Commodity Clips, November/December 2008

Disclaimer: The headings in the following Commodity Clips publication link to the relevant government home pages. This new format prevents linking to government bulletins that change locations on government web sites after legislative announcements.

A bi-monthly publication of the PricewaterhouseCoopers Indirect Tax Group.

• GST/HST
• British Columbia
• Manitoba
• Prince Edward Island
• Nova Scotia
• United Kingdom
• Customs

CANADA

Application of GST/FNGST to Yukon First Nations and their Members
GST/HST Notice 143 — Application of GST/FNGST to Yukon First Nations and their Members was revised in September 2008 and replaces the previous version, dated July 2007. This revised notice provides that application of the GST/HST no longer applies to First Nations and their members in the Yukon with or without a final land claim agreement, because there are no reserves in the Yukon for purposes of section 87 of the Indian Act.

Determining Tax Relief for Indian Members Who Are Not Citizens
GST/HST Notice 238 — First Nations Having a Self-Government Agreement Ending Indian Act Tax Relief — Determining Tax Relief for Indian Members Who Are Not Citizens was released in October 2008. The Notice explains how to determine which Indians are entitled to GST/HST tax relief, because some are now excluded from tax relief under section 87 of the Indian Act.

Social Service Tax

Exemption for Members of the Diplomatic and Consular Corps
Bulletin GEN 007 — Exemption for Members of the Diplomatic and Consular Corps, originally issued in March 1986, was revised in September 2008. The revised bulletin provides specific tax information to help members of the diplomatic and consular corps understand how to purchase goods exempt from tax in British Columbia.

Refunds of Overpayments of Tax
Bulletin GEN 008 — Refunds of Overpayments of Tax, originally issued in January 1987, was revised in September 2008. The revised bulletin provides information to help businesses understand how to claim refunds of overpayments of the provincial sales tax, the hotel room tax, the motor fuel tax and the tobacco tax. It does not include information on the carbon tax.

Manufactured Homes for Residential Use
Bulletin SST 014 — Manufactured Homes for Residential Use, originally issued in October 2004, was substantially revised in September 2008. The revised bulletin explains how provincial sales tax applies to improvements to real property in the context of time and materials contracts and lump sum contracts before and after the real property amendments that became effective October 1, 2008. The bulletin includes a summary of who pays the tax in respect of sales of new and used manufactured homes.

Bona Fide Farmers and Commercial Fishers
Bulletin SST 023 — Bona Fide Farmers and Bulletin SST 025 — Bona Fide Commercial Fishers, both originally issued in April 1982, were revised in October 2008. The revised bulletins clarify that provincial sales tax is paid on generic parts used to repair farm equipment and fishing equipment, respectively.

Exemption for Indians and Indian Bands
Bulletin SST 046 — Exemption for Indians and Indian Bands, originally issued in April 1996, was revised in September 2008. The revised bulletin provides details regarding real property amendments that became effective October 1, 2008. After October 1, 2008, the exemption can be claimed in one of two ways, depending on whether the customer or the contractor is responsible for paying tax under the real property contract.

Sales and Leases of Portable Buildings
Bulletin SST 048— Sales and Leases of Portable Buildings, originally issued in March 1985, was revised in September 2008. The revised bulletin explains that a fabric structure can qualify as an improvement to real property. Whether the contractor pays the provincial sales tax or charges the customer the tax depends on the contract between the contractor and the customer, and when the contract was entered into.

Manufacturers
Bulletin SST 054 — Manufacturers, originally issued June 1989, was revised in September 2008. The revised bulletin includes the following updates:

• Machinery and equipment used on production lines are included as examples of machinery and equipment that is exempt from PST when used primarily and directly in the manufacturing process.
• Leased or purchased parts for use on exempt machinery or equipment are not subject to PST.
• Further details are provided about the circumstances in which a contractor may qualify for the production machinery and equipment exemption.
• The exemption for catalysts and direct agents has been expanded.
• Storage tanks, including fuel storage tanks, are included as examples of taxable machinery and equipment.

Oil and Gas Industry
The British Columbia Ministry of Small Business and Revenue recently revised three bulletins and issued a question-and-answer document with respect to the oil and gas Industry. The revised bulletins and FAQ include amendments regarding the eligibility for the production machinery and equipment exemption with respect to leased or purchased parts for use on exempt machinery or equipment, the application of PST to improvements to real property post-October 1, 2008, and the expanded exemption for catalysts and direct agents, effective February 20, 2008.

• Bulletin SST 055 — Oil and Gas Industry — Producers and Processors
• Bulletin SST 126 — Oil and Gas Industry — Service Providers and Contractors
• Bulletin SST 127 — Oil and Gas Industry — Exploration, Discovery and Development
• Oil and Gas Industry — Frequently Asked Questions

Building and Home Improvement Stores
Bulletin SST 057 — Building and Home Improvement Stores, originally issued in June 2004, was revised in September 2008. The revised bulletin specifies that a vendor is not required to collect PST on the sale or lease of ENERGY STAR® qualified products, safety equipment and sales to out-of-province customers where the goods are shipped to an out-of-province location. It also specifies that a purchaser is not required to pay provincial sales tax on purchases of certain materials and equipment used for energy conservation purposes. Guidance is also provided on the application of provincial sales tax to bundled goods and services and equipment rentals and leases.

Real Property Contractors
Bulletin SST 072 — Real Property Contractors, originally issued in September 1996, was revised in September 2008. The bulletin explains that when the contractor is responsible for the provincial sales tax, it may purchase materials and equipment tax exempt by giving the supplier its PST registration number.

Telecommunications Industry
Bulletin SST 107 — Telecommunications Industry, originally issued December 1995, was revised in September 2008. The revised bulletin explains the concept of bundling, when distinct taxable and non-taxable services are supplied for a single price. It explains that provincial sales tax is charged only on the fair market value of the taxable services, except when the single price is less than $500 and the fair market value of the taxable portion is more than 90% of the single price, in which case provincial sales tax is charged on the full price. Further details are provided regarding bundling in the case of teleconferencing services, web-hosting and domain registration services. The revised bulletin also addresses the application of provincial sales tax to improvements to real property post October 1, 2008.

Home-Based Businesses
Bulletin SST 133 — Home-Based Business, originally issued in November 2006, was revised in September 2008. The revised bulletin includes a number of amendments that address sales to out-of-province customers, taxable and non-taxable services supplied for a single price, provincial sales tax on purchases from out-of-province suppliers and the application of provincial sales tax to improvements to real property post October 1, 2008.

Design Consultants
In September 2008, the British Columbia Ministry of Small Business and Revenue revised the list of frequently asked questions to include information on how provincial sales tax applies to real property contracts that are entered into on, or after, October 1, 2008.

Interjurisdictional Carriers
In September 2008, the British Columbia Ministry of Small Business and Revenue issued Notice to Interjurisdictional Carriers. The notice clarifies the record-keeping requirements of interjurisdictional carriers who license commercial vehicles under a prorate agreement, such as the International Registration Plan (IRP).

Commission Amount Increased
In November 2008, the British Columbia Ministry of Small Business and Revenue released Notice to Vendors and Operators — Commission Amount Increased. The notice outlines the commission that eligible registered vendors or operators are able to claim on their Social Service Tax or Hotel Room Tax return respectively in respect of collecting and remitting tax in full and on time. Post November 1, 2008, the commissions are as follows:

Hotel Room Tax

Municipal and Regional District Tax
Bulletin HRT 007 — Municipal and Regional District Tax, originally issued in October 1990, was completely rewritten in October 2008. The new bulletin replaces and combines bulletin HRT001, dated October 1997, and bulletin HRT007, dated June 2008. The bulletin provides specific information to help municipalities, regional districts and other eligible entities understand how they can participate in the collection of an additional hotel room tax of up to 2%.

Retail Sales Tax

Mobile, Modular, and Ready-to-Move Homes
Bulletin No. 53 — Mobile, Modular, and Ready-to-Move Homes was issued in October 2008. The bulletin provides information on how retail sales tax applies to the sale and installation of mobile, modular and ready-to-move residential homes. Retail sales tax applies at a reduced tax rate of 4% on the basic selling price of these manufactured homes when they are acquired for use by the purchaser as a domestic residence.

Sales of Propane in Portable Cylinders
Information Notice — Sales of Propane in Portable Cylinders was issued in October 2008. The notice explains the application of retail sales tax and gasoline tax for businesses that sell propane in portable cylinders designed for barbeques, lanterns and campers. It specifically deals with sales of propane, sales of portable cylindersand including propane and exchange programs.

Registration Requirement Eliminated for Small Home-Based Businesses
Information Notice — Registration Requirement Eliminated for Small Home-Based Businesses, originally issued in April 2007, was revised in November 2008. The revised notice includes a "kiosk, booth or other display location at festivals, trade or craft shows or other commercial events where goods and services are sold for a profit" as an example of a small business for which retail sales tax registration is not required, subject to certain requirements.

Sales Tax

Pet Food and Livestock Feed
Revenue Tax Guide RTG 177 — Pet Food and Livestock Feed was issued in October 2008. The guide explains that pets and pet food are subject to provincial sales tax but agricultural feeds, including grain, milled products and other agricultural feeds qualify for exemption.

Sales Tax

"Your Energy Rebate"
Sales Tax Act Bulletin 5072R1 — Notice to Bulk Vendors "Your Energy Rebate" — Status Changes was revised on October 30, 2008. The revised bulletin advises bulk vendors of a change to the eligibility status of some properties as of Tuesday, October 14, 2008. The change means that some properties previously receiving the 8% rebate at point of sale are now required to submit an application. This change will ensure only properties with a 100% residential taxable status will receive the rebate at the time of delivery.

VAT

Fleming (t/a Bodycraft) and Condé Nast Publications
Over the course of 1996 and 1997, HMRC introduced a three-year restriction on claims for repayment of overpaid VAT and late claims for input tax. A number of cases have successfully challenged the validity of the three-year cap. The House of Lords ruled in the combined cases of Fleming and Condé Nast that the introduction of the three-year cap had not provided an adequate transitional period and, as such, VAT overpaid before the introduction of the flawed legislation remained uncapped. UK legislation has now been amended to provide such a transitional period. Accordingly, there is an opportunity to make late claims for VAT overpaid before 1997. The deadline for claims is March 31, 2009.

Canada

Special Economic Measures (Zimbabwe)
Customs Notice 08-021: Summary of the Special Economic Measures (Zimbabwe), dated October 22, 2008, has been issued to inform exporters of the key provisions of the Special Economic Measures (Zimbabwe) Regulations that came into force on September 4, 2008. The regulations include a ban on the export of arms and related material to Zimbabwe or to any person in Zimbabwe.

Importation and Transportation of Goods
Memorandum D3-1-1: Policy Respecting the Importation and Transportation of Goods was revised September 16, 2008, to reflect current reporting procedures and carrier and cargo policies. Partners in Protection (PIP) sealing requirements have been added to this memorandum to advise of new standards in sealing at the Canada Border Services Agency (CBSA).

Textiles and Apparel
Memorandum D8-2-6: The Outward Processing Remission Order (Textiles and Apparel) Program, dated October 8, 2008, explains the conditions under which a remission may be granted under the Outward Processing Remission Order.

Wood Flooring Products
Memorandum D10-14-55: Tariff Classification of Wood Flooring Products, dated October 17, 2008, explains the CBSA's administrative policy regarding tariff classification of certain wood flooring products under chapters 44 and 45 of the Customs Tariff.

Re-determination or Further Re-determination
Memorandum D11-6-3: Administrative Policy Respecting Re-determinations or Further Re-determinations Made Pursuant to Paragraph 61(c) of the Customs Act, was revised September 16, 2008 and supersedes the previous version dated March 18. 1998. The revised memorandum incorporates amendments to the Customs Act and clarifies policy and procedural issues that have arisen since the last revision.

Importers' Dispute Resolution
Memorandum D11-6-7: Importers' Dispute Resolution Process for Origin, Tariff Classification, and Value for Duty of Imported Goods, originally dated December 19, 2001, has been updated to clarify on policy and procedural issues that have arisen since the last update. Certain amendments to the Customs Act and its regulations have also been incorporated into the memorandum.

Appeal Under the Special Import Measure Act
Memorandum D14-1-3: Procedures for Making a Request for a Re-Determination or an Appeal Under the Special Import Measures Act was revised October 1, 2008, as a result of the Paper Burden Reduction Initiative. In accordance with this initiative, importers are now required to submit only one copy of the prescribed information and the B2.

Release of Commercial Goods
Memorandum D17-1-4: Release of Commercial Goods, dated September 19, 2008, has been revised to reflect the elimination of the Frequent Importer Release System (FIRST), which was phased out as of January 31, 2008. New mandatory filing requirements for Release on Minimum Documentation (RMD) and the exceptions to the requirements are listed in paragraph 44. The previous requirement, outlined in paragraph 46 of "a notation indicating the corresponding page and line of the commodity to which the HS Code(s) applies" from multiple-page invoices has been removed.

Courier Low Value Shipment Program
Memorandum D17-4-0: Courier Low Value Shipment Program, previously titled "Courier/Low Value Shipment Program — low value commercial goods", was revised September 19, 2008. It cancels memorandum D17-4-1, Persons Authorized to Account for Casual Goods, and the contents of D17-4-1 have been incorporated into D17-4-0. This memorandum has been updated to include an explanation of the bonded carrier requirement of the Courier Low Value Shipment (LVS) Program, and an explanation of Customs Self Assessment (CSA) LVS shipments released in the Courier LVS Program by CSA approved carriers.

Export and Import of Rough Diamonds
Memorandum D19-6-4: Kimberley Process — Export and Import of Rough Diamonds, updated November 13, 2008, has been revised to accurately reflect the role of the CBSA in administering the provisions of the Export and Import of Rough Diamonds Act. New terminology and legislative references have been updated. Paragraphs 11 - 14 contain new information regarding Form B3 coding requirements.

Training, Events and Seminars

US Income and Sales Taxes, and Transfer Pricing
Wednesday, January 14, 2009
This seminar will address US income tax and sales and use tax issues that can affect your company. The topics to be covered will include vehicles for undertaking US expansion, where to incorporate, tax planning opportunities, filing requirements, general personal tax implications, and common pitfalls to avoid. The transfer pricing issues will include common models for expansion into the US, start up issues, and how to avoid conflicts with the IRS.

Registration

Location:
PricewaterhouseCoopers LLP
Conference Room A
Royal Trust Tower, TD Centre
77 King Street West, 30^th Floor
Toronto, ON

For more information contact: