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: 201312
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
Tax status of licences
Thank you for your request of July 16, 2019, concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to licences supplied by […][the Corporation]. We apologize for the delay in this 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 the facts as follows based on your request, the applicable legislation in […][the Province], and a review of [the Corporation]’s website.
1. [The Corporation] was continued under […] of […][Provincial Act Z] (Footnote 1).
2. On its website, [the Corporation] describes itself as: […].
3. [Provincial Act Z] includes the following provisions:
[…][Sections cited from the Provincial Act Z include: definitions; section that prohibits a person from exercising certain acts when not licenced; section that continues the Corporation; sections about the issuance of licences; sections that describe the classes of licences.]
4. […] (Footnote 2)
5. [The Corporation] published […] on its website on [mm/dd/yyyy], that include additional requirements to obtain a licence.
6. [The Corporation] supplies the following licences: […][list of licenses]
7. [The Corporation] was issued GST/HST account number […].
RULING REQUESTED
You would like to know if the supplies of licences by [the Corporation] are exempt of GST/HST.
RULING GIVEN
Based on the facts set out above, we rule that the licences supplied by [the Corporation] are exempt of GST/HST.
EXPLANATION
Paragraph 20(c) of Part VI of Schedule V to the ETA exempts a supply of a licence, permit, quota or similar right (other than a right or service supplied in respect of the importation of alcoholic beverages) where the supply is made by a government or municipality or by a board, commission or other body established by a government or municipality. GST/HST Policy Statement P-247, What Constitutes an “Other Body Established by a Government” for Purposes of the Excise Tax Act (the Act)?” sets out the Canada Revenue Agency’s position with respect to what type of body would be an “other body established by a government”. This policy provides that the body must fall into one of three categories. The categories are:
Category 1 – A body created by a government in legislation;
Category 2 – A body incorporated by a government; and
Category 3 – A body that meets the following criteria – (a) a government has taken action relating to the body; (b) the body is set up to undertake a public service function that government usually undertakes; and (c) the government retains the overall authority for the regulatory program, and the body remains accountable to the government.
[The Corporation] was established by regulation under […][Provincial Act Y] (Footnote 3) and continued as a corporation in […] of the [Provincial Act Z]. Therefore, [the Corporation] is considered to be an “other body established by government” under Category 1 for the purposes of section 20 of Part VI of Schedule V.
The supply of a licence by [the Corporation] is an exempt supply and is not subject to the GST/HST. Therefore, [the Corporation] should not charge GST/HST on its licensing fees.
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 ruling given in this letter provided that: none of the issues discussed in the ruling 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.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-670-7943. 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,
Desneiges Arbour
Charities and Non-profit Organizations Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
FOOTNOTES
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