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, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 150805
July 9, 2013
Dear [Client]:
Subject: GST/HST RULING
GST/HST status of the importation of a crop spraying aircraft
Thank you for your letter of [mm/dd/yyyy], concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the importation of a crop spraying aircraft.
The HST applies in the participating provinces at the following rates: 13% in Ontario, New Brunswick and Newfoundland and Labrador, 14% in Prince Edward Island and 15% in Nova Scotia. The GST applies in the rest of Canada at the rate of 5%.
Effective April 1, 2013, the 12% HST in British Columbia has been replaced by the 5% GST and a provincial sales tax.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
Statement of Facts
We understand the facts to be as follows:
1. [...] ([The] Company) is located in [...][Province X] and provides professional aerial and ground spraying.
2. The Company has purchased a crop spraying plane known as [...][the Product] from [...] a non-resident non-registrant.
3. The Product is specifically designed for crop spraying with seating for only the pilot, and is not designed as a passenger aircraft.
4. The Company uses the aircraft to provide an aerial spraying service where pesticides and herbicides are sprayed on fields of agricultural crops.
5. The Product's hopper (tank capacity for the liquid spray system) is [...].
Ruling Requested
Is the importation of the Product a non-taxable importation for GST/HST purposes?
Ruling Given
Based on the facts set out above, we rule that the supply of the Product is taxable pursuant to subsection 165(1). The importation of the Product is a taxable importation pursuant to section 212.
This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.
Explanation
Section 212 and subsection 212.1(2) provide for the imposition of the GST and the provincial part of the HST in respect of goods imported into Canada. Pursuant to these provisions, every person who is liable under the Customs Act to pay duty on imported goods, or who would be so liable if the goods were subject to duty, is liable to pay either the GST on imported goods calculated at the rate of 5% on the value of the goods, or in the case of a person who is a resident in a participating province (i.e., Nova Scotia, New Brunswick, Ontario, Prince Edward Island or Newfoundland and Labrador), the HST calculated at the rate for the particular province.
Special treatment is however provided for importations of commercial goods. Pursuant to subsection 212.1(3) where an importation is one of commercial goods (meaning goods which are imported for sale or any commercial, industrial, occupational, institutional or other like use) the provincial portion of the HST does not apply.
Pursuant to section 213 no GST/HST is payable in respect of goods included under Schedule VII to the ETA. Under section 6 of Schedule VII a non-taxable importation includes, in part, a supply under Part IV of Schedule VI to the ETA other than section 3.1 of that Part. Part IV of Schedule VI provides zero-rated relief for specified agricultural and fishing property and pursuant to section 10 of that Part, the Agricultural and Fishing Property GST/HST Regulations (the Regulations) prescribes further zero-rated property. Subparagraph 1(1)(g)(viii) of the Schedule to the Regulations lists self-propelled, tractor mounted, cultivator mounted, or pull-type field sprayers with a tank capacity of at least 300 L (66 gallons).
It is the CRA's position that crop-spraying aircraft are not included under this provision. Qualifying agricultural field sprayers are considered to be terrestrial agricultural equipment traditionally purchased exclusively by farmers. While a particular aircraft may have installed spraying equipment, we do not consider an aircraft to be within the scope of subparagraph 1(1)(g)(viii). Therefore, the supply of a crop spraying aircraft is subject to the GST/HST under subsection 165(1). Consequently, the importation of the Product is subject to the GST/HST.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-5124. 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,
Angela Stachowski
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
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