Memorandum D8-3-15

Locator Code: 955A

Ottawa, July 2, 1997

SUBJECT

COMPUTER CARRIER MEDIA
REMISSION ORDER

This Memorandum outlines and explains the conditions under which remission may be granted on computer carrier media.

Statutory Instrument

ORDER RESPECTING THE REMISSION OF THE CUSTOMS DUTY AND THE SALES TAX ON COMPUTER CARRIER MEDIA

Short Title

1. This Order may be cited as the Computer Carrier Media Remission Order.

Interpretation

2. In this Order,

“carrier media” means goods capable of storing instructions or data to be processed by data processing equipment; (support de transmission)

“computer carrier media” means software, but does not include sound or image recordings, integrated circuits, semi-conductors and similar devices or articles incorporating such recordings, circuits,

semi-conductors or devices; (support de transmission de données)

“software” means carrier media on which instructions or data to be used by data processing equipment have been stored. (logiciel)

Remission

3. Subject to section 4, remission is hereby granted of the customs duty paid or payable under the Customs Tariff and the sales tax paid or payable under the Excise Tax Act in respect of computer carrier media in an amount equal to the difference between

Conditions

4. Remission under section 3 is granted on the following conditions:

GUIDELINES AND GENERAL INFORMATION

1. All customs documents relating to goods imported in accordance with this Order are to bear the number of this Order in Council (see Legislative References to this Memorandum).

2. The value for duty of computer software is to be determined under the regular valuation provisions of the Customs Act and should include the value of the carrier medium, the value of the instructions or data to be used by data processing equipment contained on it, and the value of reproducing the instructions on the medium.

3. The value for duty of the carrier medium and the reproduction service will be determined as follows:

4. Importers are requested to declare the value of the data or instructions contained on the carrier medium separately from the value of the carrier medium and the reproduction service.

5. The value of the data or instructions which are subject to this Order refers to the value of the data or instructions contained on the carrier media only. Data or instructions contained in other forms such as printed matter, instruction booklets, etc., are not subject to this Order and should be valued separately from the carrier medium and the data or instructions contained on the carrier medium. Although such material is to be valued separately, the tariff classification of the subject goods is not influenced.

6. This Remission Order states Canada's position regarding a 1984 decision taken by the General Agreement on Tariffs and Trade (GATT) Committee on Customs Valuation. Signatory countries to the GATT Valuation Agreement have the option to value computer software based on its carrier medium alone.

7. The GATT decision and this Remission Order do not consider the application of the Goods and Services Tax (GST). Therefore, on importation, the GST is payable on the full value for duty of the software package (i.e., disk and program).

Application of the Harmonized Sales Tax (HST) on Imported Goods

8. The federal government and the provincial governments of Nova Scotia, New Brunswick, and Newfoundland reached an agreement on the Harmonized Sales Tax (HST) system and implemented the HST on April 1, 1997. The HST applies at a single rate of 15% to goods and services destined for consumption in the participating provinces. The rules governing the operation of this tax are the same as for GST. Accordingly, HST is applied to all goods which are currently subject to GST. Goods that are currently zero-rated or exempt from GST under the federal legislation are also zero-rated or exempt from HST.

9. The HST of 15% is applied to imported casual goods destined for consumption in the participating provinces. Casual goods are defined as goods not for sale or for any commercial, industrial, occupational, institutional, or like use. In the case of imported commercial goods, only 7% GST, as currently required, is payable at time of importation. The remaining 8% provincial portion is payable through the self-assessment provisions of the legislation.

Customs Procedures

10. All claims for remission under this Order must be referred to the regional chief officer of customs for the attention of the Manager, Drawbacks, Refunds and Remissions Unit, Customs Assessment Division, for verification of the values shown.

11. A copy of each accounting or adjustment document passed under the authority of this Order is to be forwarded by the customs office concerned to the regional collector for the attention of the Drawbacks, Refunds and Remissions Unit.

REFERENCES

ISSUING OFFICE

Valuation Division – (613) 954-7338

LEGISLATIVE REFERENCES

Financial Administration Act, section 17

Order in Council P.C. 1985-277, January 31, 1985,

as amended by Order in Council P.C. 1987-2690,

December 23, 1987

HEADQUARTERS FILE

7125-3

SUPERSEDED MEMORANDA “D”

D8-3-15, January 3, 1989

OTHER REFERENCES

N/A