Several carriers may participate in the provision of a freight transportation service as part of a continuous movement of freight from a shipper to a consignee, but only one carrier will issue an invoice to the customer. This process is called line spacing. One. There are no specific documentation requirements for line spacing, except in the case of cargo destined for export, where the shipper must provide a declaration that the property is being shipped for export. The return must be completed in the prescribed manner, as described in the appendix to GST/HST Memorandum 28.2, Freight Transportation Services. For more information, see paragraph 28 of this memorandum: www.cra-arc.gc.ca/E/pub/gm/28-2/README.html. 56. Line spacing may also include services other than the carriage of goods between carriers. If an independent truck owner (owner-operator) is engaged by a freight forwarder to provide interline freight transportation services to the freight forwarder, the freight forwarder will initially pay a portion of the costs related to fuel delivery, truck repairs, maintenance and permits incurred by the owner-operator for the transportation of physical personal goods, provided that the freight forwarder covers the costs at a later date. received in return from the owner-operator. Unless the carrier has borne the costs as the owner-operator`s representative, the amounts collected are consideration for deliveries made by the carrier to the owner-operator (see GST/HST Policy Statement P-182R, Agency for more information on agents and agency).
The consideration for such deliveries is called a chargeback. Line spacing rules also apply to messaging services. For example, if a freight company enters into a contract with a courier service for the collection or delivery of goods to the carrier, the carrier will charge the freight company for the service and the carrier will in turn charge the shipper or consignee. The courier service does not charge GST/HST for its service since it is an interline carrier and not the bill carrier. 51. If a carrier entrusts another carrier with the carriage of his own physical personal property, the first carrier is the consignor of the goods and not a carrier. Therefore, the line spacing rules set out in point 2 of Subsection 1 of Part VII of Annex VI would not apply, as those rules apply only where there are at least two air carriers. Therefore, the supply of the freight transport service under Section 11 of Part VII of Annex VI would not be zeroed. 55. The line spacing rules do not apply in the present case. In these circumstances, the contractor is deemed to be the consignor of the goods and not the carrier. For the line spacing rules to apply, there must be at least two carriers.
In this case, the operator of the dump truck is the only freight forwarder. The line spacing rules can therefore apply to the towing service of a vehicle from the site of an accident or breakdown. If independent contractors (operators) work for a GST/HST registered towing business, the services that the operators provide to the towing business are of zero value. However, the towing company (as billing agent) is responsible for calculating and collecting the GST/HST from customers. ABC Trucking is a GST/HST registrant who provides freight transportation services and is hired by a shipper to transport goods to a destination specified by the consignee. ABC Trucking assigns the freight transportation service to an owner-operator. ABC Trucking is the billing carrier, and the provision of the freight transportation service provided by the owner-operator to ABC Trucking is void according to the line spacing rules. 52.
Towing services provided by an independent tow truck driver to a towing company may also be included in the line spacing rules. Where a towing service is provided by a separate towing operator entrusted to a towing undertaking to provide towing services, the performance would be assessed at zero by the stand-alone towing operator in accordance with Section 11 of Part VII of Annex VI. The provision of freight transport services between interline carriers is free of charge. This is also the case if the billing carrier acts as an agent for the other carriers for the collection of GST/HST. If a person whose business involves the provision of freight transportation services ships his or her own goods and transfers possession of those goods to a carrier, that person is the consignor of the goods and not a carrier. In this case, the deposit rules do not apply. 88. Under Schedule IX, Part VII, Division 4, the payment of shipping costs for a postal delivery service provided by Canada Post must be made by means of an authorization fingerprint (other than a bill of lading) in the province where the recipient of the delivery deposits the mail with Canada Post, in accordance with an agreement between them authorizing the use of the fingerprint. ABC Trucking undertakes to bear in advance the fuel costs and permits necessary for the transport of the goods and to cover the costs from the amount due to the owner-operator for the freight transport service. ABC Trucking does not act as a representative of the owner-operator. Amounts claimed by the owner/operator as a chargeback are not consideration for a freight transportation service and the services to which they relate are not valued at a zero rate under interlining regulations. Chargebacks payable to ABC Trucking are consideration for supplies of goods and services that ABC Trucking provides to the owner-operator as input for the provision of the freight transportation service by the owner-operator.
As a result, ABC Trucking is required to charge GST/HST in respect of supplies of goods and services to the owner-operator. One. With respect to line spacing, is there a form or documentation provided by the prime contractor when line spacing is effective? While most comments on tax planning appear to focus solely on reducing income tax, it is equally important that SMEs, sole proprietors and businesses are aware of their status and/or obligations under the Excise Tax Act to ensure that they benefit from all available GST and HST tax credits. If a business qualifies as a zero-rate service under Schedule VI of the Excise Duty Act, it is not required to charge GST/HST on the sale of its good, but it is still entitled to recover the GST/HST created in the manufacture of the good or delivery at zero rate. An example of a zero-rate service in the Excise Duty Act is line spacing, which describes the business relationship between multiple suppliers or freight forwarders who combine their services to transfer ownership of important personal property from the shipper to its final destination. In such a case, only the first carrier in the chain is required to collect the GST/HST and transfer it to the CRA, while all subsequent carriers are not required to charge the GST/HST, but can still claim ITCs for the GST/HST spent in the course of their activities. Our GST/HST tax lawyers are experts in the Excise Duty Act and can analyze your business structure to ensure that it is optimally structured for GST/HST purposes and that you benefit from all the input tax credits to which you are entitled. A recent case of the Tax Court of Canada, 2237065 Ontario Inc.c. The Queen (2019 TCC 189) addressed and clarified this issue. In 2237065 Ontario, TCC considered the appeal of an interline airline (223 Ontario) that had provided transportation services to another company. Specifically, the Court considered whether 223 Ontario could set these services to zero.
The CRA found that the services were not classified zero and that the complainant, 223 Ontario, should have charged the recipient GST/HST. The answer was limited to the application of the rules on interline freight. 58. Line spacing rules can also apply to messaging services. An owner-operator may provide a freight transportation service for a carrier, and the carrier remains responsible for billing the customer. In this case, the services provided by the owner-operator are rated zero, since the owner-operator is an interline carrier and not the billing carrier. Carrier A concludes a contract with carrier B for the carriage of a load of pallets belonging to carrier A. Since Carrier A ships its own goods, Carrier A is the shipper. Therefore, Carrier B`s charges for the freight transportation service are not considered to be liners.
In the case of a domestic freight transportation service, Carrier B`s service is taxable at the applicable GST/HST rate, and Carrier B must collect GST/HST. 44. Several carriers may participate in the provision of a freight transport service as part of a continuous movement of freight from the origin of the movement of freight to its destination, in which a single carrier invoices the consignor or consignee. In this case, the carriers involved in the movement are considered line spacing. The line spacing process is a common practice in the freight transportation industry and is subject to special treatment for GST/HST purposes. 53. Road services such as motor vehicle lifting, winching and door unlocking provided by a tow truck operator are not freight transportation services unless the service is incidental or part of a freight transportation service. Therefore, a road service would not be considered to be line-spacing if the service is not incidental or part of a towing service provided by a tow truck driver to a towing company […].