24 February 1998 GST/HST Interpretation HQR0001006 - Schedule VI, Part V, Section 21 to the Excise Tax Act

                                                                        GST/HST Rulings and Interpretations
Place Vanier, Tower C, 9th Floor
25 McArthur Avenue
Vanier, Ontario
K1A 0L5

Gentlemen:

Thank you for your letter of December 23, 1997, concerning the application of the Goods and Services Tax (GST)Harmonized Sales Tax (HST) to your client's operations.

The following information was provided in your letter:

•   Your client provides a semiconductor analysis service to customers located both in and outside Canada.

•   The customers will place orders with your client to purchase certain semiconductor chips (chips) with the intent of having the chips analyzed to determine the chips' functionality.

•   Your client will purchase the chips and conduct the analysis.

•   Your client examines the chips and maps them to determine the chips' capabilities..

•   In order to map the chips, close attention to detail must be taken as mistakes in the technical diagrams may provide an inaccurate determination of the chips' functionality.

•   The analysis process generally results in the destruction of the chips.

Interpretation Requested

Is a service, where semiconductor chips are analyzed and in the process the chips are destroyed, a service of "testing and inspecting" for purposes of Schedule VI, Part V, section 21 to the Act?

Interpretation Given

Based on the information provided, a service of analyzing semiconductor chips to determine the chips' capabilities, where the chips are destroyed during the analytical process, would be considered to be a service of "testing and inspecting" for purposes of Schedule VI, Part V, section 21 to the Act.

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the Act, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST Memoranda Series, do not bind the Department with respect to a particular situation.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-6743.

Yours truly,

Garry L. Ryhorchuk
Senior Rulings Officer
Border Issues Unit
General Operations and Border Issues Division
GST/HST Rulings and Interpretations Directorate

                                                Roget's II The New Thesaurus

NCS Subject Code: 3