23 November 2000 GST/HST Interpretation 31630 - Transportation of Pets by Air

Dear Sir:

Thank you for your email of May 24, 2000 (with attachments) concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transportation of pets by air.

Our understanding of the facts is as follows:

1. The person, XXXXX, is engaged in the transportation of persons by air XXXXX;

2. Their passengers are entitled to a "free baggage allowance" as part of their transportation service which consists of 2 free pieces of baggage based on typical industry standards:

•   one piece of baggage can weigh up to 32 kg and measure up to 10" x 21" x 31"; and

•   the other piece of baggage can weigh up to 20 kg and measure up to 10" x 20" x 26".

1. The person charges passengers a fixed amount per piece of luggage where a passenger has excess baggage at the time of check-in at the airport. Excess baggage is a piece, or several pieces of baggage that is in excess of the carrier's "free baggage allowance";

2. A waybill is not issued for excess baggage. The only voucher issued is a proof of payment such as a credit card or debit card slip;

3. Passengers who bring pets on flights are charged a separate fee for their transportation. Pets do not affect the passenger's free baggage allowance;

4. Pets are transported in the same pressurized holds as checked baggage. Pets are not permitted in the cabin area;

5. Like excess baggage, waybills are not issued for the transportation of pets. Proof of payment slips serve as vouchers; and

6. XXXXX

Interpretation Requested

1. Is a pet that is being transported by an air carrier, such as in the scenario described, considered baggage for GST/HST purposes when accompanied by its owner who is a passenger on the flight?

2. If the pet's owner does not accompany the pet on the flight, is the pet considered baggage or freight?

3. What is the tax status of an excess baggage charge on the return leg of a round trip plane ticket from Halifax to Toronto?

Interpretation Given

Is a pet that is being transported by an air carrier, such as in the scenario described, considered baggage for GST/HST purposes when accompanied by its owner who is a passenger on the flight?

To the extent that the GST/HST rules for passenger and freight transportation differ, whether particular tangible personal property that is being transported qualifies as baggage can have an impact on whether that service is zero-rated and whether it will be considered supplied in a particular province. Specifically, the meaning of a freight transportation service in Part VII of Schedule VI and in Part VI of Schedule IX of the ETA excludes a service provided by a supplier of a passenger transportation service of transporting an individual's baggage in connection with the passenger transportation service.

In the scenario described, the transportation of the pet by the airline would be considered to be the transportation of the passenger's baggage for GST/HST purposes.

Baggage is generally understood to mean the personal belongings of a traveller that accompany the traveller on a voyage. Most major airlines will allow a free baggage allowance with specific weight and volume limits (combined checked and unchecked baggage). For an item to be considered baggage, it must be recognized that the item follows the passenger's flight route i.e. the item follows the passenger's transportation. This usually means that the item is given a baggage slip indicating the flight number, connections and destination airport that the passenger follows.

If an item is not accepted as baggage or excess baggage, it will be shipped via the cargo system. This means that the item is not checked-in as baggage but is processed as cargo. Items transported as cargo are issued waybills. A waybill provides the necessary documentary information for the contract of carriage and gives the carrier's staff instructions for its handling, dispatching and delivery.

Also, when an item is shipped cargo it does not necessarily follow the passenger's flight route. The item is evaluated by the carrier's cargo department and prioritized accordingly. A passenger may not specify to have a cargo item transported via a specific route, such as the same flight route as their (passenger) transportation service.

The transportation of the pet in the scenario described would be treated as the transportation of the passenger's baggage to the extent that the pet is being transported and tracked in direct connection with the passenger's flight and not distinctly shipped as cargo with a corresponding waybill.

If the pet's owner does not accompany the pet on the flight, is the pet considered baggage or freight?

For the transportation of an individual's pet to be considered the transportation of an individual's baggage for the purposes of being excluded from the definition of a freight transportation service, the transportation of the pet must be supplied in connection with the passenger transportation service supplied to that individual. The transportation of an unaccompanied pet is not regarded as the transportation of an individual's baggage and hence it is considered to be a freight transportation service.

What is the tax status of an excess baggage charge on the return leg of a round trip plane ticket from Halifax to Toronto?

Section 2 of Part VI of Schedule IX of the ETA sets out a place of supply rule to determine if a passenger transportation service is made in a participating province. This section provides that, where the ticket or voucher issued for the first passenger transportation service that is part of a continuous journey specifies an origin of the journey that is within a participating province and the termination and all stopovers in respect of the continuous journey are in Canada, the place of supply is in that particular participating province. This section also provides that in any other case, the place of supply will be in a particular province if the place of negotiation of the supply is in that province.

Section 4 of Part VI of Schedule IX provides that, where a person supplies a passenger transportation service to an individual and also supplies a service of transporting that individual's baggage in connection with the passenger transportation service, the place of supply of the service of transporting the individual's baggage is in the same province as that of the passenger transportation service.

The excess baggage charge made on a return leg of the round trip in question is considered to be in connection with the passenger transportation service. As a result, the excess baggage charge is subject to the HST.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-9700.

Yours truly,

Donato Licursi
Services and Intangible Property Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate