GST/HST Rulings and
Interpretations
Place Vanier, Tower C, 9th Floor
25 McArthur Avenue
Vanier, Ontario K1A 0L5
XXXXX
XXXXX File: 11720-1(glr)
XXXXX Case: HQR0001223
XXXXX Business: XXXXX
July 20, 1998
Dear XXXXX
Your letter of April 6, 1998 (with attachments), addressed to the Brandon Tax Services Office, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transactions described below, has been forwarded to this office for reply.
I understand that:
• XXXXX is registered for GST/HST purposes. The registration is issued to XXXXX with XXXXX as a trading name. However, from the information you have provided, it appears that the registration should have been issued in the names of XXXXX, with XXXXX as a trading name.
• XXXXX will be custom grazing approximately XXXXX head of cattle, which are owned by XXXXX[.]
• At the end of the grazing season, XXXXX will invoice XXXXX or the use of the pastureland during the term of the agreement XXXXX calculated at XXXXX per acre.
• At the end of the grazing season, XXXXX will also invoice XXXXX for labour expenses of its employees utilized by XXXXX during the term of the agreement.
• When invoicing XXXXX will calculate the consideration for the supply of its services based on XXXXX per pound of gain.
Interpretations Requested
1. Because the lease of the pastureland is related to the consumption of fodder, which is zero-rated, is the lease of the pastureland by XXXXX to XXXXX zero-rated (i.e., subject to the GST at 0%)?
2. Is the labour purchased by XXXXX from XXXXX zero-rated?
3. How is the GST to be calculated when XXXXX invoices XXXXX for the supply of the custom grazing services?
Interpretations Given
Based on the information provided, I am pleased to provide the following interpretations:
1. The lease of the pastureland by XXXXX to XXXXX is considered to be a supply of real property. As there are no provisions in Schedule VI, Part IV to the Excise Tax Act (Act) which would allow the supply to be zero-rated, the lease of the pastureland is subject to the GST at 7% under the provisions of subsection 165(1) of the Act.
2. The labour services supplied to XXXXX by XXXXX are subject to the GST at 7% under the provisions of subsection 165(1) of the Act.
3. The custom grazing service supplied by XXXXX to XXXXX is subject to the GST at 7%, calculated on the total charge for the supply, under the provisions of subsection 165(1) of the Act. Your operation is not that of a feedlot, which is a confined space (such as a pen, corral or a barn) in which farm livestock are fed a concentrated diet for the purposes of producing a marketable animal. In your operation, the cattle are free to roam the pastureland and graze on the grass.
The foregoing comments represent our general views with respect to the subject matter of your letter. Unannounced or future amendments to the Act may result in changes to this interpretation. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST/HST Memoranda Series, do not bind the Department with respect to a particular situation.
Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-6743.
Yours truly,
Garry L. Ryhorchuk
Senior Rulings Officer
Border Issues Unit
General Operations and Border Issues Division
GST/HST Rulings and Interpretations Directorate
| c.c.: |
G. Ryhorchuk
A. Trattner |
XXXXX
XXXXX as discussed by telephone on July 17, 1998, it appears, based on the agreement submitted by XXXXX that the registration should have been in the name of XXXXX[.]
Legislative References: Subsection 136(1), Paragraphs 142(1)(d) and 142(1)(g), Section 144.1, Schedule VI, Part IV, sections 2.1 and 9, Schedule IX, Part IV, section 1, Schedule IX, Part V, section 2
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Department of Finance Press Release dated June 24, 1991
GST Q & A 4j.36
Income Tax Interpretation Bulletin IT-156R dated 900112 - Feedlot Operators |
NCS Subject Code: 11720-1
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