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: 131860
Business Number: [...]
August 21,2013
Dear [Client]:
Subject: GST/HST INTERPRETATION
Public Service Body Rebate
Thank you for your letter of January 14, 2011, concerning [...] (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 entitlement to claim a PSB rebate of the provincial part of the HST that was paid or payable in [...][Province Z]. We apologize for the delay in our response.
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Effective April 1, 2013, the 12% HST in British Columbia has been replaced by the 5% GST and a provincial sales tax.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's head office is located in [...][City 1, Province X]. It has offices located in [...][City 2, Province X] and [...][City 3, Province Y].
5. The Charity's employees incur expenses in [Province Z], a participating province, in the course of conducting Charity business. The Charity claims a rebate of 50% the GST, and [...]% (the provincial rebate factor for charities resident in [Province X]) of the provincial part of the HST, paid or payable on these costs.
6. The Charity receives invoices for consulting services performed in [Province Z] that include the HST. The Charity claims a rebate of 50% the GST, and [...]% (the provincial rebate factor for charities resident in [Province X]) of the provincial part of the HST, paid or payable on these invoices.
Interpretation Requested
You would like to confirm that the Charity can claim a PSB rebate of the provincial part of the HST payable in [Province Z] 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 that is not a selected public service body 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.
A charity is entitled to a PSB rebate of the GST or the federal part of the HST, regardless of where the property or services are intended to be consumed, used or supplied.
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. 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.
Based on our understanding, the Charity is resident in at least two provinces. The Charity has offices located in [Province X], a participating province and [Province Y], [...]. (It is not clear if the Charity is resident in [Province Z] or any other province.)
Calculation of the public service bodies' rebate of the provincial part of the HST
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, the 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 the Charity intended to consume, use or supply the property or service in the participating province
Provincial rebate factor
The 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 [Province X] is [...]%. The provincial rebate factor for a charity resident in [Province Y], [...]%.
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) the 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, the Charity. It is not sufficient for the 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 the 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%)
Where property or services acquired by the Charity were intended to be consumed, used or supplied exclusively (100%) in British Columbia while that province was a participating province, the Charity may claim a PSB rebate of the provincial non-creditable HST charged using the provincial rebate factor for charities resident in British Columbia (57%).
(57% × provincial non-creditable HST charged × 100%)
However, if the property or services acquired by the Charity were intended to be consumed, used or supplied partly in Ontario and partly in British Columbia, 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 British Columbia (57%) to the extent (expressed as a percentage) the property or services were intended to be consumed, used or supplied in British Columbia while that province was a participating province. Similar calculations would be done for any other participating province in which the Charity is resident.
The 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.
Example: Resident in ON and BC
For example, a charity incurs HST in New Brunswick in 2012 on the acquisition of a service that is eligible for the PSB rebate. The service is intended to be used 20% in Ontario, 20% in British Columbia and 60% in New Brunswick. The charity was not entitled to claim an input tax credit or any other rebate, refund or remission of that HST. Assuming the charity is resident in Ontario and British Columbia but is not resident in New Brunswick, the charity will be required to do two PSB rebate calculations, one for Ontario and one for British Columbia. It will be entitled to a PSB rebate of the provincial part of the HST paid using the provincial rebate factor for charities resident in Ontario, that is 82%, multiplied by the extent (in this example, 20%) that it intended to use the service in Ontario. It will also be entitled to a PSB rebate of the provincial part of the HST paid using the provincial rebate factor for charities resident in British Columbia, that is 57%, multiplied by the extent (in this example, 20%) that it intended to use the service in British Columbia. As New Brunswick is a participating province in which the charity is not resident, the extent that any HST paid or payable on the service is intended to be consumed, used or supplied in New Brunswick will not qualify for a PSB rebate of the provincial part of the HST.
Example: Resident in ON, BC and NB
Where a charity is resident in Ontario, British Columbia and New Brunswick, the charity will be required to do three PSB rebate calculations, one for Ontario, one for British Columbia and one for New Brunswick. Again the charity incurs HST in New Brunswick in 2012 on the acquisition of a service that is eligible for the PSB rebate and the service is intended to be used 20% in Ontario, 20% in British Columbia and 60% in New Brunswick. The charity was not entitled to claim an input tax credit or any other rebate, refund or remission of that HST. The charity will be entitled to a PSB rebate of the provincial part of the HST paid using the provincial rebate factor for charities resident in Ontario, that is 82%, multiplied by the extent (in this example, 20%) that it intended to use the service in Ontario. It will be entitled to a PSB rebate of the provincial part of the HST paid using the provincial rebate factor for charities resident in British Columbia, that is 57%, multiplied by the extent (in this example, 20%) that it intended to use the service in British Columbia. It will also be entitled to a PSB rebate of the provincial part of the HST paid using the provincial rebate factor for charities resident in New Brunswick, that is 50%, multiplied by the extent (in this example, 60%) that it intended to use the service in New Brunswick.
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. For example, a charity that is resident in Ontario, British Columbia and New Brunswick that incurred HST in New Brunswick that is for consumption, use or supply in Ontario, British Columbia and New Brunswick would report amounts on line 305-ON, 305-BC and 305-NB of Form RC7066 SCH or GST284 SCH. 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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