13 February 1996 GST/HST Interpretation 1996-02-13 - Proposed Tariff Item to Replace the Passover Products Remission Order

Dear XXXXX

This is in response to a facsimile message from Rob Allwright dated May 12, 1995, requesting our comments with respect to the implications of the above-referenced proposal for the imposition of GST under Division III of the Excise Tax Act (ETA).

The Passover Products Remission Order (P.C. 1990-2849) currently provides for the remission of customs duties imposed under the Customs Tariff and taxes imposed under Division III of Part IX (i.e., GST on imported goods) and any other Part of the Excise Tax Act on Passover foods and products that are of a class not available in Canada that are for use during the Passover holiday and that are imported during the period beginning two months before the eve of the first day of that holiday and ending on the last day of that holiday. Customs has administratively determined a list of food items which are eligible for remission, as the remission order does not contain a specific list of goods but only states that the remission is granted to "Passover foods and products of a class not available in Canada".

The proposed tariff item would provide the same relief from customs duties with respect to this list of goods as the remission order but would not provide relief of GST (which the remission order does). Accordingly, some goods which, in effect, may currently be imported without payment of GST, would become subject to seven per cent GST upon importation.

The Passover foods for which tax would become payable at seven per cent upon importation are those foods the supply of which is not zero-rated under Part III of Schedule VI to the ETA (which are non-taxable on importation under section 6 of Schedule VII). Examples of Passover foods in this category include potato chips and such items as chocolates, candies, gum and other confectionery that may be classed as candies.

It should be noted that some importers may be entitled to an input tax credit with respect to the Division III tax paid on importation because they are registrants who are importing the goods for use in a commercial activity. However, other importers will not be able to claim an input tax credit because they are importing the goods for personal consumption or may be unregistered small suppliers.

If a policy decision is made to maintain the status quo, section 1 of Schedule VII to the ETA could be amended to include the new tariff item. This would permit non-taxable importation of the goods which qualify under the tariff item.

Should you have any questions regarding this matter, please contact Mark Seigel of the GST Imports Unit at 952-1512.

Yours truly,

H.L. Jones
Director, General Applications Division
GST Rulings and Interpretations
Revenue Canada

Doc.# 2212(GENL)