3 June 2005 GST/HST Interpretation 60367 - Permanent Establishment

Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.

Dear XXXXX:

Thank you for your telephone call XXXXX concerning the application of the point-of-sale rebate of the provincial component of the Harmonized Sales Tax (HST) to books sold with CD-ROMs.

A point-of-sale rebate of the provincial component of the HST (8%) is available on supplies of qualifying products in the participating provinces of Nova Scotia, New Brunswick, and Newfoundland and Labrador. Suppliers of qualifying products, including publishers, wholesalers, distributors, and retailers, only have to collect a net amount of 7% on sales of the qualifying products in the participating provinces, after the provincial rebate is deducted.

The qualifying products are printed books or updates of printed books, audio recordings all or substantially all of which is a spoken reading of a printed book, and bound or unbound printed versions of scripture of any religion. The legislation does not specifically provide a rebate for electronic versions of books or books packaged together with CD-ROMs.

A printed book and a CD-ROM sold together generally contains a combination of auditory visual and textual information, interactive activities and in some instances textbook chapters.

The position of the Canada Revenue Agency (CRA) since the implementation of the point-of-sale rebate has been that a printed book and a CD-ROM packaged together and sold for a single price is considered to be a single supply of a new product that is not a printed book, and is therefore not eligible for the point-of-sale rebate.

The CRA is responsible for administering the legislation as passed by Parliament. Any change to the legislation is a tax policy matter, which falls under the responsibility of the Department of Finance. In this regard, I assure you that Finance officials are aware of the views expressed on this issue.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 954-4397.

Yours truly,

Costa Dimitrakopoulos
Manager
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

2005/06/30 — RITS 60577 — Delivery Requirements and Relief of GST on Property of an Indian or Indian Band Situated On a Reserve