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: 131339
Business Number: [...]
August 21, 2013
Dear [Client]:
Subject: GST/HST INTERPRETATION
Public Service Body Rebate
Thank you for your letter of [mm/dd/yyyy], concerning the [...] (the Charity)'s entitlement to claim a public service body (PSB) rebate of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST). Specifically, your submission concerned the application of the PSB rebate rules to the Charity's operations. We apologize for the delay in our response.
In your submission you requested information with respect to the activities of "[...] branches" of the Charity. Our records indicate that these "branches" are separately incorporated legal entities. Therefore we have omitted any information provided that does not correspond with our understanding of the facts.
The HST applies in the participating provinces at the following rates: 13% in Ontario, New Brunswick and Newfoundland and Labrador, 14% in Prince Edward Island (effective April 1, 2013) and 15% in Nova Scotia. The GST applies in the rest of Canada at the rate of 5%.
Effective April 1, 2013, the 12% HST in British Columbia has been replaced by the 5% GST and a provincial sales tax.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
We understand that
1. The Charity 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.
2. According to Industry Canada's web site (www.ic.gc.ca) the Charity was incorporated under the Canada Corporations Act - Part II on [yyyy/mm/dd].
3. The Charity is not a selected PSB (Footnote 1).
4. The Charity is not registered for purposes of the GST/HST.
5. The Charity's office is located in [...][City 1, Province X] where most employees reside and most costs are incurred.
6. The Charity also has employees located in various other provinces across Canada. These employees incur costs in the provinces in which they are located performing functional duties and activities for the Charity.
7. The Charity enters into agreements with separate third-party legal entities that outline support the Charity will provide in the following functional areas: [...]
8. You have stated that the Charity has a permanent establishment in the following provinces:
• Ontario,
• Nova Scotia,
• British Columbia,
• Alberta,
• Manitoba,
• Saskatchewan,
• New Brunswick,
• Prince Edward Island, and
• Newfoundland and Labrador.
Interpretation Requested
You would like to confirm that when the Charity intends to consume, use or supply property or services in the course of its activities in any province in Canada, the Charity is entitled to
1. a PSB rebate of the GST or the federal part of the HST using the federal rebate factor of 50%, and
2. a PSB rebate of the provincial part of the HST using the provincial rebate factor of [...]%.
Interpretation Given
Generally, a charity can claim a PSB rebate on tax paid or payable on property or services acquired, imported or brought into a participating province during a claim period. A charity is entitled to a PSB rebate of the GST or the federal part of the HST using the federal rebate factor of 50%, regardless of where in Canada the property or services are intended to be consumed, used or supplied. A charity that is resident in a participating province may be eligible to claim a PSB rebate of the provincial part of the HST.
Resident in a province
A person is deemed to be resident in a province if:
* the person is resident in Canada; and
* in the case of a corporation, the corporation is incorporated or continued under the laws of that province and not continued elsewhere.
In addition, a person is deemed to be resident in a province if the person is resident in Canada and the person has a permanent establishment in that province. A charity will be deemed to have a permanent establishment in a province if a place in that province would be a permanent establishment for income tax purposes under the following circumstances:
* the charity were a corporation; and
* the charity's activities were a business for income tax purposes.
Generally, a permanent establishment of a charity is a fixed place of activities. A fixed place of activities includes a determined or ascertained space in which there is some presence or routine over which the charity has some degree of control and in which some undertaking or operations of the charity occur. In most cases, this includes an office, branch, factory, workshop, warehouse, plant, mine, oil well, farm, timberland or natural resource used in the day-to-day activities of the charity. It does not mean that the place of activities must exist for a long time or be located in a durable building; for instance, a temporary field office on a construction site could be a fixed place of activities.
Although the Charity's office is located in [Province X], you have stated that the Charity is resident in nine provinces including the participating provinces of Ontario, Nova Scotia, New Brunswick, Prince Edward Island, and Newfoundland and Labrador and British Columbia, which was a participating province for the period of July 1, 2010 to March 31, 2013. For information, including a worksheet, to assist the Charity in determining in which province(s) it is resident, please refer to GST/HST Info Sheet GI-121 Determining Whether a Public Service Body is Resident in a Province for Purposes of the Public Service Bodies' Rebate. This Info Sheet is available on the Canada Revenue Agency's Web site.
Resident in one participating province
Where a charity that is not a selected PSB is resident in only one province and that province is a participating province the charity will be entitled to a PSB rebate of the provincial part of the HST equal to the specified provincial rebate factor of the provincial non-creditable HST charged regardless of where the HST was incurred. For example, if a charity is only resident in Ontario the PSB rebate of the provincial part of the HST paid or payable is calculated using the provincial rebate factor for charities resident in Ontario (82%).
Resident in two or more provinces, at least one of which is a participating province
A charity that is not a selected PSB and that is resident in two or more provinces, at least one of which is a participating province, must calculate its PSB rebate of the provincial part of the HST based on the extent it intended to consume, use or supply the property or service in the course of its activities in each participating province in which it is resident. Therefore, a charity must calculate its PSB rebate of the provincial part of the HST in the following manner:
provincial rebate factor
×
provincial non-creditable HST charged
×
the extent a charity intended to consume, use or supply the property or service in the participating province
Provincial rebate factor
A charity must undertake a PSB rebate calculation for each province in which it is resident. The provincial rebate factor used is not based on the province where a supply was made to the charity (that is, the province where the HST is charged). Each PSB rebate of the provincial part of the HST must use the provincial rebate factor for the province in which the charity is resident.
The provincial rebate factor for a charity resident in:
• Ontario is 82%.
• Nova Scotia is 50%.
• New Brunswick is 50%.
• Newfoundland and Labrador is 50%.
• Prince Edward Island is 35%.
The provincial rebate factor for a charity resident in British Columbia, when that province was a participating province, was 57%.
Provincial non-creditable HST charged
The provincial non-creditable HST charged for a claim period of a person is equal to the provincial part of the HST paid or payable on property or a service (other than a prescribed property or service), minus the following amounts:
• any amount of that HST that is included in determining an input tax credit of the person;
• any other rebate, refund, or remission of that HST that it is reasonable to expect the person received or is entitled to receive; and
• any amount of that HST that is refunded, credited, or adjusted in the person's favour and for which the person has either received a credit note from the supplier or has issued a debit note to the supplier.
To determine the provincial part of the HST, multiply the HST paid or payable by:
• 7/12 for those purchases taxed at 12%;
• 8/13 for those purchases taxed at 13%;
• 9/14 for those purchases taxed at 14%;
• 8/14 for those purchases taxed at 14% before the 2008 rate change; or
• 10/15 for those purchases taxed at 15% after the 2010 Nova Scotia rate change.
Extent of consumption, use or supply in the participating province
Each calculation of the PSB rebate of the provincial part of the HST must take into account the extent (expressed as a percentage) a charity intended to consume, use or supply the property or service in the course of its activities engaged in that participating province. This determination is made at the "relevant time", which is defined in section 5.1 of the Public Service Body Rebate (GST/HST) Regulations. Generally, the "relevant time" will be the time the supply was made to, or the property was imported or brought into a participating province by, a charity. It is not sufficient for a charity to incur HST in a province in which it is resident in order to be entitled to a PSB rebate of the provincial part of the HST using the rebate factor for that province.
Where property or services acquired by a charity are intended to be consumed, used or supplied exclusively (100%) in Ontario, the charity may claim a PSB rebate of the provincial non-creditable HST charged using the provincial rebate factor for charities resident in Ontario (82%).
(82% × provincial non-creditable HST charged × 100%)
However, if the property or services acquired by a charity were intended to be consumed, used or supplied partly in Ontario and partly in New Brunswick, the charity may claim a PSB rebate of the provincial non-creditable HST charged using the provincial rebate factor for charities resident in Ontario (82%) to the extent (expressed as a percentage) the property or services were intended to be consumed, used or supplied in Ontario. Additionally, the charity may claim a PSB rebate of the provincial non-creditable HST charged using the provincial rebate factor for charities resident in New Brunswick (50%) to the extent (expressed as a percentage) the property or services were intended to be consumed, used or supplied in New Brunswick. Similar calculations would be done for any other participating province in which the charity is resident.
A charity is not entitled to claim a PSB rebate of the provincial part of the HST paid on property or services to the extent it intended to consume, use, or supply the property or services in a participating province in which the charity is not resident or any non-participating province. British Columbia was not a participating province for any periods prior to July 1, 2010 and is not a participating province for any periods after March 31, 2013.
Completing the public service bodies' rebate application
Where a charity is eligible to claim a PSB rebate of the provincial part of the HST it would report the PSB rebate of the provincial part of the HST on the appropriate lines of the form RC7066 SCH Provincial Schedule - GST/HST Public Service Bodies' Rebate or GST284 SCH Provincial Schedule - GST/HST Public Service Bodies' Rebate for each participating province in which it is resident. The total amount claimed on the provincial schedule is entered on line B of Part D of the PSB rebate application (Form GST66 Application for GST/HST Public Service Bodies' Rebate and GST Self-government Refund or Form GST284 Application for GST/HST Public Service Bodies' Rebate and GST Self-government Refund). The charity would attach a copy of the provincial schedule, Form RC7066 SCH or GST284 SCH, to the application. The GST284 SCH and the GST284 are personalized versions of the RC7066 SCH and the GST66. A charity that is a GST/HST registrant that is claiming its PSB rebate on its GST/HST return would send the provincial schedule and the application with the return.
If the charity is filing its return electronically, it can also file its rebate application and provincial schedule electronically using:
* GST/HST NETFILE; or
* the "File a rebate" online service at www.cra.gc.ca/mybusinessaccount.
If a charity needs to change a rebate that has already been filed, the charity can:
* use the "Adjust a rebate" online service at www.cra.gc.ca/mybusinessaccount;
* send a letter to the Canada Revenue Agency (CRA) indicating the change; or
* call 1-800-565-9353.
ADDITIONAL INFORMATION
As discussed, the provincial part of the HST is not the same in each participating province. It is therefore possible for a PSB to acquire goods, services or intangible personal property (IPP) (such as goodwill, contractual rights, trademarks and intellectual property) in a participating province that has a higher (or lower) HST rate than in the province where the property or services are to be consumed, used or supplied by the PSB.
Self-assessment of the provincial part of the HST
Generally, for GST/HST purposes the person making a taxable supply collects the GST/HST. However, in some cases the recipient of the supply is required to calculate the tax it owes on a supply and pay the amount directly to the CRA. This is known as "self-assessment". Amounts of the provincial part of the HST that are self-assessed may be eligible for a PSB rebate.
A PSB may be required to self-assess the provincial part of the HST if it is the recipient of a supply of goods, services or IPP in a non-participating province for consumption, use or supply in a participating province. Self-assessment may be required by a person where the person brings goods into a participating province that has a higher rate of the provincial part of the HST than the province from which the goods are brought. Similarly, a person who is resident in a participating province may be required to self-assess tax in respect of a supply of services or IPP acquired by the person where the services or IPP are consumed, used or supplied in whole or in part in a participating province that has a higher rate of the provincial part of the HST than the province where the supply occurred. For self-assessment purposes, the rate of the provincial part of the HST in a non-participating province is considered to be 0%.
For more information on this topic, please see "Tax on property and services brought into a participating province" in guide RC4022, General Information for GST/HST Registrants.
Rebate for services or IPP supplied in a participating province
If a PSB is a recipient of a supply of services or IPP in a participating province for use significantly (10% or more) in a participating province with a lower rate of the provincial part of the HST or outside participating provinces, it may be entitled to a rebate of some or all of the provincial part of the HST that was paid on an amount of consideration for the supply. For further information, see "Reason code 13 - Intangible personal property or services supplied in a participating province" in guide RC4033, General Application for GST/HST Rebates.
Rebate for goods removed
If a PSB purchased goods in a participating province and removed them from that province for consumption, use, or supply exclusively (90% or more) outside the participating province, it may be entitled to a rebate of all or a portion of the provincial part of the HST paid in respect of the goods. For further information, see "Did you buy goods in a participating province and bring them into another province?" in guide RC4034, GST/HST Public Service Bodies' Rebate or page 2 of Form GST495, Rebate Application for Provincial Part of Harmonized Sales Tax (HST).
PSB rebate and rebates claimed on Forms GST189 or GST495
Amounts claimed (or entitled to be claimed) as a rebate on Form GST495 or under "Reason code 13" on Form GST189, General Application for Rebate of GST/HST must be deducted from the provincial non-creditable HST charged by the PSB prior to calculating its PSB rebate.
The foregoing comments represent our general views with respect to the subject matter of your request. 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 CRA with respect to a particular situation. Future changes to the ETA, regulations, or our interpretative policy could affect this interpretation.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-952-0420. 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
Footnotes:
1. A "selected PSB" is defined as a school authority, university, or public college that is established and operated other than for profit; hospital authority; municipality; facility operator; or external supplier.
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