GST/HST Rulings and Interpretations
Directorate
Place Vanier, Tower C, 9th Floor
25 McArthur Avenue
Ottawa ON
XXXXX K1A 0L5
February 16, 1998
Dear XXXXX
This is in reply to your facsimiles of March 16, 1997 and March 20, 1997 sent to the XXXXX Tax Services Office concerning the application of the Goods and Services Tax (GST)Harmonized Sales Tax (HST) to imported educational material supplied as part of a distance learning program.
On the basis of the information you have provided, as well as information we received from the distributor of the program in XXXXX our understanding of the facts is as follows:
Statement of Facts
1. You are considering applying for an MBA distance learning program offered by XXXXX which is located in XXXXX The courses and accompanying material for the MBA program in which you are interested in are distributed in XXXXX XXXXX
2. XXXXX offers XXXXX courses of which XXXXX are compulsory and XXXXX are elective, as part of its MBA program. Each course consists of textual materials in a ringbinder format, MBA registration documents, an examination application form and full instructions relating to the program. Practice final examinations, with solutions, are also included in the course package.
3. All compulsory courses have optional accompanying software packages. These software packages consist of simulations, interactive programs designed to provide the kind of guidance and feedback normally supplied by a tutor or fellow student, and utility programs to allow input and analysis of real world data.
4. The program also offers XXXXX which is sold separately and includes additional practice examinations with answers, as well as detailed information on each course.
5. The XXXXX distance learning MBA is entirely selfsufficient. There are no research papers or written assignments to submit for marking. XXXXX does not have telephone support for its distance learning students, but will provide help to written or faxed queries on course material.
6. The price of the MBA Student Handbook was XXXXX, including GST, when it was sold by the previous distributor who operated in Canada.
7. The price of each course is XXXXX, with a discount for three or more courses, and XXXXX for each optional software package.
8. It is our understanding that you are the recipient of the course and the importer of record.9. The courses are sent XXXXX and XXXXX will act as the recipient's customs broker, if requested.
10. The order form indicates that the recipient of the course(s) and software will pay GST on both directly upon delivery of the package. XXXXX will not release the package until it has collected the applicable GST.
Ruling Requested
You are inquiring as to whether you must pay GST on the importation of educational material, such as textbooks, computer software and other related materials supplied as part of this distance learning program.
Ruling Given
Based on the facts set out above, we rule that the importation of educational material, textbooks, computer software and other related materials supplied by XXXXX distance learning MBA program are subject to GST. The GST is calculated on:
• the value of the goods, as it would be determined under the Customs Act for the purpose of calculating duties imposed on goods at a percentage rate, whether the goods are in fact subject to duty; and
• the amount of all duties and taxes, if any, payable under the Customs Tariff, the Special Import Measures Act, the Excise Tax Act (other than the GST/HST), or any other law relating to Customs.
This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act, or to departmental interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.
Explanation
Generally, the Excise Tax Act ("ETA") provisions dealing with tax on imported goods apply the legislative requirements of the Customs Act. Division III of the ETA deals with the application of the GST/HST to goods imported into Canada. Pursuant to section 212 of the ETA, GST/HST is payable on all imported goods, unless specifically relieved from tax under section 213 and Schedule VII to the ETA. There are no relieving provisions in the ETA for the importation of educational material.
The value of imported goods for GST purposes is determined under section 215 of the ETA. This section provides that GST on goods imported into Canada is to be calculated on the excise and dutypaid value of the goods, as established by the Customs branch of the Department. This amount is the aggregate of the value as determined in accordance with sections 45 to 55 of the Customs Act, the amount of any customs duties payable on the goods under the Customs Tariff, duty under the Special Import Measures Act, and the amount of taxes (other than the HSTGST), if any, payable under the ETA.
Furthermore, there are special rules relating to the GST on imported computer software. Generally, it is the Department's position that offtheshelf software and custom software sold outright to a user are subject to GST on their full value, i.e., the value of the carrier medium plus the value of the software, as imported goods under Division III of the ETA.
The GST on all imported goods will be paid to, and collected by, Customs as if it were a duty levied on the importation of goods under the Customs Act. Duties and taxes, including the GST, on imported goods are payable when Customs processes the accounting or entry documents. With respect to the goods you are importing, i.e., casual goods, you are considered to be the importer and therefore liable to pay the GST at the time of importation. If you choose to use a customs broker, the broker will collect the tax from you and remit it to Customs.
Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-6761.
Yours truly,
Susan Eastman
Charities, NonProfit Organizations and Educational Services Unit Division
File: 3
| c.c.: |
J.A. Venne
M. Place
S. Eastman
XXXXX |
| Legislative References: |
sections 212, 213, 215 of Division III, Schedule VII |
NCS Subject Code(s) R 3; 3
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