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.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0l5
[Addressee]
Case Number: 201085
Dear [Client]:
Subject: GST/HST INTERPRETATION
Application of GST/HST and excise duties on supplies of spirits and wine
We are writing further to your letter of July 11, 2019 and our subsequent telephone conversations concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to supplies of certain alcoholic beverages (spirits and wine, collectively referred to in this letter as “products”). We apologize for the delay in our response.
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.
In your letter, you provide a description of the pricing practices of […][Organization Z] whereby federal excise duty amounts are included in the cost base of the products that are imported into […][Province X] by [Organization Z]. You ask whether such excise duty amounts should be included in this cost base and whether the HST should be applied on the final retail sales price of a product supplied in [Province X], including the excise duty amount. More generally, you have asked us to confirm whether the GST/HST should apply to the retail price of such products, including amounts in respect of taxes or duties.
While we cannot comment on [Organization Z]’s pricing practices, we can confirm the following with respect to the amount on which the GST/HST must be calculated.
INTERPRETATION
GST/HST is imposed on taxable supplies made in Canada, calculated at the applicable rate, on the value of the consideration paid or payable for the supply, except where the supply is a zero-rated supply or specifically exempt. Every person who makes a taxable supply is generally required to collect the GST/HST payable by the recipient of the particular supply.
For this purpose, “consideration” is defined for GST/HST purposes to include “…any amount that is payable for a supply by operation of law”. In addition, the consideration for a supply of a property or a service includes any tax, duty or fee (other than the GST/HST) imposed under an Act of Parliament that is payable by the recipient, or payable or collectible by the supplier, in respect of that supply or in respect of the production, importation, consumption or use of the property or service.
Excise duties are imposed on spirits and wine under the Excise Act, 2001 (EA, 2001). Therefore, we would confirm that the excise duties would be included in the value of the consideration for the supply of the products for purposes of calculating the GST/HST, as excise duties are imposed under the EA, 2001, an Act of Parliament. Further, since the products are not specifically exempt or zero-rated under the ETA, GST/HST would be calculated on the value of the consideration at the applicable rate. For information on the application of excise duties on spirits and wine, please see Excise Duty Memorandum 3.1.1, Producers and Packagers of Spirits and Excise Duty Memorandum 4.1.1, Producers and Packagers of Wine, and Excise Duty Memorandum 8.1.1, Excise Warehouses. For further information on how the GST/HST applies to taxes, duties, and fees, please refer to GST/HST Memorandum 3.5, Application of GST/HST to Other Taxes, Duties and Fees.
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 CRA with respect to a particular situation. Future changes to the ETA, regulations, or the CRA's interpretative policy could affect the interpretation(s) or the additional information provided herein.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-670-0668. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Philippe Taylor
Government Sectors Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
Email this Content