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.
[Addressee]
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 135238
August 15, 2011
Dear [Client]:
Subject:
GST/HST INTERPRETATION
Children's footwear and snowboarding clothing
Thank you for your letter of May 10, 2011, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the point-of-sale rebate (the Rebate) on children's goods.
HST applies at the rate of 15% in Nova Scotia, 13% in Ontario, New Brunswick, and Newfoundland and Labrador, and 12% in British Columbia. GST applies at the rate of 5% in the remaining provinces and territories.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
You are requesting an interpretation for an undisclosed client who sells clothing and footwear through a retail store located in the province of British Columbia.
Your client sells clothing, footwear and accessories intended for people aged 12 to 20. With respect to footwear, your client sells boy's shoes, men's shoes and women's shoes. The shoes for which you are seeking an interpretation are adult unisex shoes (Unisex Shoes). The Unisex shoes are sold in boxes that specify men's sizes and where applicable, women's sizes.
The Unisex Shoes are available in sizes smaller than a men's size 6. You state that this particular shoe is available in men's size 3.5 to 5, specifically to cater to teen and pre-teen girls. The Unisex Shoes are the only shoes that your client sells that are available in men's sizes less than a size 6.
Your submission includes information on the British Columbia Social Services Tax Act, which was in effect prior to July 1, 2010. The British Columbia Social Services Tax Act exempted children's footwear which was defined in section 2.22 of the Social Services Tax Act Regulations, as follows:
"Children's footwear" means footwear up to and including girls' and boys' size 6.
Children's clothing and footwear also includes clothing of the type specified in this regulation and footwear when purchased for any person who is certified to be under 15 years of age.
You state that the Unisex Shoes were exempt from the British Columbia Social Services Tax Act, when purchased for a person who was certified to be less than 15 years of age.
You also provided information from the British Columbia HST Notice #2, Point-of-Sale Rebates for British Columbia, dated November 16, 2009 (the Notice). The Notice indicates that footwear for girls in sizes up to and including girls' size 6 and, footwear for boys in sizes up to and including boys' size 6, will qualify for the Rebate. The notice goes on to indicate that "adult sized footwear (i.e., sizes greater than 6), even if purchased for a child", would not qualify for the Rebate. Your interpretation of the Notice is that adult sized footwear that is a size 6 or less would qualify for the Rebate.
Your submission notes that a men's size 6 shoe and a boy's size 6 shoe have the same insole length, that is, 24.25 centimetres and, women's size 7.5 shoe have a 24.25 centimetre insole. Accordingly, the Unisex Shoes that are sized smaller than a men's size 6 (i.e., sizes 3.5 to 5.5) and, smaller than a women's size 7.5, have an insole length of less than 24.25 centimetres.
Your client sells snowboarding pants and snowboarding jackets which are designed to be used when snowboarding. You state that both the jacket and pants otherwise meet the requisite child's sizing requirements. Both the jacket and the snow pants have features specifically designed for snowboarding. Both are water resistant to 10,000 mm and are made with vapour transmission fabric to allow breathability. The seams on both are sealed to prevent snow from getting into the garment. As well, both have loops to allow the jacket to connect to the pants and vice versa to also prevent snow from getting in. The pants also have boot clips for this same reason. The jacket has an extra layer/elastic skirt inside the lining which also prevents snow from getting into the garment.
You understand that in determining whether a garment qualifies for the Rebate, the Canada Revenue Agency considers whether a garment is of a class that is used exclusively in sports or recreational activities, or whether it could reasonably be used for everyday use. While the jacket and pants you describe are designed to be worn while snowboarding, they can also reasonably be worn for everyday use.
INTERPRETATIONS REQUESTED
1. Are the Unisex Shoes sold in men's sizes 3.5 to 5.5 considered to be "designed for girls and boys" and are they qualifying goods for purposes of the Rebate?
2. Are the Unisex Shoes that are available in men's size 6 and/or women's size 7.5, having an insole length of 24.25 centimetres qualifying goods for purposes of the Rebate when purchased for a boy or girl?
3. Are jackets and pants designed to be used for snowboarding qualifying goods for purposes of the Rebate?
INTERPRETATIONS GIVEN
The governments of Ontario, British Columbia and Nova Scotia each provide a point-of-sale rebate of the provincial part of the HST payable on qualifying children's goods. The Rebate is available to persons that are recipients of qualifying children's goods sold in Ontario, British Columbia or Nova Scotia, or that are resident in any of those provinces and that import qualifying children's goods in circumstances where the provincial part of the HST is payable on the importation, or that receive delivery or possession of qualifying children's goods into Ontario, British Columbia or Nova Scotia in circumstances where the provincial part of the HST is payable on the children's goods.
Children's Footwear
The Regulations define qualifying "children's footwear" to mean:
Footwear (other than stockings, socks or similar footwear or footwear of a class that is used exclusively in sports or recreational activities) that
(a) is designed for babies; or
(b) is designed for girls or boys and has an insole length of 24.25 centimetres or less.
Under the Regulations children's clothing and footwear are qualifying items for purposes of the Rebate unless they are not designed for girls or boys, do not meet the size requirements, or can be shown to be of a class that is used exclusively in sports or recreational activities.
Where there are no physical design features differentiating children's shoes from adult shoes, marketing is examined to determine whether a shoe is designed for an adult or a child. As described, the Unisex Shoes are labelled and sold as shoes for men and women and therefore, are not designed for boys or girls. Consequently, they will not be qualifying children's footwear for purposes of the Rebate.
The Unisex Shoes that are available in men's size 6 and/or women's size 7.5, which have an insole length of 24.25 centimetres would not be qualifying goods for purposes of the Rebate, if purchased for a boy or girl. Under the Regulations, the shoes must have an insole length of 24.25 centimetres or less and also be designed for boys or girls to qualify for the Rebate. The Unisex Shoes which have an insole length of 24.25 centimetres or less and are sized and marketed as men's or women's footwear will not qualify for the rebate when purchased for a boy or girl regardless of age because the shoes do not meet both of the required conditions of "designed for girls or boys" and "has an insole length of 24.25 centimetres or less". Therefore, men's shoes sized shoes smaller than men's size 6 and women's sized shoes smaller than women's size 7.5, regardless of insole length, will not be qualifying footwear for purposes of the Rebate.
The Regulations do not contain a provision allowing adult sized footwear that is purchased for children regardless of age to be relieved from tax when certification is received from the customer, as did the former British Columbia Provincial Sales Tax.
Children's Snowboarding Clothing
The Deduction for Provincial Rebate (GST/HST) Regulations (the Regulations) defines qualifying "children's clothing" to mean:
Garments (other than garments of a class that is used exclusively in sports or recreational activities, costumes, children's diapers or children's footwear) that are
(a) designed for babies, including baby bibs, bunting blankets and receiving blankets;
(b) children's garments
(i) designed for girls and of a size not greater than the size that is girls' size 16 according to the national standard applicable to the garments, or
(ii) designed for boys and of a size not greater than the size that is boys' size 20 according to the national standard applicable to the garments, or
(iii) if no national standard applies to the garments, designed for girls or boys and having a size designation of extra small, small, medium or large; or
(c) hosiery or stretchy socks, hats, ties, scarves, belts, suspenders, mittens and gloves in sizes and styles designed for children or babies.
Snowboarding is considered to be both a sport and a recreational activity for purposes of the Rebate. Therefore, any items of snowboarding clothing or snowboarding shoes that are of a class that is used exclusively in the sport or recreational activity are not qualifying items for purposes of the Rebate.
The nature of items such as snowboard jackets and pants is such that they could reasonably be worn for purposes that are not exclusively for snowboarding. Although jackets and pants may be marketed as snowboarding jackets and snowboarding pants, in most cases these pieces of clothing can be used for general winter activities. As a result, these items qualify for purposes of the Rebate where the design and size requirements under the Regulations are also met.
For further information please refer to GST/HST Info Sheet GI-063, Point-of-Sale Rebate on Children's Goods, which is available on the CRA Website.
The foregoing comments represent our general views with respect to the subject matter of your request. These comments are not rulings and, in accordance with the guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, do not bind the Canada Revenue Agency with respect to a particular situation. Future changes to the ETA, regulations, or our interpretative policy could affect this interpretation.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 952-9585. 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,
Ben Boboski
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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