Commodity Clips, 2009 Issue 3
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
Designation of Hospital Authorities
GST/HST Memoranda Series 25.2 — Designation of Hospital Authorities was revised in March 2009, replacing the July 1996 version. The updated memorandum provides the administrative guidelines and eligibility criteria that must be met for an organization to be designated as a hospital authority. It also includes acceptable evidence to be provided when applying for designation, GST/HST rebates available to persons designated as hospital authorities or changes in organizational structure or activities.
Basic Groceries
GST/HST Notice of Change 242 — Basic Groceries was issued in April 2009. The notice explains that paragraph 160 and 161 of "GST/HST Memorandum 4.3 Basic Groceries," regarding meal replacements and nutritional supplements, has been amended and now includes "formulated liquid diet products."
Fertilizer and Pesticide
GST/HST Notice 243 — Draft GST/HST Policy Statement, Fertilizer and/or Pesticide Supplied Together with an Application Service, was issued in April 2009. The policy statement is issued in draft form for comments or suggestions, which should be sent to the Canada Revenue Agency on or before May 31, 2009. At issue is the tax status of zero-rated fertilizer and/or pesticide supplied together with a taxable application service. Examples are provided to illustrate where there is either a single supply of a taxable application service or multiple supplies consisting of a zero-rated supply of fertilizer and/or pesticide and a taxable supply of an application service.
Social Service Tax
School Supplies
Bulletin SST 012 — School Supplies, originally issued in May 1994, was revised in March 2009. The revised bulletin clarifies that private career training institutions must be registered and accredited with the Private Career Training Institutions Agency to qualify for the school supplies exemption. The bulletin also adds that PST must be charged on sales to schools and school boards for services to repair or maintain taxable equipment.
Motor Vehicle Dealers and Leasing Companies
Bulletin SST 042 — Motor Vehicle Dealers and Leasing Companies, originally issued in September 1986, was revised in March 2009, replacing the previous August 2008 version. The revised bulletin includes a link to a list of fuel efficient vehicles that qualify for point-of-sale- PST reductions as sales of alternative fuel vehicles.
Automotive Services and Parts
Bulletin SST 122 — Automotive Services and Parts, originally issued in April 2006, was revised in May 2009 and replaces the previous version dated February 2009. On November 1, 2008, the Insurance Corporation of British Columbia introduced their Alternative Transportation Service (ATS). The revised bulletin explains how PST applies to courtesy vehicles under ICBC's ATS or an equivalent program.
Provincial Sales Tax (PST)
Taxation of Aircraft
Information Bulletin PST-56 Information on the Taxation of Aircraft, originally issued in March 2000, was revised in April 2009. The revised bulletin provides additional details in relation to exempt aircraft repair parts and labour, taxable aircraft repair parts and labour, and rented/leased aircraft.
Retail Sales Tax (RST)
Simplified Calculation of RST for Computer Services
RST Information Notice 73 — Simplified Calculation of RST for Computer Services was issued in May 2009. The Simplified Calculation is a pilot project for small businesses that provides an optional method for calculating retail sales tax on sales that include both taxable and non-taxable services related to computer programs. The optional method was initially in force from April 1, 2006 to March 31, 2009 and has now been extended to June 30, 2010.
Plastic Bags Sold by Retailers
Tax Tip — Retail Sales Tax — Plastic Bags Sold by Retailers was issued in March 2009. Sales of taxable goods in Ontario are subject to Retail Sales Tax (RST) unless the total charge for all taxable goods sold as part of the same transaction is less than 21 cents. The Tax Tip provides that plastic bags are subject to RST if the total amount of the taxable goods, including the bags, is 21 cents or more. Illustrative examples are included.
Canada
Rules of Origin Respecting the Most-Favoured-Nation Tariff
Memorandum D11-4-3, originally issued February 17, 2005 was revised May 8, 2009 to reflect the extension of Most-Favoured-Nation Tariff to Libya, effective January 29, 2009. Libya has been removed as a General Tariff country.
Temporary Admission Permit
Customs Notice 09-006, Temporary Admission Permit — Form Requirements, issued May 1, 2009, announces that effective January 1, 2010, the CBSA will no longer accept the Temporary Admission Permit, Form E29B, when printed on forms that consist of coloured sheets separated by carbon paper. The form, which is available on the Canada Border Services Agency website, must still be submitted in hard copy.
Canada-European Free Trade Association Free Trade Agreement (CEFTA)
Customs Notice 09-007, issued May 5, 2009, provides information regarding the CEFTA, to be implemented on July 1, 2009. The CEFTA consists of a main Free Trade Agreement, which deals with industrial products and selected processed agricultural products, and three bilateral agreements on agriculture signed with Norway, Iceland and Switzerland, which deal with selected agricultural products.
Export Control List
An Order Amending the Export Control List (ECL) was published on May 13, 2009. The ECL was amended to reflect Canada's current obligations, commitments and policies including the notion of the control of technology, by replacing the term "goods" with the terms "goods and technology." The controls relating to the export of firearms has also been amended to more accurately reflect those firearms controlled by the Criminal Code.
European Union
Amendment to the EU Customs Code
On April 16, 2009, the European Commission issued Commission Regulation (EC) No. 312/2009 to amend Regulation No 2454/93 laying down provisions for the implementation of Council Regulation No 2913/92 establishing the Community Customs Code. Under the new regulation, an Economic Operators Registration and Identification number (EORI number) will be assigned to each economic operator as of July 1, 2009. For reasons of unification and administrative simplification, economic operators will have only one EORI number. When this number has been assigned, economic operators will be obliged to use that unique number in all customs procedures and communications with customs authorities in the European Community (the Community).
The EORI number will replace customs ID numbers used previously in the Member States. Economic operators based in the Community will be registered and assigned their EORI number by the customs authority of the Member State where they are established. Economic operators that are not established in the customs territory of the Community will be assigned their EORI number by the designated authority of the Member State where the given customs procedure is carried out.
European Union VAT
Insurance Intermediary
The UK's High Court has handed down its decision in the InsuranceWide.com and Trader Media Group (Auto Trader) cases, which concern the scope of the insurance intermediary exemption. The High Court ruled that "introducers" of those seeking and those providing insurance services should benefit from VAT exemption, and only those who are mere advertisers should find that their services are standard-rated (InsuranceWide.com Services Ltd [2009] EWHC 999: Ch).
This decision concerns the appeals in both InsuranceWide.com and Trader Media Group. These were heard jointly by the High Court in March, and were dealt with in a single judgment. The cases concern whether the services provided through insurance comparison websites fall within the VAT exemption for insurance agents.
The Tribunal in InsuranceWide.com held that the commission income was standard-rated. It was influenced by the fact that the taxpayer had no power to bind the insurers and had included a disclaimer in its terms and conditions that it was not acting as an agent. Of the five different "phases" of service offering, the Tribunal considered that in the first, the website had merely acted as an introducer; in the second, it had not made recommendations and remained indistinguishable from an advertiser of insurance; and in the third to fifth phases, while the Tribunal accepted that it acted as insurance intermediary, it held that this could not be equated with the concept of an insurance agent.
Trader Media Group concerned the Auto Trader website. A differently constituted VAT Tribunal held (on similar facts) that the taxpayer's services were VAT-exempt. It placed substantial weight on the purpose of (and the concepts underlying) the EC Insurance Mediation Directive (2002/92). That directive replaced the concepts of "insurance agent" and "insurance broker" (used in its predecessor, the Insurance Mediation Directive (77/92)) with the single concept of "insurance intermediary" — with the explicit purpose of ensuring equality of treatment between the various types of persons and institutions that can distribute insurance products.
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