CRA finds that CEWS received by an NPO does not qualify as government funding for GST/HST PSB rebate purposes

A non-profit organization (NPO) generally is entitled to GST/HST public service body rebates if the percentage of its “government funding” (defined in s. 2 the Public Service Body Rebate (GST/HST) Regulations) is at least 40%.

CRA noted that the s. 2 definition excludes a “refund, rebate or remission of, or credit in respect of, taxes” and also references a purpose of “financially assisting the particular person in carrying out the purposes of the particular person,” and further indicated that the purpose of the Canada emergency wage subsidy (“CEWS”) program was to “re-hire workers previously laid off as a result of COVID-19, help prevent further job losses, and better position businesses to resume normal operations following the crisis.” CRA concluded that the CEWS was not government funding under the definition, given that it “is a refund in respect of income taxes imposed under the ITA” and it “is not paid for the purpose of financially assisting the NPO in carrying out the purposes of the NPO. “

CRA applied a somewhat similar analysis to find that the 10% temporary wage subsidy for employers program also did not count as government funding.

Neal Armstrong. Summary of 22 December 2020 GST/HST Interpretation 209955 under Public Service Body Rebate (GST/HST) Regulations, s. 2.