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: 176875
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
[Whether a] Qualifying Non-Profit Organization - […][Organization A]
Thank you for your letter of March 31, 2016, concerning […] ([…][Organization A’s]) eligibility for public service bodies’ rebates. We apologize for the delay in providing 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.
STATEMENT OF FACTS
We understand
1. [Organization A] was created under […] ([…][Act X]), pursuant to Order in Council […] dated [mm/dd/yyyy] (OIC), as a corporation without share capital.
2. Pursuant to […] of the OIC, [Organization A] […][describes the purpose of Organization A]
3. […][definition of term in OIC]
4. […][definition of term in OIC]
5. […]
6. […] the OIC states “The sole member in [Organization A] shall be […].”
7. […].
8. […].
9. [Organization A] is not a government as defined in subsection 123(1) of the ETA.
10. [Organization A] is not a specified crown agent as defined in subsection 123(1) of the ETA.
11. [Organization A] has an office in […], Ontario, and is therefore resident in Ontario. Based on the information provided, [Organization A] is not resident in any other province.
12. [Organization A] is not a selected public service body.
13. [Organization A] is not registered for GST/HST purposes.
14. […][Describes the activities of Organization A].
15. You have advised that [Organization A] is funded through government appropriations, and that this funding is not consideration for a supply.
16. You provided us with [Organization A’s] financial statements for the year ended [mm/dd/yyyy]. [Organization A’s] Statement of Operations contains amounts of money identified as government funding. [Organization A] had no other sources of revenue in the year ended [mm/dd/yyyy].
17. […][Describes Organization A’s government funding].
18. [Organization A’s] financial statements for the year ended [mm/dd/yyyy] are available on its website […]. [Organization A’s] Statement of Operations for the year ended [mm/dd/yyyy], contain amounts of money identified as government funding. [Organization A] also earned revenue from interest and foreign exchange gain in the year ended [mm/dd/yyyy].
19. […][Describes Organization A’s government funding].
RULING REQUESTED
You would like us to confirm the following
1. Pursuant to subsection 259(2) of the ETA, [Organization A] is a “qualifying non-profit organization” for its fiscal years ended [mm/dd/yyyy], and [mm/dd/yyyy].
2. As a “qualifying non-profit organization”, [Organization A] is entitled to claim a PSB rebate equal to the specified percentage of the non-creditable tax charged in respect of properties or services (other than prescribed properties or services).
3. The specified percentages of the PSB rebate that [Organization A] was entitled to claim on the non-creditable tax charged in respect of properties or services (other than prescribed properties or services) are 50% of the GST (or the federal part of the Ontario HST) and 82% of the provincial component of the Ontario HST.
RULING GIVEN
Based on the facts set out above, we rule that
1. [Organization A] was a qualifying non-profit organization for the fiscal years ended [mm/dd/yyyy], and [mm/dd/yyyy].
2. As a qualifying non-profit organization, [Organization A] is entitled to claim a PSB rebate under subsection 259(3).
3. [Organization A’s] PSB rebates of the GST and the federal part of the HST are equal to 50% of the non-creditable GST charged or the federal non-creditable HST charged in respect of property or a service (other than a prescribed property or service) for the claim periods in its fiscal years ended [mm/dd/yyyy], and [mm/dd/yyyy].
4. [Organization A’s] PSB rebates of the provincial part of the HST are equal to 82% of the provincial non-creditable HST charged in respect of property or a service (other than a prescribed property or service) for the claim periods in its fiscal years ended [mm/dd/yyyy], and [mm/dd/yyyy], regardless of in which province the HST was paid or payable.
EXPLANATION
Qualifying non-profit organization
Pursuant to subsection 259(2), “a person is a qualifying non-profit organization at any time in a fiscal year of the person if, at that time, the person is a non-profit organization and the percentage of government funding of the person for the year is at least 40%.”
Therefore, to be a qualifying non-profit organization [Organization A] must satisfy two conditions:
- It must be a “non-profit organization”; and
- Its percentage of government funding must be at least 40%.
A “non-profit organization” is defined in subsection 123(1) as “a person (other than an individual, an estate, a trust, a charity, a public institution, a municipality or a government) that was organized and is operated solely for a purpose other than profit, no part of the income of which is payable to, or otherwise available for the personal benefit of, any proprietor, member or shareholder thereof unless the proprietor, member or shareholder is a club, a society or an association the primary purpose and function of which is the promotion of amateur athletics in Canada.”
[…]
[…]
In your letter, you referred to the definition of “non-profit organization” in subsection 259(1). As [Organization A] is not a “government”, it is not excluded from the definition of “non-profit organization” in subsection 123(1). As such, there is no need to consider the extended definition of “non-profit organization” in subsection 259(1).
It is a question of fact whether, at any particular time, a person meets the definition of a non-profit organization for ETA purposes. In particular, whether [Organization A] meets the criterion of operating solely for a purpose other than profit must be determined on an ongoing basis. [Organization A] met the definition of “non-profit organization” in the fiscal years ended [mm/dd/yyyy], and [mm/dd/yyyy].
Pursuant to subsection 259(1), the “percentage of government funding” of a person for a fiscal year of the person means the percentage determined in prescribed manner. The prescribed manner for determining the “percentage of government funding” is set out in section 3 of the Public Service Body Rebate (GST/HST) Regulations. The percentage of government funding of a person for a fiscal year is the greater of the percentage determined under paragraph 3(1)(a) and the percentage determined under paragraph 3(1)(b).
[Organization A’s] percentage of government funding is at least 40% for the fiscal years ended [mm/dd/yyyy], and [mm/dd/yyyy]. Therefore, [Organization A] was a qualifying non-profit organization for these years.
In addition, we have determined that [Organization A’s] percentage of government funding for the fiscal year ended [mm/dd/yyyy], is at least 40%, based on its two immediately preceding years pursuant to paragraph 3(1)(b) of the Public Service Body Rebate (GST/HST) Regulations. Therefore, [Organization A] would be a qualifying non-profit organization for the fiscal year ended [mm/dd/yyyy] if it in fact continued to meet the definition of “non-profit organization”.
Public service bodies’ rebate
Pursuant to subsection 259(3), and subject to certain exclusions that do not apply in this case, a person that is a qualifying non-profit organization on the last day of a claim period of the person or of the person's fiscal year that includes that claim period is entitled to a public service bodies’ (PSB) rebate.
As a qualifying non-profit organization that is not a selected public service body (Footnote 1), [Organization A’s] PSB rebates of the GST and the federal part of the HST are calculated under paragraph 259(3)(a). Under paragraph 259(3)(a), a PSB rebate of the GST and the federal part of the HST is equal to the specified percentage of the non-creditable GST charged or the federal non-creditable HST charged in respect of property or a service (other than a prescribed property or service) for the claim period.
In the case of a qualifying non-profit organization, “specified percentage” is defined in subsection 259(1) as 50%.
The non-creditable tax charged in respect of property or a service for a claim period is defined in subsection 259(1) and is generally equal to the total GST/HST that became payable during a claim period or that was paid during a claim period without having become payable, minus the following amounts:
- any input tax credits the PSB claimed or is entitled to claim for any of that GST/HST;
- any rebate, refund, or remission of any of that GST/HST that it is reasonable to expect the PSB received or is entitled to receive under any other section of the ETA or under any other Act of Parliament;
- any amount of that GST/HST that is refunded, credited, or adjusted in the PSB's favour and for which it has either received a credit note from the supplier or has issued a debit note to the supplier.
For more information on non-creditable tax charged, see GST/HST Memorandum 13.5, Non-creditable Tax Charged.
As a qualifying non-profit organization (that is not a selected public service body) resident only in Ontario, [Organization A’s] PSB rebates of the provincial part of the HST are calculated under paragraph 259(3)(b). As such, [Organization A’s] PSB rebates of the provincial part of the HST are equal to the specified provincial percentage of the provincial non-creditable HST charged in respect of property or a service (other than a prescribed property or service) for the claim period, regardless of in which province the HST was paid or payable.
Pursuant to paragraph (f) of the definition of “specified provincial percentage” in subsection 259(1) and section 5 of the Public Service Body (GST/HST) Regulations, the “specified provincial percentage” of a qualifying non-profit organization resident in Ontario is 82%.
For more information on how to calculate [Organization A] PSB rebate, see GST/HST Info Sheet GI-184, Public Service Bodies' Rebate for Qualifying Non-profit Organizations Resident Only in Ontario.
[…][Discusses certain purchases made by Organization A]
Where a supplier has charged or collected an excess amount as or on account of tax on supplies that qualify for zero-rating, the supplier may refund or credit the excess amount to the recipient in accordance with section 232. If the supplier refunds or credits the amounts collected as GST/HST, it must do so within two years after the day the amount was charged or collected and it must provide the recipient with a credit note (unless the recipient issues a debit note) containing prescribed information.
Alternatively, persons who have paid an amount as GST/HST on supplies that qualify for zero-rating may make an application to the Canada Revenue Agency (CRA) for a rebate of tax paid in error under section 261 using Form GST189, General Application for Rebate of GST/HST. The time limit to apply for this rebate is within two years after the day the amount was paid.
For more information, refer to GST/HST Memorandum 12.2, Refund, Adjustment, or Credit of the GST/HST under Section 232 of the Excise Tax Act and Guide RC4033, General Application for GST/HST Rebates.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the rulings given in this letter provided that: none of the issues discussed in the rulings 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 613-670-7942. 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,
Heather Reardon
Charities and Non-Profit Organizations Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
Footnotes:
1. "Selected public service body" means a school authority, university or public college that is established and operated otherwise than for profit; a hospital authority; a municipality; a facility operator; or an external supplier.
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