GST/HST Info Sheet GI-065

Harmonized Sales Tax for Ontario and British Columbia - Point-of-Sale Rebate on Books

May 2010

The governments of Ontario and British Columbia have each announced that they will provide a point-of-sale rebate of the provincial part of the HST payable on qualifying books. The CRA and the Canada Border Services Agency (CBSA) will administer these rebates on behalf of the governments of Ontario and British Columbia.

The governments of Nova Scotia, New Brunswick and Newfoundland and Labrador currently provide a rebate of the 8% provincial part of the HST payable on qualifying books sold, imported or brought into those provinces. Effective July 1, 2010, the HST rate in Nova Scotia will be increased to 15%. Nova Scotia's existing point-of-sale rebate on qualifying books will continue as currently legislated, with adjustments to reflect the increase of the provincial part of the HST to 10%.

In this publication:

“Consumer” means an individual who acquires or imports qualifying books for the individual's personal consumption or use, or for the personal consumption or use of another individual.

“Exempt” means not subject to the GST/HST.

“Provincial part of the HST” means the 8% Ontario part of the HST or the 7% British Columbia part of the HST.

“Qualifying books” means goods designated by the governments of Ontario and British Columbia as qualifying books and satisfying prescribed conditions. More information is available under the heading “Goods qualifying for the rebate”.

“Qualifying course” means a course where the service of instructing in the course is an exempt educational service or would be an exempt educational service if the supplier had not made an election to make it taxable. Most elementary, secondary and university level courses as well as certain professional accreditation and vocational courses are qualifying courses.

“Read-only medium” means a tangible medium designed for the read-only storage of information and other material in digital format. Read-only medium can be a tangible medium like a CD-ROM. A medium designed to allow removal or replacement of the information stored on it such as a storage device or an MP3 player would not meet this definition.

“Rebate” means the point-of-sale rebate of the provincial part of the HST payable on qualifying books, which will be provided by the governments of Ontario and British Columbia.

“Recipient” of qualifying books means the person who is liable to pay for the books. When no amount is due, it means the person to whom the books 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.

“Taxable” means subject to the 5% GST or the HST rate in effect in a particular province.

Who will be eligible for the rebate

The rebate will be available to all persons that:

• are recipients of qualifying books sold in Ontario or British Columbia;
• are resident in Ontario or British Columbia and that import qualifying books in circumstances where the provincial part of the HST will be payable on the importation; and
• receive delivery or possession of qualifying books in, or bring qualifying books into, Ontario or British Columbia in circumstances where the provincial part of the HST will be payable on the books.

The rebate will be available at any point in the distribution chain of the qualifying books. For example, the rebate will be available to persons that are wholesalers, retailers or consumers of qualifying books.

Goods qualifying for the rebate

The following goods will be qualifying books for purposes of the rebate:

• a printed book or an update of a printed book;
• an audio recording 90% or more of which is a spoken reading of a printed book (e.g., an “audio book”);
• a bound or unbound printed version of scripture of any religion;
• a printed book with a read-only medium that is wrapped, packaged or prepared for sale as a single product where the read-only medium contains material 90% or more of the value of which is reasonably attributable to a reproduction of the printed book and/or material that makes specific reference to the printed book and its content, and that supplements and is integrated with that content; and
• a printed book with a read-only medium or a right to access a website (or both) that is wrapped, packaged or prepared for sale as a single product specially designed for use by students enrolled in a qualifying course where the read-only medium or website contains material related to the subject matter of the printed book.

The following goods, including anything having the following goods as its main part, will not be printed books for purposes of the rebate, and therefore, would not be qualifying books. As a result, no rebate will be available in respect of the provincial part of the HST payable on these goods:

• a newspaper (A rebate is available on qualifying newspapers in Ontario. For more information, see GST/HST Info Sheet GI-060, Harmonized Sales Tax for Ontario - Point-of-Sale Rebate on Newspapers);
• a magazine or periodical acquired otherwise than by way of subscription;
• a magazine or periodical in which the printed space devoted to advertising is more than 5% of the total printed space;
• a brochure or pamphlet;
• a sales catalogue, a price list or advertising material;
• a warranty booklet or an owner's manual;
• a book designed primarily for writing on;
• a colouring book or a book designed primarily for drawing on or affixing thereto, or inserting therein, items such as clippings, pictures, coins, stamps, or stickers;
• a cut-out book or a press-out book;
• a program relating to an event or performance;
• an agenda, calendar, syllabus, or timetable;
• a directory, an assemblage of charts or an assemblage of street or road maps, but not including a guidebook or an atlas that consists in whole or in part of maps other than street or road maps;
• a rate book;
• an assemblage of blueprints, patterns or stencils; or
• an assemblage or a collection of, or any item similar to, the above items.

For purposes of the rebate, the term “printed book” has its ordinary meaning. Therefore, electronic and digital books will not qualify as printed books for purposes of the rebate.

Appendixes A to D to this info sheet contain examples of items that are, and are not, qualifying books for purposes of the rebate.

How to claim the rebate

Recipients of qualifying books sold in Ontario or British Columbia will receive their rebate by:

• being paid or credited the rebate amount by the registrant supplier (e.g., a publisher, 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 books sold in Ontario or British Columbia will automatically have their rebate paid or credited to them at the point of sale by the registrant supplier that sold the books to them.

The rebate amount that a registrant supplier will pay or credit to the recipient will equal the amount of the provincial part of the HST that will be payable by the recipient on the sale of the qualifying books.

A registrant supplier that pays or credits the rebate amount at the point of sale will collect only the 5% federal part of the HST on the sale of the qualifying books. 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 books sold in Ontario or British Columbia will be able to file a rebate claim with the CRA using Form GST189, General Application for Rebate of GST/HST.

The rebate amount that the CRA will pay to the recipient will equal the amount of the provincial part of the HST that the recipient paid on the sale of the qualifying books. The recipient will have 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 books sold in Ontario or British Columbia is a registrant acquiring the books for use or supply in the course of a commercial activity, then the recipient will be able to claim an input tax credit (ITC) to recover the 5% federal part of the HST paid. The recipient will also be able to file a rebate claim with the CRA, using Form GST189, to recover the provincial part of the HST paid. The recipient will have to file this form within four years after the day the provincial part of the HST became payable.

Residents importing qualifying books

Generally, persons that are resident in Ontario or British Columbia and that import qualifying books in circumstances where the provincial part of the HST will be payable on the importation will automatically have their rebate deducted by the CBSA from the HST payable.

The rebate amount that the CBSA would deduct would equal the amount of the provincial part of the HST that would be payable by the person on the imported qualifying book. The CBSA will, therefore, collect only the 5% federal part of the HST on the imported qualifying book.

Similarly, where a non-resident supplier (e.g., a non-resident publisher, wholesaler or retailer) that is not registered for GST/HST purposes sends qualifying books by mail or courier to an address in Ontario or British Columbia, the CBSA will automatically deduct the rebate amount from the HST payable on the importation and collect only the 5% federal part of the HST.

Persons bringing qualifying books into Ontario or British Columbia

In certain circumstances, a person that brings qualifying books into Ontario or British Columbia will have to self-assess the provincial part of the HST on these books. Generally, the person will be eligible for a rebate equal to the amount of the provincial part of the HST that will be payable by the person on the qualifying books.

Rebate for registrants

If the person is a registrant, the person will account for the provincial part of the HST self-assessed on the qualifying books brought into Ontario or British Columbia 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 will normally account for the provincial part of the HST self-assessed on the qualifying books brought into Ontario or British Columbia 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 will receive the rebate by deducting the rebate amount from the self-assessed provincial part of the HST. The person will 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 books 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 books 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 book, 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 will have two options for accounting for the rebate amount on its GST/HST return.

First, the registrant supplier may account for the total HST collected or collectible (i.e., 13% for Ontario or 12% for British Columbia) 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.

Appendix A - Printed books

A printed book or an update of a printed book will be a qualifying book for purposes of the rebate. However, as discussed in the section “Goods qualifying for the rebate” of this info sheet, a printed book excludes a number of items such as newspapers, certain magazines and periodicals, and brochures and pamphlets.
The following table sets out the various items that will, and will not, be printed books/qualifying books for purposes of the rebate.

Appendix B - Audio recordings of printed books

An audio recording 90% or more of which is a spoken reading of a printed book (an “audio book”) will be a qualifying book for purposes of the rebate. The following table provides examples of items that will, and will not, be audio books/qualifying books for purposes of the rebate.

Appendix C - Religious scriptures

A bound or unbound printed version of scripture of any religion will be a qualifying book for purposes of the rebate. The following table provides examples of items that will be religious scriptures/qualifying books for purposes of the rebate.

Appendix D - Composite books

A composite book consists of a printed book and a read-only medium (and/or a right to access a website under certain conditions as discussed in the section “Goods qualifying for the rebate” of this info sheet) that is wrapped, packaged or prepared for sale as a single product. The following table provides examples of items that will not be composite books/qualifying books for purposes of the rebate.