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.
DATE: January 10, 2018
TO: [Addressee]
FROM:
Geoff Macmillan
Services and Intangibles Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
Case Number: 179129
SUBJECT: [GST/HST Interpretation]
Characterization of […][driving] services
Thank you for your submission, received by our office on [mm/dd/yyyy], regarding the GST/HST characterization of the supply of […][driving] and […][towing] services by […][the Company]. We apologize for the delay in our response.
All legislative references are to the Excise Tax Act unless otherwise specified.
Included in your inquiry was a submission from [the Company]s representative, […].
The submission […] describes [the Company]’s business and its supplies of [driving] services, and contains an analysis in support of why such supplies should be considered freight transportation services. The submission also included a number of documents, all of which were reviewed.
In addition, [the Company]’s representative submits that notwithstanding his arguments that all of [the Company]’s [driving] services should qualify as freight transportation services, at the very least the […] [towing] services, should be considered freight transportation services.
[…][FACTS]:
We have reviewed all the relevant information provided in the submission from [the Company]’s representative, […]. We do not disagree with the facts as described in respect of [the Company]’s business. They will therefore not be reproduced in this memorandum.
[…][INTERPRETATION REQUESTED]:
You have asked us to confirm whether [the Company]’s supplies of [driving] services are supplies of freight transportation services for GST/HST purposes. If [the Company] is providing freight transportation services, then such supplies could be zero-rated under Part VII of Schedule VI if they are in respect of the transportation of tangible personal property from a place in Canada to a place outside Canada, or involve such transportation from a place outside Canada to a place in Canada. If, however, [the Company]’s [driving] services are not freight transportation services for GST/HST purposes they could not be zero-rated under that part of Schedule VI.
[…][INTERPRETATION GIVEN]:
Based on the information provided, and having carefully considered it and the representative’s arguments, […][the CRA’s] position regarding the characterization of [the Company]’s supplies of [driving] services […] are not considered to be freight transportation services for GST/HST purposes, as defined under subsection 1(1) of Part VII of Schedule VI.
In order to supply a “freight transportation service”, a person must assume liability to supply a freight transportation service and use the person’s own truck. This position […] has been reflected in various publications of the Canada Revenue Agency (CRA), including the GST/HST Guide RC4080, Information for Freight Carriers, which has since been replaced by the CRA webpage GST/HST Information for Freight Carriers. Based on the facts, [the Company] generally does not use its own vehicle to transport its customers’ vehicles.
[The Company]’s representative also requests that [the Company]’s operations be considered in light of the informal decision of the Tax Court of Canada (TCC) in Bam Packaging Ltd. v. The Queen, [2001] G.S.T.C. 76. He further submits that even if the [driving] services are not freight transportation services, the […] [towing] services […] should be considered to be freight transportation services.
While [the Company]’s representative cites Bam Packaging and its use of dictionary definitions of “transportation” and “transporting” to conclude that freight transportation services were supplied, the CRA is not required to follow that case because it was an informal decision and is distinguishable on the facts. Other recent informal decisions of the TCC support [the CRA] position, such as Vuruna et al. v. The Queen, 2010 T.C.C. 365 and Andrews v. The Queen, 2017 T.C.C. 23, both of which contained facts similar to the current case, but concluded that services of driving were not freight transportation services. In particular, Andrews used the same interpretative approach as in Bam Packaging to conclude that a freight transportation service means “a particular service of carrying personal property from one place to another” and that a good (in that case, a vehicle) “cannot be both the personal property and the means of carrying it at the same time”.
Based on [the CRA's] position, which is supported by the TCC in Andrews, […] [towing] services, would also not be considered freight transportation services if […][the vehicles] were not being transported […] by a vehicle owned by [the Company]. For supplies of such services to be a freight transportation service, [the Company] would need to use a vehicle it owns in addition to assuming liability for supplying the freight transportation service.
[In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the interpretations given in this letter 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 interpretations provided herein.]
If you have further questions or require clarification on the above information, please contact me at 613-670-9886 or Russell Vermette at 613-670-9884.
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