6 September 1994 GST/HST Interpretation 11680-1(glr) - Maintenance and Repair of Trailers Owned by U.S. Clients

                                                                        Telephone: (613) 954-8585
Fax: (613) 990-1233

                                                                        File: 11680-1(glr), ss. 179(3), Sch. VI/V/1, 4

                                                                        September 6, 1994

Dear Mr. XXXXX:

Your Reference: XXXXX

I refer to your letter of November 23, 1993, addressed to Mr. Rob Allwright of my staff, Ms. XXXXX facsimile message of November 25, 1993, addressed to Mr. XXXXX‚ formerly of my staff, and Mr. XXXXX facsimile message of July 26, 1994, addressed to Mr. Garry Ryhorchuk of my staff, concerning supplies made by XXXXX. Please accept my apologies for the delay in replying to your letter.

I understand that XXXXX supplies goods and services for the maintenance and repair of trailers owned by U.S. clients. The trailers are imported for the purpose of maintenance and repair, and exported once these services have been performed. When invoicing its non-resident clients, XXXXX provides a breakdown of the costs — one total for parts and another total for labour. You have determined that XXXXX is making two distinct supplies, one for parts and one for labour.

Schedule VI, Part V, section 4 to the Excise Tax Act (Act) zero-rates any service (other than a transportation service) performed on goods temporarily imported into Canada for the sole purpose of having the service performed. The labour service supplied by XXXXX to the non-residents for the repair or maintenance of the trailers would qualify for zero-rating under this provision. As you have determined that the supply of the parts related to the service is a separate supply from the labour component, the parts would not be zero-rated under Schedule VI, Part V, section 4.

In addition, the supply of the parts would not be zero-rated under Schedule VI, Part V, section 1 to the Act, or deemed to be made outside Canada under the provisions of subsection 179(3) of the Act, as the parts are for use in Canada prior to export and lose their separate identity prior to export.

XXXXX[.] However, I would like to point out that although XXXXX is itemizing the various charges (i.e., labour and parts) when it invoices its non-resident clients, if XXXXX were actually making a single supply of a service of repairing or maintaining the trucks, the supply of the repair or maintenance service, including the parts, would qualify for zero-rating under Schedule VI, Part V, section 4.

If you require any further information, please contact Mr. Ryhorchuk at (613) 952-6743 or Mr. Daniel Chamaillard at (613) 957-8220.

Yours sincerely,

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