Where there is a recording of a spoken reading of a book that was published electronically, such as a book published only on Kindle, with no printed version, will there be considered to be an audio recording of a “printed book? What if the publisher keeps one copy of the book so that a “printed book” does exist, although it is not sold to the public?
After noting that under ETA s. 259.1(2) “a rebate is generally not available where an audio recording all or substantially all of which is a spoken reading of a printed book, is acquired for the purpose of sale or is to be given away” but that “specified persons that are prescribed charities or prescribed qualifying non-profit organizations, whose primary purpose is the promotion of literacy, are not subject to this restriction” and that “the provincial rebates are provided without restriction,” CRA stated:
Electronically published written works are not printed books and thus, when an audio recording is made that is a spoken reading of an electronically published written work, neither of the aforementioned rebates would be allowed. However, if it is established based on the facts, that a printed book pre-exists … it would appear that the audio recording would qualify for both rebates (subject to the noted restrictions). The determination as to whether a printed book exists in a particular situation is a question of fact requiring consideration of all relevant facts.
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|Tax Topics - Excise Tax Act - Regulations - Deduction for Provincial Rebate (GST/HST) Regulations - Schedule 1 - Section 1||provincial rebate (which is unrestricted by ETA s. 259.1) requires a pre-existing printed book||176|
Athabasca University (“Athabasca”) delivered instructional services in respect of courses and programs (“courses”) online and through distance learning, to students across Canada and internationally and provided printed books (the “Books”) to them at no additional charge. It claimed GST rebates for the GST on its Book purchases. The availability of the rebates turned on whether Athabasca acquired the Books “otherwise than for the purpose of supply by way of sale” as required by s. 259.1(2) (“rebate provision”).
After noting that the French version of “the exclusion is referring to the supply of the acquired printed books by way of sale,” Lyons J stated (at para 27):
Hence, the rebate is unavailable only if a taxpayer acquires printed books for the purpose of supplying printed books by way of sale.
After referencing (at para. 31) “the single supply test (‘Test’),” she found that the rebate was available, stating (at paras. 40, 65 and 72):
Since both parties accept that Athabasca only made a single supply of instructional services, then Athabasca did not acquire the Books for the purpose of supply (or supplying) of those Books as contemplated by the specific language in the provision. …
…Athabasca’s purpose in acquiring the Books was to utilize these as inputs in its supply of exempt instructional services rather than to supply the Books by way of sale. Accordingly, I conclude “purpose” in the exclusionary phrase refers to the ultimate purpose. …
…[T]he wording of the provision is clear that Athabasca was to have made a supply of the Books and not merely a transfer of ownership of the Books.
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|Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Sale||University purchased books for educational supply rather than a transfer of their ownership to students||109|
|Tax Topics - Statutory Interpretation - Technical Notes||Explanatory Notes not followed||116|
Sale includes giving away
83. This rebate is available to specified persons if the specified property is acquired, imported, or brought into a participating province for purposes other than supply by way of sale. If a specified person acquires the specified property to resell, including giving away for free, then there is generally no rebate under subsection 259.1(2) of the GST/HST payable on the acquisition of the specified property.
84. However, pursuant to paragraph 259.1(2)(a), prescribed charities and prescribed qualifying non-profit organizations whose primary purpose is the promotion of literacy can claim a rebate under subsection 259.1(2) if the specified property was acquired, imported, or brought into a participating province to be given away for free.
refer to GST/HST Memorandum 13.4,