides a rebate under certain conditions, for example where duty paid goods are damaged, of inferior quality, were not the goods that were ordered. These circumstances do not apply to the case at hand and, therefore, no rebate is available under this provision.
Where the goods are not subject to duty subsection 215.1(3) allows for the rebate to be calculated using the rules found in sections 73, 74, or 76 of the Customs Act. These provisions which provide for a refund of duty are applied for GST/HST purposes as if the goods were subject to duty. The provisions provide for a rebate for the following reasons:
* damage, deterioration or destruction from the time of shipment to Canada to the time of release, or a loss in volume or weight arising from natural causes while in a bonded warehouse (section 73);
* damaged, deteriorated, or destroyed, or quantity are less than the amount for which duty was paid, or the quality of the goods is inferior (section 74); and
* defective goods (section 76).
In the case where there is no duty imposed, a rebate of the GST/HST could still be allowed pursuant to subsection 215.1(3) based on sections 73, 74 and 76 of the Customs Act. However, none of the reasons under sections 73, 74 and 76 of the Customs Act apply, and consequently there is no rebate of the GST/HST available in respect of the books under subsection 215.1(3).
[…]
There is no provision in the ETA that applies to relieve or provide a rebate or refund of the GST/HST. […]
[In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the interpretation given in this letter, including any additional information, is not a ruling and does not bind the Canada Revenue Agency (CRA) with respect to a particular situation. Future changes to the ETA, regulations, or the CRA’s interpretative policy could affect the interpretation or the additional information provided herein.]
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