XXXXX
XXXXX
January 4, 1995
I refer to your electronic mail transmission of August 3, 1994, to a member of my staff, namely, Pamela LaFrance, regarding the administrative policy with respect to paragraph 3(c) of Part VII of Schedule VI to the Excise Tax Act (the Act). I apologize for the delay in the response. I understand your question is as follows:
Where a non-resident recipient of a supply of a passenger air transportation service tenders the consideration for that supply by placing a telephone call from the continental U.S.to a Canadian resident travel agent and giving a credit card number over the telephone, is that supply zero-rated by virtue of VI/VII/3(c) to the ETA provided, of course, that all of the other conditions in that paragraph are met?
Paragraph 3(c) of Part VII of Schedule VI to the Excise Tax Act reads as follows:
A supply of a passenger transportation service that is provided to an individual or a group of individuals and that part of a continuous journey of the individual or group that includes transportation by air, where ...
(c) the origin of the continuous journey is within the taxation area, but outside Canada, and the recipient of the supply tenders the consideration for the supply at a place outside Canada; ....
In other words, an air ticket with a routing from the U.S.A. to Canada will be zero-rated if it is purchased at a place outside Canada; the origin of the journey is in the taxation zone but outside Canada.
The Department of Finance has agreed that payment received by a Canadian travel agent from a client who has ordered the ticket from outside Canada, and paid for it by cheque, money order, or American credit card, mailed or supplied from outside Canada, will be considered as payment made outside Canada. The Department advised the airline industry of that decision in the fall of 1991.
If you have any questions or comments, please do not hesitate to contact Tom Alley, Tax Policy Officer, at (613) 952-9218.
Tony D'Abramo
Manager, Services Unit
Tax Policy - Special Sectors
GST Policy and Legislation
| c.c.: |
Adam Belyea
Tom Alley |
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