Excise Tax Act — E-15 179
Drop shipment — deemed supply 179 (1) For the purposes of this Part, if (a) a registrant (i) makes a taxable supply in Canada of particular tangible personal property by way of sale to a non-resident person that is not registered under Subdivision D of Division V, (ii) makes a taxable supply in Canada of a service of manufacturing or producing particular tangible personal property to a non-resident person that is not registered under Subdivision D of Division V, (iii) acquires physical possession of particular tangible personal property (other than property of a person that is resident in Canada) for the purpose of making a taxable supply in Canada of a commercial service in respect of the particular property to a non-resident person that is not registered under Subdivision D of Division V, or (iv) acquires — as the recipient of a supply of particular tangible personal property made by way of lease, licence or similar arrangement by a non-resident person that is not registered under Subdivision D of Division V — physical possession of the particular property and either (A) gives a certificate described in paragraph (2)(d) in respect of that acquisition of physical possession of the particular property, or (B) claims an input tax credit in respect of tax that is deemed to have been paid or payable by the registrant under subsection 178.8(2) or paragraph 180(d) in respect of the particular property, (b) the registrant, at a particular time, causes physical possession of the particular property to be transferred, at a place in Canada, to a third person (in this subsection referred to as the “consignee”) or to the non-resident person, and (c) the non-resident person is not a consumer of the particular property, the following rules apply: (d) the registrant is deemed to have made a particular taxable supply in Canada of the particular property to the non-resident person and the non-resident person is deemed to have received the particular taxable supply from the registrant, (e) if the transfer of physical possession of the particular property occurs at a place in a participating province, the particular taxable supply is deemed to have been made in that province, (f) the particular taxable supply is deemed to have been made for consideration, that becomes due and is paid at the particular time, equal to (i) except if subparagraph (ii) applies, the fair market value of the particular property at the particular time, and (ii) if the registrant has caused physical possession of the particular property to be transferred to a consignee that is acquiring physical possession of the particular property as the recipient of a supply made by the non-resident person by way of sale for no consideration, nil, and (g) the registrant is deemed not to have made the taxable supply referred to in any of subparagraphs (a)(i) to (iii) in respect of the particular property to the non-resident person, unless that supply is a supply of a service of storing the particular property. Exception — certificate of registered consignee (2) For the purposes of this Part, if (a) paragraphs (1)(a) to (c) apply to (i) a taxable supply in respect of particular tangible personal property that is made by a registrant and is referred to in any of subparagraphs (1)(a)(i) to (iii), or (ii) an acquisition by a registrant of physical possession of particular tangible personal property that is referred to in subparagraph (1)(a)(iv), (b) the transfer referred to in paragraph (1)(b) of physical possession of the particular property is to a person (in this subsection referred to as the “consignee”) that is registered under Subdivision D of Division V, (c) the consignee is acquiring physical possession of the particular property (i) as the recipient of a taxable supply of the particular property made by a non-resident person that is not registered under Subdivision D of Division V, (ii) for the purpose of making a taxable supply in Canada of a service of manufacturing or producin