Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 565.0177


565.0177 Sales to the Canadian Government. A supplier, who is a United States contractor, is selling spare parts in California to Canada's Department of National Defense. The parts are stored in California for possible use in equipment either in California or in Canada.

Since the supplier transfers possession of the property to the purchaser in California, the sale takes place in the state. A person is a "United States contractor" only with respect to its performance of contracts with the United States. Since the United States is not a party to this contract, it is irrelevant whether the supplier is a United States contractor. Also, there is no specific exemption for sales to the Canadian government. Thus, the sale in California of spare parts to Canada is subject to tax. 12/2/92.