17 February 1995 GST/HST Interpretation Reference: ETA 261 - Visit to - Cross-Border Issues

I refer to XXXXX E-mail message of December 1, 1994, forwarding to Mr. Rob Allwright of my staff a number of questions for discussion at the presentation on December 15, 1994.

As promised by Mr. Allwright x the following are provided regarding the issues raised by your office. The Services Unit, Special Sectors has responded to the XXXXX question in a separate letter to XXXXX

1. Question

How does an unregistered non-resident get a refund for past operations where GST that was paid was not, in fact, payable and the Canadian Company has gone out of business?

Answer:

Under section 261 of the Excise Tax Act (Act), where a person pays or remits an amount of tax, net tax, penalty or interest that is later found not to be payable or remittable, the person may claim a rebate of that amount within four years from the day the amount was paid or remitted.

2. Question

How can a non-registered non-resident get a refund of the GST on business related expenses such as local transport, processing charges, meals and entertainment?

Answer:

The GST charged on business expenses such as local transport, processing services, meals and entertainment provided to a non-registered non-resident while in Canada is not eligible for a GST rebate.

Processing charges may be relieved under either the drop shipment rules, or a specific relieving provision in Part V of Schedule VI, but this will depend on the specific facts of the situation.

Relief by way of input tax credits may be available if the non-resident is eligible to register for GST.

3. Question

Exports of processing services: imports by non-registrant for processing services. How can they get the certificate of exemption?

Answer:

Exporters of Processing Services

The procedures for obtaining the certificate of exemption are outlined in Technical Information Bulletin (TIB-069).

While the policy (P-047) is being updated you should continue to administer the program based on information contained in:

•   Press Release dated March 10, 1992;

•   Memorandum to Regional Directors dated March 25, 1992;

•   Explanatory notes to the legislation relating to the GST - September 1992 and February 1993; and

•   TIB B-069.

The policy is being updated because of certain minor changes proposed by legal services. These changes are not substantial and do not affect the terms and conditions of the Press Release on which the policy is based. While making the necessary changes, Policy and Legislation will engage in further consultation with Customs to resolve such issues as the application of security and the post audit issue.

Where a Company makes application for authorization to use the Imports by Exporters of Processing Services Program and the goods are not subject to duty, the application is made to Excise/GST and the pre-audit is to be done by Excise/GST.

Where a Company makes application for authorization to use the Imports by Exporters of Processing Services Program and the goods are subject to duty and the GST, the application is made to Customs and the pre-audit is to be done by Customs.

The issue of processing requests from persons who are already participating in the Customs Inward Processing Program is discussed on page 5 of the TIB. Customs headquarters is aware of the contents of the program and assures me that there is no discrepancy between the procedures of Customs and that of Excise/GST in the processing of applications under this scenario.

The treatment in such circumstances is similar to that which occurs in situations where the application is being made for both duty and tax relief. That is, Customs conducts the pre-audit and approves the duty portion of the application and consults with the Excise/GST District Office to determine if a certificate would be allowable under the circumstances.

The misunderstanding which currently exists involves the situation where a company's application to the Customs Inward Processing Program was made to Excise/GST instead of Customs. The pre-audit was not at issue. However, as part of the consultation process in determining if the goods would qualify for GST relief, Customs began asking applicants who possess an Inward Processing Certificate to send a letter to the Excise/GST District Office. The Excise/GST Office was then supposed to send a letter to Customs indicating that the applicant is acceptable for the program. This letter is maintained on file to show Excise/GST acceptance. Excise/GST was not aware of this manner of managing the program. The manner has been discussed with Customs headquarters in the hope of clarifying this misunderstanding. Customs are prepared to accommodate us in the best way possible in order to ensure that client needs are properly met.

We intend to clarify this issue in an amendment made to the Policy and the TIB.

4. Question

Exporters of motor vehicles - Should one bill of lading indicate the supplier as shipper? Can the purchaser export the vehicle and get a refund from the supplier upon producing the bill of lading?

Answer:

Under section 12 of Part V of Schedule VI to the Act, where the dealer is arranging for delivery of the vehicle to a recipient at a place outside Canada, the dealer's name must appear on all documentation including the bill of lading as the shipper.

Where, however, the vehicle is purchased and exported by the recipient (other than a consumer), the supply of the vehicle may be zero-rated under section 1 of Part V of Schedule VI to the Act provided all of the conditions of the provision are met. The term "consumer" is defined in subsection 123(1) of the Act.

Provision exists for tax relief when a non-resident person purchases goods in Canada for export. Subsection 252(1) of the Act provides for a rebate of the GST paid by a non-resident person on goods purchased in Canada and exported or taken by the person out of Canada within 60 days of purchase.

Should you require further clarification, please do not hesitate to contact Mrs. Carol Ann Villeneuve at (613) 957-8224 or Mr. Rob Allwright at (613) 952-8810.

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