DAVID WILKENFELD, CPA, CA, canadian tax CONSULTANT

Happy Birthday, GST!!

In Canadian Income Tax on December 30, 2010 at 5:02 pm

The GST is turning 20 years old, so I thought I’d turn the clock back to 1991 and post a piece I wrote back when the tax was born. I’m proud of this tongue-in-cheek look at the complexities of the GST because it was picked up and published by such publications as The Canadian Taxpayer and the MENSA newsletter. (I’ve considered myself an honorary MENSA member ever since.)

Parenthetically, in 1999, the Quebec government announced that Quail and Pheasants would be zero-rated if sold for consumption, but taxable if sold for hunting purposes. I had to laugh because that announcement would have fit so well into my article. In any case, here it is again. Enjoy, and have a happy and healthy New Year!!

GST On Household Pets And Farm Animals

The Goods and Services Tax, while conceptually simple on the surface, contains many exemptions and special rules that must be analyzed in each specific situation. This article examines the subject of pet foods and related areas and discusses the various special provisions contained in the draft legislation.

As far as basic household pet foods are concerned, there must be a distinction drawn between dog food and cat food for the purposes of the GST. As a general rule, all dog food will be taxable. However, as is the case with other exports, if the food is to be consumed by a non-resident dog, such as a German Shepherd, Australian Cattle Dog or Old English Sheepdog, the GST will not apply. While the dog will be forced to pay GST on the initial purchase, there will be a special rebate available. In order to claim this rebate, the purchasing dog must present himself to a Revenue Canada agent, jump through a few hoops, and then beg (the usual procedure).

Cats will be completely exempt under the GST. The government has made this concession even though the cat community has no lobby in Ottawa, has not represented itself at any of the public hearings regarding the GST, nor organized any placard-waiving anti-government demonstrations. The government recognizes that cats are basically lazy, un-trainable and totally unconcerned with the tax.

Special rules will apply as well in the area of birdseed. Poppy seeds will be taxable, sesame seeds are exempt. Sunflower seeds, while eaten in their self-contained shell, will be zero-rated. However, they will be taxable if eaten without the shell and covered with that oily stuff that gets on your fingers.

There appears to be some uncertainty in the legislation regarding sesame seeds attached to hamburger buns. All seeds consumed in restaurants are taxable, whether eaten on a bun or lapped up from the floor. The law seems to be silent, however, in situations where the hamburger bun is taken out of the restaurant, the seeds fall to the street, and are pecked by a flock of pigeons. This seems to open the door for some planning opportunities for the pigeon community.

Under the general GST rules, cows and other farm animals who re-chew their food would appear to be subject to a degree of double-taxation if not for a special formula included in the law which will reduce the tax payable in these circumstances.

NOT a "common" mouse

Other exemptions to the GST include supplies of common field mice. The use of the word “common” in the definition of field mice seems to suggest that excluded from the definition are Mickey Mice, Mighty Mice and Speedy Gonzalezes.

As you can see, the GST is not quite as simple as the government would have us believe. Revenue Canada has deployed some of its top people to man the telephones and receive our calls to help us clarify some of the more complicated areas of the law. To date, these telephone operators have not been of much assistance. The operators are extremely difficult to reach and, if one is lucky enough to get through, the answers are generally quite unreliable. It appears that half of the government’s operators have begun hibernating for the winter. The other half are probably cats!

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