Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
XXXXX
XXXXX
XXXXX
Case Number: 107405
XXXXX
XXXXX
December 1, 2008
Dear XXXXX:
Subject:
_GST/HST Interpretation
Application of GST/HST to Instalment Payment Charges
Thank you for your letter of XXXXX, concerning the Canada Revenue Agency's (CRA) recent policy clarification regarding the application of the Goods and Services Tax (GST)/ Harmonized Sales Tax (HST) to instalment payment charges levied by funeral homes and cemetery operators under prepaid arrangements. We apologize for the delay in responding to you.
XXXXX, we understand that you are concerned about your obligation to charge and account for GST/HST on certain instalment payment charges payable on or after the effective date of the above-noted policy clarification (i.e., on or after April 1, 2009). Specifically, neither you nor your customers anticipated that any GST/HST would be due on instalment payment charges payable under prepaid arrangements entered into before April 1, 2009. Therefore, you asked if the CRA would grandfather all instalment payment charges made under prepaid arrangements entered into before April 1, 2009.
XXXXX, we sent a draft version of GST/HST Technical Information Bulletin B-091, Application of the GST/HST to Prepaid Funeral Arrangements, to XXXXX for comments XXXXX. We gave careful consideration to the comments received from XXXXX in finalizing the CRA's policy clarification regarding instalment payment charges. However, XXXXX, we are unable to grandfather the application of tax to instalment payment charges.
As you are aware, the CRA grandfathered the timing of the application of the GST/HST payable on supplies of property and services made under prepaid arrangements. In that case, it was always understood that the supplies of property and services under prepaid arrangements were subject to tax, and the issue was a matter of when the funeral homes and/or cemetery operators were required to account for the tax payable on the supplies. In this case, the application of the GST/HST to instalment payment charges deals strictly with the tax status of the charges, that is, whether or not the GST/HST applies to these payments. As it does not deal with the timing of when the tax is payable, the CRA's grandfathering rules do not apply.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-952-8813.
Yours truly,
Christopher Lewis
Services and Intangibles Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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