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, 14th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 188621
Business Number: […]
Dear [Client]:
Subject: GST/HST INTERPRETATION
Application of the GST/HST to a registered charity
Thank you for your letter of December 4, 2017, concerning the obligations and entitlements of the […]([…][the Association]) under the Excise Tax Act (ETA).
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%. […].
[STATEMENT OF FACTS]
[The Association] is a registered charity within the meaning assigned to that expression by subsection 248(1) of the Income Tax Act, and is a charity for purposes of the ETA. [The Association] makes supplies of services exclusively to […], an entity that is on the list of [Province X] entities entitled to full relief from GST/HST. A charity that makes supplies of services is generally making exempt supplies. You have stated that [the Association] does not collect any tax on the supplies it makes, is not entitled to any input tax credits and can only recover […][GST/HST] paid by way of the public service bodies’ rebate at the rate of 50%.
In our conversations […] you confirmed to me that:
[The Association] is not requesting to be designated pursuant to section 178.7 of the ETA because [the Association]’s purposes and services are not those contemplated in section 178.7 of the ETA. In addition, you do not wish for us to consider whether [the Association] could be designated as a municipality. Rather, your letter is an attempt to explain that your belief that application of the GST/HST to [the Association] would be more beneficial if [the Association] were considered a non-profit organization for purposes of the ETA.
You understand that [the Association] is a charity for purposes of the ETA. You also understand that the definition of non-profit organization in the ETA specifically excludes a charity. Further, you also fully understand [the Association]’s obligations and entitlements under the ETA.
[INTERPRETATION REQUESTED]
In your view, if [the Association] were not a charity for purposes of the ETA it would most likely be considered a non-profit organization as that term is defined in subsection 123(1) of the ETA. A non-profit organization that make supplies like those made by [the Association] would generally be making taxable supplies for purposes of the ETA. A non-profit organization would not be required to collect the [GST/HST] on taxable supplies made to an entity that is on the list of [Province X] entities entitled to full relief from GST/HST. Finally, a non-profit organization in these circumstances would generally be allowed to claim input tax credits to recover the [GST/HST] paid or payable on purchases and expenses to the extent they are used, consumed, or supplied in the course of making taxable supplies.
[INTERPRETATION GIVEN]
It was explained that it is possible for a charity to become a non-profit organization for purposes of the ETA, but that transition would have other consequences that could affect [the Association] and that you should discuss any questions you have concerning a possible transition to a non-profit organization with the Charities Directorate. The telephone number to reach a client services representative at the Charities Directorate is 1-800-267-2384.
[…]. However, and as explained, the Canada Revenue Agency is responsible for administering legislation like the ETA, which governs the application of GST/HST. Changes to the legislation, such as a change to the tax treatment of charities, are a tax policy matter under the jurisdiction of the Department of Finance Canada. Therefore a copy of this correspondence has been sent to […], Department of Finance Canada, for his consideration.
[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 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 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 613-670-7941. 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,
Trent MacDonald
Charities and Non-Profit Organizations Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
Email this Content