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: 132114
Business Number: [...]
June 18, 2013
Dear [Client]:
Subject: GST/HST INTERPRETATION
Public service body rebate
Thank you for your letter of January 25, 2011, concerning the [...] (the Charity)'s entitlement to claim a public service body (PSB) rebate of the provincial part of the Harmonized Sales Tax (HST). Specifically, your submission concerned the entitlement to claim a PSB rebate of the provincial part of the HST paid to Canada Post that is incurred in a participating province other than [...] [Participating Province A]. 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 (Goods and Services Tax) 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Effective April 1, 2013, the 12% HST in British Columbia has been replaced by the 5% GST and a provincial sales tax.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. The Charity is not a selected PSB (Footnote 1) .
3. Goods purchased from the Charity are shipped to its customers via Canada Post's [...] service.
4. When the goods are shipped to a participating province, Canada Post charges the Charity HST based on the HST rate of the province where the goods are destined.
Interpretation Requested
You would like to know if the Charity can claim a PSB rebate of the provincial part of the HST paid to Canada Post that is incurred in a participating province other than [Participating Province A].
If the Charity is able to claim a PSB rebate for the provincial part of the HST, does it enter the amount in the [Participating Province A] section (line [...]) of the form GST284 SCH "Provincial schedule - GST/HST public service bodies' rebate"? Or, are the amount(s) claimed in the respective section of the other provinces listed on that form?
Interpretation Given
Generally, a PSB 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 PSB that is resident in a participating province may be eligible to claim a PSB rebate of the provincial part of the HST. A PSB that is not resident in a participating province is not 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. 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. The PSB rebate of the provincial part of the HST, regardless of where the HST was incurred, will be claimed on line [...] for the province in which the charity is resident. For example, if a charity is only resident in [Participating Province A] the PSB rebate of the provincial part of the HST paid or payable is calculated using the provincial rebate factor for charities resident in [Participating Province A] ([...]%) and is reported on line [...] of form GST284 SCH.
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, the charity must calculate its PSB rebate of the provincial part of the HST for each province in which it is resident 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.
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.
For example, a charity is resident in [Participating Province A] and [...] [Participating Province B]. Where property or services acquired are intended to be consumed, used or supplied exclusively (100%) in [Participating Province A], the charity may claim a PSB rebate of the provincial non-creditable HST charged using the provincial rebate factor for charities resident in [Participating Province A] ([...]%).
([...]% × provincial non-creditable HST charged × 100%)
However, if the property or services acquired were intended to be consumed, used or supplied partly in [Participating Province A] and partly in [Participating Province B], the charity may claim a PSB rebate of the provincial non-creditable HST charged using the provincial rebate factor for charities resident in [Participating Province A] ([...]%) to the extent (expressed as a percentage) the property or services were intended to be consumed, used or supplied in [Participating Province A]. Additionally, the charity may claim a PSB rebate of the provincial non-creditable HST charged using the provincial rebate factor for charities resident in [Participating Province B] ([...]%) to the extent (expressed as a percentage) the property or services were intended to be consumed, used or supplied in [Participating Province B]. 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 any non-participating province (or in a participating province in which the charity is not resident).
Completing the public service bodies' rebate application
Where a charity that is not a selected PSB is resident in two or more provinces it would report the PSB rebate of the provincial part of the HST on the appropriate lines of the form GST284 SCH for each participating province in which it is resident.
For example, a charity is resident in [Participating Province A] and [...] [Participating Province C]. It incurred HST in [Participating Province A] that is for consumption, use or supply in [Participating Province C]. The PSB rebate of the provincial part of that HST paid is calculated using the provincial rebate factor for charities resident in [Participating Province C] ([...]%) and is reported on line [...] of form GST284 SCH.
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 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 Canada Revenue Agency 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, Non-Profit Organizations and Educational Services 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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