GST/HST Rulings and Interpretations
Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Avenue
Vanier, ON K1A 0L5
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XXXXX
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XXXXX
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Case: HQR0000164
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Subject:
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GST/HST APPLICATION RULING
Brand Inspection Fee
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Dear XXXXX
Thank you for your letter of October 5, 1994, with attachments, wherein you requested a review of the Department's position, as reflected in a letter to you of September 6, 1994, concerning the application of GST/HST to the following transaction. We apologize for the delay in this response.
Statement of Facts
Our understanding of the facts, the transaction, and the purpose of the transaction is as follows:
XXXXX
1. XXXXX[.] A registered brand is property of the registered owner, and he has the exclusive right to its use." "Brand" is defined in section 1 of the XXXXX as "a symbol, letter or numeral impressed or to be impressed on the hide of livestock to indicate ownership;". "Registered Brand" is a brand registered under XXXXX
2. XXXXX states that "An inspector may, for the purpose of carrying out his duties under this Act and the regulations, ...
(b) inspect livestock, a carcass or a hide for evidence of a brand, ownership or purchase ..."
3. XXXXX states that "A certificate signed by an inspector or the recorder respecting a matter or thing for which he is responsible under this Act or the regulations is evidence of the facts stated in the certificate concerning the matter or thing."
4. XXXXX provides that, in part, the XXXXX respecting duties of inspectors; brand inspection of livestock and hides; movement of livestock, hides and meat; slaughter of livestock; fees for registration, licences, inspection or other services under the Act or the regulations; inspection of livestock by an inspector and the issue of an inspection certificate.
5. XXXXX (Regulation) states that "No contributor shall send cattle from a place in a brand inspection area to a place outside it other than to an outlet in the prescribed area unless the cattle have been inspected at the place where they are first loaded for transporting...and the inspector has issued his inspection certificate to which a copy of Form 3 must be attached." A "contributor" is defined as a person who
(a) consigns livestock to an outlet,
(b) sells or transports hides,
(c) slaughters livestock in a place other than a licensed premise,
(d) presents livestock to an inspector for inspection, or
(e) transports livestock or causes livestock to be transported.
XXXXX[.]
6. XXXXX of the Regulation states that "No person shall send horses to a slaughterhouse in or out of the Province unless the horses have been inspected by an inspector at the place where they are first loaded for transporting or at a place specified by the inspector and the inspector has issued his certificate of inspection to which a copy of the Form 3 must be attached."
7. Under the heading "Duties of inspector" XXXXX of the Regulation states that "An inspector shall
(a) inspect livestock,
(b) issue a brand inspection certificate..."
8. XXXXX of the Regulation states that "There shall be paid in respect to the inspections, applications and registrations and other matters under this Act the fees set out in the XXXXX XXXXX of the XXXXX states that an "Inspector's fee for inspecting cattle not exceeding 4 in number" is $ XXXXX XXXXX states that an "Inspector's fee for inspecting cattle exceeding 4 in number, for each head of cattle" is XXXXX[.]
9. The XXXXX" used for purposes of the XXXXX states "THIS IS TO CERTIFY that I have this day personally inspected the undermentioned stock". This certificate provides space for the name of consignee; signature of inspector; name of shipper, etc. Columns are provided to allow for the calculation of the "FEES PAID" for "Brand Inspection".
10. By means of XXXXX the XXXXX was renamed XXXXX[.] The Regulation made pursuant to the XXXXX was amended by XXXXX XXXXX[.]
11. XXXXX states that "A registered brand is property of the registered owner who has the exclusive right to its use." "Brand" is defined as meaning "an identification impressed or affixed on or within the body of livestock to indicate ownership". "Registered Brand" means a brand registered under the XXXXX
12. XXXXX states that "For the purpose of carrying out duties under this Act and the regulations an inspector may do any of the following ...
(b) inspect livestock, a carcass or a hide for evidence of a brand, ownership or purchase ..."
13. XXXXX states that
"(1) A certificate signed by an inspector respecting a matter or thing for which the inspector is responsible under this Act or the regulations is evidence of the facts stated in the certificate concerning the matter or thing ..." A "certificate of inspection" is defined as a completed certificate of inspection in a form approved by a designated organization.
14. XXXXX states that "The minister, by order, may
(a) designate organizations that may establish one or more programs specified in the order for the registration of brands or use of identification brands for XXXXX[.]
15. XXXXX states that "An organization designated under subsection (1) may charge and retain fees for services it performs."
16. An organization designed under XXXXX carries out brand inspection services for purposes of that Act.
17. As indicated earlier, the Regulation made under XXXXX was amended by XXXXX[.] The circumstances under which livestock must be inspected, as in the examples described under facts number 5 and 6 above, remain in place under the amended Regulation.
18. Items 1 to 5 of XXXXX were repealed by XXXXX[.]
Transaction
For purposes of XXXXX carried out brand inspection services and issued "XXXXX up until it designated an organization, pursuant to XXXXX to perform these services effective September 1997.
Ruling Requested
The supply of a brand inspection service and a "XXXXX is an exempt supply by XXXXX under subparagraph (e)(ii) of section 20 of Part VI of Schedule V to the Excise Tax Act, as it formerly read prior to its amendment effective 1997.
Ruling Given
Based on the facts set out above, we rule that
The supply of a brand inspection service and a XXXXX" is a taxable supply pursuant to section 146 of the Excise Tax Act and therefore subject to GST. Accordingly, the Department's position, as stated in its letter of September 6, 1994 to you, remains unchanged.
This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act, or to departmental interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.
Explanation
"Consideration", as defined in subsection 123(1) of the Excise Tax Act, "includes any amount that is payable for a supply by operation of law". It is evident from this definition, that an amount payable for a supply is consideration for that supply.
XXXXX imposes a fee for inspection services carried out under that Act. This fee is set out in XXXXX clearly indicates that the amount payable is for the service of inspecting cattle. There is nothing in the XXXXX or its Regulation which states that the payment of the brand inspection fee is consideration for the supply of a certificate or document. Since "consideration" is defined in the ETA as including any amount that is payable for a "supply" by operation of law and the fee payable under XXXXX is for brand inspection services, the supply in question is that of brand inspection services.
Subparagraph (e)(i) of section 20 of Part VI of Schedule V to the Excise Tax Act, as it presently reads, specifically exempts a supply of any certificate or other document that is in respect of the title to property. Prior to amendments made to paragraph (e) of this section, a supply of any certificate or other document evidencing the title to property was exempt under subparagraph (e)(ii).
Although the XXXXX may evidence ownership of livestock, the payment of the brand inspection fee is, under XXXXX for the supply of an inspection service. Whether this service is performed by XXXXX or the organization designated under subsection XXXXX it is a taxable supply as no exempting provisions within the Excise Tax Act apply.
Section 146 of the Excise Tax Act states, in part, that a supply of a service of inspecting any property by a government for the purpose of verifying or certifying that the property is suitable for consumption, use or supply in a particular manner, is deemed for greater certainty, to be made in the course of a commercial activity, except where the supply is an exempt supply.
While the licencing of livestock dealers, slaughterhouses and hide dealers controls the sale and slaughter of livestock, the certification of livestock through the inspection process ensures that livestock meets the requirements of XXXXX and is suitable for "consumption, use or supply" in the course of a business or other activity. As the words "consumption", "use" and "supply" are broadly defined for GST/HST, they would include the purposes for which brand inspection services are conducted.
Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-7952.
Yours truly,
Lynn F. Renner
Rulings Officer
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate
| c.c.: |
D. Harding
L. Renner
ATIP
Dan Trahan, Director, Large Business Division, Audit Directorate,
Verification, Enforcement and Compliance Research |
| Legislative References: |
section 146 and paragraph 20(e) of Part VI of Schedule V to the ETA |
| NCS Subject Code(s): |
11846-1 |
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