Business

TheReyiew _ Wednesday, November 27,1991 — A28@

Saving some GST on travel cosis

Planning a holiday? Entertaining
visitors from outside Canada?
Brush up on the GST rules and
make life less taxing for ali con-
cerned.

“When you travel, how and
where you start and where you are
going determine whether you pay.
the Goods and Services Tax,” said
Elio Luongo, senior tax manager
for Peat Marwick Thorne, char-
tered accountants.

If your destination is outside
Canada, you generally pay no GST.
— even if part of the trip is within
Canada. “However, there are some
exceptions to this that may
increase the cost of your holiday,”
Luongo warned.

If you travel by bus, boat or train
to destinations outside Canada,
you do not pay GST. As long as the
destination is outside Canada, you
escape the tax even if part of the
trip is inside Canada. However, the
tule doesn’t apply if you are away
from Canada for less than 24
hours.

“Air travel is different,” said
Luongo. “Whether or not GST is
charged depends on where you are
going.”

“The government has come up
with what I call a fictional “taxa-
tion area,’ which includes Canada,
the U.S. (except Hawaii) and the
islands of St. Pierre and Mique-
lon.”

“So if you fly to Disneyland or
Disneyworld, you’ll pay the GST
on your trip. But if you fly to
destinations outside the taxation
area, you escape the GST.”

“Tf you buy a package tour to
the US. mainland which includes
air transportation, the GST will be
charged only on the air fare por-

(and convenience) to decide which
makes more sense to you and your
budget.

When you have visitors from
outside Canada, Luongo suggests
you remind them how to claim
back as much as possible for the
GST they spend while here.

“Goods your visitors buy for

use outside Canada — which are -

taken outside Canada within 60
days of purchase — qualify for the
rebate,” Luongo said. “Also, any
GST paid on short-term accom-
modation (less than one month) is
eligible for the rebate.

“However, there is a minimum
claim of $7 and tobacco products
and alcoholic beverages do not
qualify. Nor do camping and
trailer park fees — only hotel,
motel and bed-and-breakfast
accommodation is eligible.”

Other exclusions: gifts left in
Canada: services; meal and restau-
rant charges.

“To get your rebate, you must
complete the Visitors Application
for Rebate of Goods and Services
Tax form, which should be availa-

‘Even though the GST has been in
effect for almost a year, misiakes
are still being made’

tion of your travel.”

“But if you fly to Miami, for
example, then continue directly on
to a Caribbean cruise, you won’t
pay the GST on the flight.”

Of course, if you buy your air
trip to the U.S. mainland starting
just south of the border, you can
escape the GST completely.
Always compare your total cost

ble at all airports, ports of entry,
travel infocentres and major
hotels,” said Luongo. If your visi-
tors have left, you could send them
an application along with a copy
of this column.

“Tf the claim is for less than
$500, the visitors can receive a
cash rebate from any participating
Canadian duty-free shop,” he said.

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“Tf the claim is for more than
$500 or the visitor cannot get to a

, duty-free shop, then the claim

form can be mailed to Revenue
Canada, Customs and Excise, Vis-
itors’ Rebate Program, Ottawa,
Ontario, Canada K1A 135.”

Note that original copies of all
bills of sale and itemized receipts
must accompany the application.

The deadline for applying for
the GST rebate is one year from
the date of purchase of the goods
and/or accommodation.

“Also, for frequent visitors,
mail-in claims can be made only
once every three months —
although this restriction does not
apply to claims made at duty-free
shops,” Luongo said.

Even though the GST has been
in effect for almost a year, mis-
takes are still being made —
charging the tax when goods or
Services are exempt or “zero-
rated.”

These mistakes are gradually
decreasing in frequency but in the
meantime, it’s “spender beware.”
Know the rules yourself and pay as
little GST as possible.

After all, the rate will probably
go up as it has in virtually every
other country that introduced a
similar tax. Knowing the rules
then will become even more prof-
itable.

Mike Grenby is a Vancouver-
based columnist and independent
financial adviser who works with
individuals; he will answer your
questions as space allows — write
to him clo The Review 9726-First
Street Sidney B.C. V8L 3S5

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