2 November 1994 GST/HST Interpretation 11610-7[1] - Application of Containers Policy to Boomgear

This amends and clarifies our letter to you dated November 2, 1994, and is further to the e-mail of September 20, 1994 addressed to Joe Cuillerier XXXXX of your office.

Statement of Facts

It is our understanding that "boomgear" generally includes boom chain and swifter wire, together used to join the logs or "boom sticks" which form the outside of a boom used to contain logs for transportation on inland waterways. An amount is charged by vendors for the supply of boomgear where logs are supplied in boom lots to recipients. This amount is refunded when boomgear is returned. Where boomgear has been lost, the recipient will generally replace the gear and the amount will be refunded.

You have questioned whether the supply of the boom gear will be considered to be the supply of a container, allowing the application of the administrative treatment outlined in Technical Information Bulletin B-038 whereby the refund of the amount may be treated as a price adjustment and optionally ignored for GST purposes.

The Department's Position

The term "container" is not defined by the Excise Tax Act (the "Act") so the common or dictionary definition should be considered to apply. Webster's Third New International Dictionary, for example, defines "container" to mean "one that contains; a receptacle ... or a formed or flexible covering for the packing or shipment of articles, goods or commodities."

Based on our understanding of the fact situation, it is our view that boomgear in and of itself does not constitute a container in the ordinary sense of the word. The gear may only be considered to be part of a container where it is joined together with boom sticks with the intention of containing logs for transport. In this the boomgear may be somewhat analogous to fasteners in a wooden pallet. Only where the components are assembled in a functional whole can a container be said to exist.

Given this interpretation, section 137 of the Act will not apply in respect of the supply of boomgear, nor will the administrative treatment described in bulletin B-038, allowing the application of section 232, be applicable. Instead the amount payable on the supply of the boomgear to the supplier is to be treated as consideration for the supply and tax calculated on the amount is payable at the time the consideration is payable.

We have insufficient information to express an opinion as to whether the amount charged by the supplier in respect of the boomgear is a "deposit" for purposes of subsection 168(9). In order to make this determination, it would be necessary to determine how the supplier accounts for the amount, including whether the supplier has established a separate deposit account, and how the amount is accounted for income tax purposes. In the absence of other information we have assumed that the amount is not a deposit but, rather, is consideration for the supply of the boomgear.

If you require further information on this issue please contact Roy Jamieson at (613) 954-8345 or Michael Matthews at 952-8806.

Yours truly,

H.L. Jones
Director
General Tax Policy
GST Policy and Legislation

XXXXX

Closed November 2nd, 1994.