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, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 184056
Dear [Client]:
Subject: GST/HST INTERPRETATION
PROPOSED LAW/REGULATION
Repeal of the rebate for tour package-related accommodations
Thank you for your letter of April 18, 2017 regarding the proposal in Budget 2017 to repeal the Goods and Services Tax/Harmonized Sales Tax (GST/HST) rebate for accommodations related to eligible tour packages.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
Budget 2017 proposes to repeal the Foreign Convention and Tour Incentive Program (FCTIP) rebate available to non-resident individuals and non-resident tour operators for the GST/HST that is payable in respect of the Canadian short-term accommodation or camping accommodation portion of eligible tour packages. Although the repeal will generally apply in respect of supplies of tour packages or accommodations made after March 22, 2017 (Budget Day), as a transitional measure, the rebate will continue to be available in respect of a supply of a tour package or accommodations made after Budget Day but before January 1, 2018, if all of the consideration for the supply is paid before January 1, 2018.
[…]
You provide an example in your letter involving […] an umbrella agreement in place as of March 1, 2017, with an agent in the United Kingdom (UK) that will sell tour packages in 2018. The umbrella agreement sets the price of the tour packages and takes into account the FCTIP rebate; you confirmed in our telephone conversation […] , that the umbrella agreement also establishes the general terms with respect to the tour packages being offered for sale. Based on the price and terms of the umbrella agreement, separate secondary agreements for the supply of tour packages could then be entered into after Budget Day and into 2018 with the agents in the UK.
INTERPRETATION REQUESTED
You would like to know which of the agreements described in the above example constitute a “supply” for purposes of the transitional measure.
INTERPRETATION GIVEN
Under subsection 123(1), “supply” is defined to mean the provision of property or a service in any manner, including sale, transfer, barter, exchange, licence, rental, lease, gift or disposition. However, pursuant to section 133, where an agreement is entered into to provide property or a service, the entering into of the agreement is generally deemed to be a supply of the property or service made at the time the agreement is entered into, and the provision, if any, of property or a service under the agreement shall be deemed to be part of that supply and not a separate supply.
Based on the information provided in your example, the umbrella agreement between […] and a UK agent would not be considered to be a supply of a tour package or accommodations. The umbrella agreement establishes the terms and price for a tour package if the agent chooses to purchase the tour package during a specified period. However, there is no obligation imposed on the agent to actually acquire the tour package in the future. As a result, for purposes of the proposed amendment, the date the umbrella agreement was entered into would not be relevant for purposes of the transitional rule.
However, based on the information provided, if the secondary agreements involve the purchase of eligible tour packages or accommodations, then those agreements, pursuant to section 133, would constitute a supply. It would therefore be necessary to determine when those agreements were made to determine if they would be subject to the amendment proposed in Budget 2017.
Using your example, if the secondary agreements for purchases of eligible tour packages or accommodations were entered into on or before Budget Day, then the current rules would continue to apply to those supplies. In other words, a non-resident individual or non-resident tour company generally would continue to be able to claim a FCTIP rebate in respect of the GST/HST payable for a supply of an eligible tour package or accommodation made on or before March 22, 2017, regardless of when the consideration for the supply is paid or the tour occurs. The proposed amendment to repeal the rebate would not apply to those supplies.
If a secondary agreement for the purchase of an eligible tour package or accommodations is entered into after Budget Day, then the rebate under FCTIP will not be payable in respect of that supply, unless the supply is made before 2018 and all the consideration for that supply is paid before January 1, 2018. As a result, if a UK agent purchases an eligible tour package on April 1, 2017, at a price set by the umbrella agreement, for travel in Canada after 2017, the FCTIP rebate will only be available if the consideration for that supply is fully paid before 2018.
The foregoing comments represent our general views with respect to the proposed amendment to the ETA as it relates to the subject matter of your request. Any change to the wording of the proposed amendment or any future proposed amendment to the ETA, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, do not bind the Canada Revenue Agency with respect to a particular situation.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-670-9886. 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,
Geoff Macmillan
A/Manager
Services and Intangibles Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
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