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: 160206
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
PST or HST exemption on sale of assets from one company to another
Thank you for your [correspondence] of February 18, 2014, concerning the application of the goods and services tax/harmonized sales tax (GST/HST) on a sales of assets from one company to another. We apologize for the delay in responding to your request.
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.
STATEMENT OF FACTS
We understand that
- You are a general partner of […][the partnership]. The latter is registered for GST purposes.
- You, the recipient, purchased assets from […] ([…](the Supplier)).
- The supplier and the recipient submitted a signed GST44, Election concerning the acquisition of a business or part of a business, dated [mm/dd/yyyy] and [mm/dd/yyyy], respectively.
- The assets were described on the GST44 as “[…][assets].”
- The notice sent to the supplier by the Canada Revenue Agency (CRA) on [mm/dd/yyyy], advising that the GST44 was accepted and processed, refers only to “[…]”
- The assets in question were vehicles that were located in British Columbia (BC) prior to the sale and remained there after the sale.
- The date of the transaction was [mm/dd/yyyy].
- The recipient did not attempt to register the vehicles until after March 31, 2013.
- When registering the vehicles, the province of BC charged Provincial Sales Tax (PST) on the transaction as the new PST was in effect in BC as of April 1, 2013.
RULING REQUESTED
You would like to know if there is an HST exemption possible on the sale of assets from [the Supplier] to [the partnership] that took place on [mm/dd/yyyy].
You would also like to know if an exemption is available for the PST that was paid or became payable on the date these assets were registered (after March 31, 2013).
RULING GIVEN
Based on the facts set out above, we rule that there is no HST exemption applicable as you received a taxable supply of the vehicles for which no tax was deemed payable.
We are unable to rule on any possible BC PST exemption as that is the jurisdiction of the province of BC.
EXPLANATION
The rules in subsection 167(1) permit an otherwise taxable sale of a business to be made without tax applying if both parties to the transaction so elect. This election is made using GST44, Election concerning the acquisition of a business or part of a business.
The effect of a GST44 election means
- no tax is payable in respect of any of the property under the agreement,
- the supplier is deemed to have made a separate supply of each property for consideration equal to that part of the consideration for the supply of the business or part thereof that can be reasonably attributed to that property,
- where property that was capital property of the supplier and that is being acquired by the recipient for use as capital property of the recipient, the recipient shall be deemed to have so acquired the property for use exclusively in the course of commercial activities of the recipient, and
- Where tax would not have been payable by the recipient in respect of a supply made under the agreement of property that was capital property of the supplier and that is being acquired by the recipient for use as capital property of the recipient, the recipient shall be deemed to have so acquired the property for use exclusively in activities of the recipient that are not commercial activities.
BC was a participating province from July 1, 2010, until March 31, 2013. During this period, the ETA applied in BC and was administered by CRA. HST was applicable to taxable supplies in BC during this time unless stated otherwise. The date of the sale was [mm/dd/yyyy], and you and the supplier submitted a signed GST44, Election concerning the acquisition of a business or part of a business, […][before April 1, 2013]. The election was accepted by CRA and, as such, there was deemed to be no HST payable. No exemption for HST paid is necessary or possible.
In respect of the PST paid, you did not register the vehicles until after March 31, 2013, at which time BC’s PST rules applied. CRA has no authority to rule on this transaction as it occurred after March 31, 2013.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the CRA is bound by the ruling(s) given in this letter provided that: none of the issues discussed in the ruling(s) are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed. The interpretation(s) given in this letter, including any additional information, is not a ruling and does not bind the 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 613-670-9882. 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,
Doug Campbell
General Operations Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
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