Imported Prescribed Publications and Subscription Agents

Please note that the following Policy Statement, although correct at the time of issue, may not have been updated to reflect any subsequent legislative changes.

GST/HST policy statement P-185R

Date of Issue

Issued August 29, 1995
Revised June 25, 1999

Subject

Imported Prescribed Publications and Subscription Agents

Legislative Reference(s)

[Where the information provided in this policy reflects proposed amendments to the legislation, the information is enclosed in square brackets.]

Subsection 123(1) - definition of recipient
Section 143.1 of the ETA
Subsection 240(4) of the ETA
Subsection 241(1) of the ETA

Publications Supplied by a Non-Resident Registrant Regulations. The Notice of Ways and Means Motion announced on November 26, 1997 proposes that the the former title of the Regulations be changed from Publications Supplied by a Non-resident Registrant Regulations to
[PUBLICATIONS SUPPLIED BY A REGISTRANT (GST/HST) REGULATIONS]. Deemed to have come into force on January 1, 1993

National Coding System File Number(s)

11645-2; 1645-2-1

Effective Date

June 1, 1995 for GST
April 1, 1997 for HST

Text

Issue and Decision

Section 143.1 of the ETA states that a supply of prescribed tangible personal property, made by a person who is registered shall be deemed to be made in Canada if the property is sent, by mail or courier, to the recipient of the supply at an address in Canada. Subsection 240(4) of the ETA states that every person whether or not they are resident in Canada, who, in Canada, whether through an employee or agentor through advertising directed at the Canadian market solicits or offers to supply prescribed property for purposes of section 143.1 of the ETA that is to be sent by mail or courier, to the recipient at an address in Canada shall be deemed to be carrying on busines in Canada and is required to be registered.

The Department of Finance has proposed amendments to the Publications Supplied by a Non-resident Registrant Regulations. Specifically, the title of the regulation is changed to [PUBLICATIONS SUPPLIED BY A REGISTRANT (GST/HST) REGULATIONS]. The provisions of the ETA under which these Regulations are made (formerly subsection 143(2)) has been renumbered as section 143.1. The Regulations continue to prescribe the publications to which section 143.1 of the ETA applies. Pursuant to paragraphs 3(a) and (b) of the regulations:

(a) books, newspapers, periodicals, magazines and any similar printed publications [other than a publication included in section 1 of Schedule VII to the Act]; and

(b) an [audio recording] that relates to a publication included in paragraph (a) and that accompanies the publication when it is submitted to the Canada Post Corporation or a customs officer.

are prescribed tangible personal property.

With respect to subsection 240(4) of the ETA, the question arises as to who is the person making the supply where a subscription agent is involved in the transaction, i.e. where a person orders a publication through a subscription agent rather than through the publisher. The Department's view is that generally the subscription agent is making the supply of prescribed property to the Canadian resident as a principal, acting on the subscription agent's own account and not as an agent for the publisher.

Therefore, it is the position of the Department that where a subscription agent is, in fact, soliciting subscriptions and is not a small supplier, the provisions of section 143.1 of the ETA and related regulations and subsection 240(4) of the ETA apply to the supply by the subscription agent.

Should a legal agency relationship exist between a publisher and a subscription agent, it will be incumbent upon the subscription agent to show that the subscription agent is not selling the subscription on its own account.

Section 143.1 of the ETA also applies when the publisher sells directly to a Canadian consumer and a subscription agent is not involved in the transaction.

SAMPLE RULING #1

Our understanding of the facts and transactions is as follows:

Statement of Facts

1. Company A is a registered non-resident subscription agent.

2. Company A buys books from book publishers and sells the books on its own account to consumers resident in Canada.

3. Company B is a registered non-resident publisher.

4. Company C is a resident of Canada.

Transactions

1. Company C contracts with Company A to acquire a book published by Company B.

2. Company A contacts Company B to buy the book for Company C. Company A contracts with Company B for the price of the book and the commission.

3. Company C pays Company A for the price of the book, the service of contacting the publisher to arrange for payment and shipment of the book and the amount of GST applicable on the book and the service.

4. Company A in turn pays Company B the amount stipulated by their contract.

5. Company B sends the book directly to Company C at an address in Canada.

Ruling Given

Based on the facts set out above, we rule that tax is payable by Company C and should be collected and remitted by Company A under Division II of the Excise Tax Act.

Rationale

Company A is considered to be the supplier of the book to Company C because Company A buys the book from Company B and resells the book, not as agent, but as principal, to the recipient, Company C. As the supplier, Company A collects and remits the tax payable by Company C.

SAMPLE RULING #2

Our understanding of the facts and transactions is as follows:

Statement of Facts

1. Company X is a registered non-resident publisher of Bicycle News, a magazine.

2. Company X sells subscriptions to its magazines directly to consumers resident in Canada.

3. Company Y is a resident of Canada.

Transactions

1. Company Y orders a 12 month subscription of Bicycle News from Company X.

2. Company X sells the subscription to Company Y.

3. Company X sends Bicycle News directly to Company Y at an address in Canada.

Ruling Given

Based on the facts set out above, we rule that tax is payable by Company Y and should be remitted by Company X under Division II of the Excise Tax Act.

Rationale

Company X is considered to be the supplier of the subscription to the magazine to Company Y because Company X sells the subscription to the magazine directly to the recipient, Company Y. As the supplier, Company X collects and remits the tax payable by Company Y.