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: 151782
Business Number: [...]
July 2, 2013
Dear [Client]:
Subject: GST/HST INTERPRETATION
Application of the GST to supplies of accommodation made in British Columbia
We are writing regarding [...][the application of the goods and services tax/harmonized sales tax (GST/HST) to supplies of accommodation made in British Columbia].
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Effective April 1, 2013, the 12% HST in British Columbia has been replaced by the 5% GST and a provincial sales tax.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.
Statement of Facts
1. [...] is the official destination marketing organization (DMO) for [...] in British Columbia (BC).
2. Supplies of taxable accommodation within the DMO boundary are subject to an 8% provincial sales tax (PST) and a [...]% Municipal and Regional District Tax (MRDT).
3. Accommodation providers within the DMO boundary are required to charge and remit the PST and MRDT on supplies of taxable accommodation.
Ruling Requested
You would like to know whether the GST applies to the amount charged for the taxable accommodation including the PST and MRDT or excluding PST and MRDT.
We are unable to provide a ruling in this case, as it requires an interpretation of a provincial law not administered by the CRA. However, we are pleased to provide the following interpretation.
Interpretation Given
Effective April 1, 2013, the GST applies to taxable supplies of goods and services made in BC, including taxable supplies of accommodation, at a rate of 5%. The tax payable is calculated by applying the 5% tax rate to value of the consideration for the supply.
The consideration for a supply includes any tax, duty, or fee imposed on the supplier or recipient of the supply under any federal or provincial legislation, except for the GST/HST and any provincial or municipal taxes, duties or fees that are prescribed under the Taxes, Duties and Fees (GST) Regulations.
Taxes imposed under the BC Provincial Sales Tax Act (the Act) are prescribed for the purposes of the Taxes, Duties and Fees (GST) Regulations if the following four conditions are met:
• they are calculated as a percentage of the value or price of the property or service
• they are payable by the recipient of a supply of the property or service
• they are not included in the value or price of the property or service for purposes of calculating any other tax under the Act in respect of that property or service
• the total of the rates of all taxes that are imposed under the Act in respect of the property or service and calculated as a percentage of the value or price of the property or service does not exceed the specified tax rate for BC (i.e., 12%)
The BC Ministry of Finance has informed us that the MRDT is imposed under the BC Provincial Sales Tax Act, and it meets the four conditions specified above. Provided this information is correct, both the PST and MRDT are prescribed under the Taxes, Duties and Fees (GST) Regulations. Therefore, neither the PST nor MRDT are included in the amount of consideration on which the GST is calculated. In other words, the GST applies to the amount charged for the taxable accommodation excluding the PST and MRDT.
The foregoing comments represent our general views with respect to the proposed amendment(s) to the ETA as it (they) relate(s) to the subject matter of your request. Any change to the wording of these proposed amendments or any future proposed amendments to the ETA, if enacted, could have an effect on the interpretation provided herein. 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.
If you require clarification with respect to any of the issues discussed in this letter, please call Glenda Karamath, Officer, directly at 905-721-5182. 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,
John Smith
Manager
Special Provisions - General Unit
FIRP Oshawa Division
Excise and GST/HST Rulings Directorate
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