17 January 2013 GST/HST Ruling 119144 - Rebate for printed books under section 259.1 of the Excise Tax Act

Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.

Dear [Client]:

Thank you for your letter of October 26, 2009, concerning the eligibility of […] (the Church) to claim a rebate for printed books pursuant to section 259.1 of the Excise Tax Act (ETA). We apologize for the delay in responding to your request.

HST applies at the rate of 15% in Nova Scotia, 13% in Ontario, New Brunswick, and Newfoundland and Labrador, and 12% in British Columbia. GST applies at the rate of 5% in the remaining provinces and territories.  

All legislative references are to the ETA unless otherwise specified.

Statement of Facts

The Church is a registered charity for purposes of the Income Tax Act and is therefore a charity for purposes of the ETA.

The Church operates a small library that contains both fiction and non-fiction religiously themed books. The Church includes amounts for the acquisition of new books in their yearly budget.

The library is open to the congregation of the Church and members of the general public on [dd] and [dd] between the hours of […] and […]. Sign out cards are contained in each book in the library.

The Church does not advertise the library but new acquisitions may be noted in the […].

The Church offers Sunday school classes for pre-school and elementary school aged children from [mm] until [mm]. The Church purchases teacher guidebooks and student workbooks for use in the Sunday school classes. Teachers are provided with guides by the Church to assist them in preparing their lessons. The guides are reused in future years and remain the property of the Church. Students are provided with workbooks that the students write in and become the property of the children.

The Church purchases Bibles that are given away to congregation members.

The Church purchases reference books such as sermon preparation books, worship preparation books and hymn selection books that are kept in the library or remain in the pews.

Ruling Requested

You would like to know if the Church is eligible for the rebate of 100% of the GST or the federal component of the HST that became payable on the following purchases pursuant to section 259.1 of the ETA:

1. Teacher guidebooks for use in Sunday school classes.

2. Student workbooks for use in Sunday school classes.

3. Bibles to be given to congregation members.

4. Reference books such as sermon preparation books, worship preparation books and hymn selection books.

Ruling Given

Based on the facts set out above, we rule that:

1. The Church is eligible for the rebate of 100% of the GST or the federal component of the HST that became payable on the purchase of teacher guidebooks for use in Sunday school classes.

2. The Church is not eligible for the rebate of 100% of the GST or the federal component of the HST that became payable on the purchase of student workbooks for use in Sunday school classes.

3. The Church is not eligible for the rebate of 100% of the GST or the federal component of the HST that became payable on the purchase of Bibles to be given away.

4. The Church is eligible for the rebate of 100% of the GST or the federal component of the HST that became payable on the purchase of reference books such as sermon preparation books, worship preparation books and hymn selection books.

Please note that the rebates must be filed within four years after the end of the claim period in which the GST/HST became payable.

This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.

Explanation

Section 259.1 of the ETA provides for a rebate of 100% of the GST or the federal component of the HST that became payable by a specified person in respect of the purchase of certain printed books and scripture that are acquired for purposes other than resale.

A charity that operates a public lending library is considered to be a "specified person" pursuant to paragraph 259.1(e) and is eligible to claim a rebate of 100% of the GST or the federal component of the HST paid on qualifying books and other material acquired other than for resale.

As outlined in paragraph 5 of GST/HST Memoranda Series 13.4 Rebates for Printed Books, Audio Recordings of Printed Books, and Printed Versions of Religious Scriptures, a copy of which is enclosed, "a public lending library is interpreted to mean a place where a collection of documents and other items such as films and recordings are kept and maintained and that is open to the public for its use. It includes libraries from which these documents and other items can be borrowed, as well as libraries accessible to the public for research purposes only."

Based on the information provided, the parish operates a lending library and the library is open to the general public.

An explanation of the terms printed book, audio recording and scripture is contained in the enclosed Memoranda. A printed book does not include anything that is or the main component of which is a book designed primarily for writing on.

There is no federal book rebate of GST or the federal component of the HST that became payable on the acquisition or importation of printed books that are acquired to be given away free of charge.

In addition to the rebate for printed books referred to above, pursuant to section 259 of the ETA, a charity may apply for a Public Service Body (PSB) rebate of 50% the GST or the federal component of the HST paid or payable on eligible purchases and expenses. Please find enclosed, the GST/HST guide RC4034(E), GST/HST Public Service Bodies' Rebate, which contains detailed information on rebates. Enclosed in the guide is a copy of form GST66, Application for GST/HST Public Service Bodies' Rebate and GST Self-Government Refund, which you may use to file for the book rebate and the PSB rebate.

Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.

Yours truly,

Trent MacDonald
Charities and Non-Profit Organizations Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate