Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 160444
Dear [Client]:
Subject: GST/HST INTERPRETATION
Membership fee
Thank you for your [correspondence] concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to a membership fee. We apologize for the delay in our response.
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
1. We understand that you are enquiring about an undisclosed Ontario […] fish and game club (the Club). The Club is neither a charity nor a non-profit organization.
2. The Club provides its members with access to its property in Ontario which encompasses a lake. The Club stocks the lake with fish for its members’ enjoyment.
3. The Club charges its members an annual fee of $[…].
4. Members are advised that the annual fee is broken down as follows:
Membership $[…]
Fish Entitlement (up to […][# Fish]) […]
Donation to Special Project […]
Total $[…]
5. Members cannot purchase the individual elements, for which the annual fee is charged, separately.
6. The Club charges HST only on the $[…] "membership" portion of the annual fee.
7. The “fish entitlement” portion of the annual fee represents the quota of fish that a member may catch during a membership year. There is no reduction in the annual fee or rebate for a member if the member catches less than […] fish in a year. However, if a member catches more than […] fish in a year, the member must pay to the Club an additional fee for each fish caught over the […] fish entitlement.
8. The “Donation to Special Project” portion of the annual fee represents an amount that is set aside by the Club to repair buildings, fix docks or fund other similar projects. This amount also entitles the member to participate in a lottery. Each member receives […] tickets worth $[…] each ([…] tickets x $[…] = $[…]) which are put into a draw. The winning ticket holder receives a free weekend at the Club’s lake (valued at $[…]).
9. A right to fish on the Club’s lake is available to non-members for a daily fee of $[…] plus HST, plus an additional fee for each fish caught.
INTERPRETATION REQUESTED
You would like to confirm the application of the HST to the annual fee charged by the Club as described above.
INTERPRETATION GIVEN
We are unable to provide a ruling without all of the relevant facts and agreements. However, we are providing you with the following interpretation based on the information that you have provided.
A membership, as defined in subsection 123(1), includes a right granted by a particular person that entitles another person to services that are provided by, or to the use of facilities that are operated by, the particular person and that are not available, or are not available to the same extent or for the same fee or charge, to persons to whom such a right has not been granted, and also includes such a right that is conditional on the acquisition or ownership of a share, bond, debenture or other security.
It must first be determined whether a transaction is a single supply or multiple supplies. To help in this determination the Canada Revenue Agency (CRA) has published GST/HST Policy Statement P-077R2 entitled Single and Multiple Supplies (P-077R2).
P-077R2 outlines the principles used to determine whether a transaction consisting of several elements is to be regarded as a single supply or multiple supplies. They are as follows:
1. Every supply should be regarded as distinct and independent.
2. A supply that is a single supply from an economic point of view should not be artificially split.
3. There is a single supply where one or more elements constitute the supply and any remaining elements serve only to enhance the supply.
Two or more elements are part of a single supply when the elements are so intertwined or interdependent that they must be supplied together. Conversely, multiple supplies occur when one or more of the elements can sensibly or realistically be broken out.
It should also be remembered that the way in which the price for a transaction is set out does not in itself determine whether there are one or more supplies. A single price does not automatically mean that there is one supply. Equally, separately identified prices for certain elements do not necessarily mean that there are two or more supplies.
P-077R2 provides a number of questions that should be asked:
1. Is the property/service provided by two or more suppliers?
2. Is there more than one recipient?
3. What did the supplier provide for the consideration received?
4. Is the recipient made aware of the elements (in detail) that are part of the package?
5. In the context of the particular transaction, does the recipient have the option to acquire the elements separately or to substitute elements?
Based on the information provided, the portion of the annual fee identified as a donation would not appear to be a gift as it is required to be paid as part of the annual fee. This is an amount which, although separately identified, appears to be part of the total consideration for the supply of the membership in the Club. The member is merely being advised how the total consideration for the membership is allocated.
In addition, based on the information provided, the elements of the membership and the fish entitlement are provided by the same supplier. The membership and fish entitlement elements are acquired by the same person. The supplier does not offer a membership (with its property and lake access) without the fish entitlement element, and the fish entitlement element is not available without the membership. The element of the fish entitlement does not appear to be distinct from the element of the membership, but appears to be an integral component of the membership. The recipient is required to pay the total annual fee of $[…], and does not have the option of acquiring any of the elements, for which the fee is charged, separately.
As a result, the supply in question would appear to be a single supply of a membership in the Club. The $[…] annual fee appears to be the consideration for the supply and would be subject to the HST at a rate of 13% where it is determined that it is a taxable supply made in Ontario.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the interpretation(s) given in this letter, including any additional information is not a ruling and does not bind the Canada Revenue Agency (CRA) with respect to a particular situation. Future changes to the ETA, regulations, or the CRA’s interpretative policy could affect the interpretation(s) or the additional information provided herein.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 905-721-5217. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Jill McDonald, CPA, CA
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
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