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Can an American trucking company buying products in Ontario get HST back?

By Lloyd Lindsay |

Mike asked:

If an American trucking company buys used trailer equipment in Ontario, and pays HST on that purchase, can they get it back? If so, how?

Lloyd Lindsay answered:

Under GST/HST rules, exports are zero rated. This means that a Canadian vendor would charge zero per cent (no tax) on the sale price of goods delivered to a location outside of Canada. As long as the vendor had proper supporting documentation proving that the goods were delivered to another country, there would be no problem.

However, if the purchaser took possession of the trailer in Ontario, there are several hurdles to overcome and the purchaser would have to provide the vendor with some of the following:

  1. Proof that the trailer equipment was to be used ommercially outside of Canada;
  2. A US address on the invoice;
  3. Invoices from customs brokers;
  4. Import documentation required by the US;
  5. Copies of the documents from the US regulatory authority if the property has been licensed in the case of automotive vehicles, trucks, etc;
  6. Embossed copy of US Customs and Border Protection Form 7501, Entry Summary;
  7. US Customs entry;
  8. US Certificate of Disposition of Imported Merchandise.

Initially, some of the needed documentation may not be available to give to the vendor at the time of the sale. So the vendor may charge the HST rather than zero rate the sale and be liable for the tax if it incorrectly zero rated the sale.

To recover the HST, the American trucking company should provide the necessary documentation to the Canadian vendor, request that the vendor zero rate the sale and provide a refund.

If the vendor still refuses to provide a refund, the American trucking company can submit the necessary documentation to Canada Revenue Agency (CRA) and request a refund by filing an Overpayment of Tax form.

For further information, you can call CRA at 1-800-959-8287, but this number might only be available from Canada. Also, I suggest that you contact a tax professional for further information.

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