GST/HST Info Sheet GI-063

July 2010

Harmonized Sales Tax for Ontario, British Columbia and Nova Scotia – Point-of-Sale Rebate on Children's Goods

The governments of Ontario, British Columbia and Nova Scotia each provide a point-of-sale rebate of the provincial part of the HST payable on qualifying children's goods. The Canada Revenue Agency (CRA) and the Canada Border Services Agency (CBSA) administer these rebates on behalf of the governments of Ontario, British Columbia and Nova Scotia.

In this publication:

"Consumer" means an individual who acquires or imports qualifying children's goods for the individual's personal consumption or use, or for the personal consumption or use of another individual.

"Provincial part of the HST" means the 8% Ontario part of the HST, the 7% British Columbia part of the HST or the 10% Nova Scotia part of the HST.

"Qualifying children's goods" means goods designated by the governments of Ontario, British Columbia and Nova Scotia as qualifying children's clothing, children's footwear, or children's diapers, and satisfying prescribed conditions. The governments of Ontario and British Columbia have also included children's car seats that satisfy prescribed conditions as "qualifying children's good". More information is available under the heading "Goods qualifying for the rebate".

"Rebate" means the point-of-sale rebate of the provincial part of the HST payable on qualifying children's goods, which is provided by the governments of Ontario, British Columbia and Nova Scotia.

"Recipient" of qualifying children's goods means the person who is liable to pay for the children's goods. When no amount is due, it means the person to whom the children's goods are delivered or made available. A recipient could be a wholesaler, retailer or consumer.

"Registrant" means a person who is registered, or is required to be registered, for GST/HST purposes.

Who is eligible for the rebate

The rebate is available to all persons that:

• are recipients of qualifying children's goods sold in Ontario, British Columbia or Nova Scotia;
• are resident in Ontario, British Columbia or Nova Scotia and that import qualifying children's goods in circumstances where the provincial part of the HST is payable on the importation; and
• receive delivery or possession of qualifying children's goods in, or bring qualifying children's goods into, Ontario, British Columbia or Nova Scotia in circumstances where the provincial part of the HST is payable on the children's goods.

The rebate is available at any point in the distribution chain of the qualifying children's goods. For example, the rebate is available to persons that are wholesalers, retailers or consumers of qualifying children's goods.

Goods qualifying for the rebate

Children's clothing

The following goods are qualifying children's clothing for purposes of the rebate:

• garments designed for babies, including baby bibs, bunting blankets and receiving blankets;
• children's garments in sizes up to and including girls' Canada Standard Size 16 and boys' Canada Standard Size 20, or garments designed for girls or boys in sizes extra small, small, medium or large if the garment does not have a designed Canada Standard Size; and
• children's hosiery or stretchy socks, hats, ties, scarves, belts, suspenders, gloves, and mittens in sizes and styles designated for children or babies.

The following goods are not qualifying children's clothing for purposes of the rebate, and therefore, no rebate is available in respect of the provincial part of the HST payable on these goods:

• adult-sized garments even if acquired for a child;
• costumes;
• garments used exclusively in sports or recreational activities; and
• children's footwear and children's diapers (rebates are available on these goods if such goods qualify as children's footwear or children's diapers, respectively, for purposes of the rebate).

Children's footwear

The following goods are qualifying children's footwear for purposes of the rebate:

• footwear designed for babies;
• footwear designed for girls or boys that has an insole length of 24.25 centimetres or less.

The following goods are not qualifying children's footwear for purposes of the rebate, and therefore, no rebate is available in respect of the provincial part of the HST payable on these goods:

• adult-sized footwear (i.e., having an insole greater than 24.25 centimetres) even if acquired for a child;
• footwear that is used exclusively in sports or recreational activities such as cleats, skates, inline skates, ski boots, or similar footwear; and
• stockings, socks, or similar footwear (a rebate is available on these goods if such goods qualify as children's clothing for purposes of the rebate).

Children's diapers

Cloth or disposable diapers that are designed for babies or children are qualifying children's diapers for purposes of the rebate. Diapers designed for babies or children include diaper inserts and liners, rubber pants, and training pants.

The following goods are not qualifying children's diapers for purposes of the rebate, and therefore, no rebate is available in respect of the provincial part of the HST payable on these goods:

• adult-sized diapers even if acquired for a child; and
• children's diapers provided as part of a diaper service.

Children's car seats and car booster seats

The governments of Ontario and British Columbia also provide a point-of-sale rebate of the provincial part of the HST payable on qualifying children's car seats and car booster seats. The Government of Nova Scotia does not provide a point-of-sale rebate on these goods.

The following goodsare qualifying children's car seats and car booster seats for purposes of the point‑of-sale rebate to be provided by the governments of Ontario and British Columbia:

• restraint systems or booster cushions that conform with Transport Canada's safety requirements for Standards 213 (Child Restraint Systems), 213.1 (Infant Restraint Systems), 213.2 (Booster Cushions), 213.5 (Restraint Systems for Infants with Special Needs), as described under the federal Motor Vehicle Safety Act.

Transitional Provision

Until December 31, 2010, the children's car seats referred to in the Deduction for Provincial Rebate (GST/HST) Regulations, as amended by sections 9 to 11, may, instead of conforming to the requirements of the Motor Vehicle Restraint Systems and Booster Seats Safety Regulations, conform to the requirements of the Motor Vehicle Restraint Systems and Booster Cushions Safety Regulations as they read on May 11, 2010, and as they were modified in their application by the Order Modifying the Operation of the Motor Vehicle Restraint Systems and Booster Cushions Safety Regulations and the Motor Vehicle Safety Regulations, which came into effect on May 1, 2009 and was published in the Canada Gazette, Part I, May 9, 2009.

The following goods are not qualifying children's car seats and car booster seats for purposes of the rebate, and therefore, no rebate is available in respect of the provincial part of the HST payable on these goods:

• children's car seats and car booster seats that do not meet Transport Canada's safety standards; and
• travel systems that are combination stroller, carrier and car seat sold in a single package.

How to claim the rebate

Recipients of qualifying children's goods sold in Ontario, British Columbia or Nova Scotia receive their rebate by:

• being paid or credited the rebate amount by the registrant supplier (e.g., a producer, wholesaler or retailer) at the point of sale; or
• filing a rebate claim with the CRA.

Rebate amount paid or credited by registrant suppliers

Generally, recipients of qualifying children's goods sold in Ontario, British Columbia or Nova Scotia automatically have their rebate paid or credited to them at the point of sale by the registrant supplier that sold the children's goods to them.

The rebate amount that a registrant supplier pays or credits to the recipient is equal to the amount of the provincial part of the HST that is payable by the recipient on the sale of the qualifying children's goods.

A registrant supplier that pays or credits the rebate amount at the point of sale collects only the 5% federal part of the HST on the sale of the qualifying children's goods. Information on how a registrant supplier discloses the rebate amount paid or credited is available under the heading "How registrant suppliers show the rebate on their invoices".

Filing rebate claims with the CRA

If the registrant supplier does not pay or credit the rebate amount at the point of sale, then the recipient of the qualifying children's goods sold in Ontario, British Columbia or Nova Scotia can file a rebate claim with the CRA using Form GST189, General Application for Rebate of GST/HST. The rebate amount that the CRA pays to the recipient will be equal to the amount of the provincial part of the HST that the recipient paid on the sale of the qualifying children's goods. The recipient has to file Form GST189 within four years after the day the provincial part of the HST became payable.

If the registrant supplier does not pay or credit the rebate amount at the point of sale and the recipient of the qualifying children's goods sold in Ontario, British Columbia or Nova Scotia is a registrant acquiring the children's goods for use or supply in the course of a commercial activity, then the recipient can claim an input tax credit (ITC) to recover the 5% federal part of the HST paid. The recipient can also file a rebate claim with the CRA, using Form GST189, to recover the provincial part of the HST paid. The recipient has to file this form within four years after the day the provincial part of the HST became payable.

Residents importing qualifying children's goods

Generally, persons that are resident in Ontario, British Columbia or Nova Scotia and that import qualifying children's goods in circumstances where the provincial part of the HST is payable on the importation automatically have their rebate deducted by the CBSA from the HST payable.

The rebate amount that the CBSA will deduct is equal to the amount of the provincial part of the HST that is payable by the person on the imported qualifying children's goods. Therefore, the CBSA collects only the 5% federal part of the HST on the imported qualifying children's goods.

Similarly, where a non-resident supplier (e.g., a non‑resident producer, wholesaler or retailer) that is not registered for GST/HST purposes sends qualifying children's goods by mail or courier to an address in Ontario, British Columbia or Nova Scotia, the CBSA automatically deducts the rebate amount from the HST payable on the importation and collects only the 5% federal part of the HST.

Persons bringing qualifying children's goods into Ontario, British Columbia or Nova Scotia

In certain circumstances, a person that brings qualifying children's goods into Ontario, British Columbia or Nova Scotia has to self‑assess the provincial part of the HST on these children's goods. Generally, the person is eligible for a rebate equal to the amount of the provincial part of the HST that is payable by the person on the qualifying children's goods.

Rebate for registrants

If the person is a registrant, the person accounts for the provincial part of the HST self-assessed on the qualifying children's goods brought into Ontario, British Columbia or Nova Scotia on its regular GST/HST return for the reporting period in which the tax became payable.

The person will receive the rebate by claiming a deduction for the rebate amount on the return for the reporting period in which the tax became payable.

Rebate for non-registrants

If the person is not a registrant, the person normally accounts for the provincial part of the HST self‑assessed on the qualifying children's goods brought into Ontario, British Columbia or Nova Scotia on Form GST489, Return for Self-Assessment of the Provincial Portion of the Harmonized Sales Tax (HST), no later than the last day of the month after the calendar month in which the tax became payable.

However, the person receives the rebate by deducting the rebate amount from the self‑assessed provincial part of the HST. The person does not have to file Form GST489 where the resulting amount is nil.

How registrant suppliers show the rebate on their invoices

When disclosing the HST on an invoice or receipt issued in respect of the sale of qualifying children's goods to which the registrant supplier has paid or credited the rebate amount at the point of sale, the registrant supplier may show:

• the total amount of the HST payable (or the total HST rate) with the rebate amount paid or credited shown separately;
• the total HST payable as an amount net of the rebate amount paid or credited; or
• the total price of the qualifying children's goods that includes HST at a net rate of 5%.

If the recipient in the above example were a registrant that would be eligible to claim an ITC to recover the tax paid or payable on the purchase of the footwear, the maximum ITC available would be $2.00 (i.e., the 5% federal part of the HST). This amount appears only on the second invoice. In the case of the first and third invoices, the recipient would have to calculate 5% of $40.00 ($40.00 × 5% = $2.00), or 5/105 of $42.00 ($42.00 × 5/105 = $2.00), respectively, to determine the amount that may be claimed as an ITC.

How registrant suppliers account for the rebate on their GST/HST returns

A registrant supplier that pays or credits the rebate amount at the point of sale has two options for accounting for the rebate amount on its GST/HST return.

First, the registrant may account for the total HST collected or collectible (i.e., 13% for Ontario, 12% for British Columbia and 15% for Nova Scotia) on line 103 of the return, and claim an adjustment for the rebate amount paid or credited on line 107.

Second, the registrant supplier may show the net amount as the HST collected or collectible (i.e., 5%) on line 103, and not claim an adjustment for the rebate amount paid or credited on line 107.