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: 94993
Business Number: […]
October 24, 2012
Dear [Client]:
Subject: GST/HST RULING
The application of GST/HST to real estate valuations
Thank you for your fax of [mm/dd/yyyy], concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the real estate valuations supplied by […] (your company) to insurance companies. We apologize for the length of time it has taken to respond to your query.
HST applies at the rate of 15% in Nova Scotia, 13% in Ontario, New Brunswick, and Newfoundland and Labrador, and 12% in British Columbia. GST applies at the rate of 5% in the remaining provinces and territories.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
* Your company occasionally supplies real estate valuations for insurance claims.
* You supplied two fire insurance reports to us as samples of your work: 1) […][Address in Canada], produced for […] and 2) […][Address in Canada], for […].
* The report for the first case stated at page [#]: “Property inspection –... The dimensions and physical characteristics of the subject are based on physical inspection of the foundation, photographs and physical characteristics provided by […][Adjuster], the property owner as well as interviewing former tenant.”
* In the addenda to this report (page [#]), the author noted, “I have not made a personal inspection of the property that is the subject of this report, the dimensions and physical characteristics of the subject are based on physical inspection of the building as at the date of inspection and physical characteristics provided by the property owner.”
* The author of the report for the second case also noted (page [#]), “I have not made a personal inspection of the property that is the subject of this report, the dimensions and physical characteristics of the subject are based on physical inspection of the building as at the date of inspection and physical characteristics provided by the property owner.”
RULING REQUESTED
You would like to know if the supply of either of these reports is an exempt supply for which you do not need to collect GST/HST.
RULING GIVEN
Based on the facts set out above, we rule that the supply of these reports is not an exempt supply and that GST/HST applies to such a supply.
This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.
EXPLANATION
For the valuation services supplied by your company to an insurer (or an insurance adjuster) to be exempt, the service must satisfy one of the exempting provisions set out in the ETA. In this particular situation – valuation services that concern property insurance claims – the service would be exempt under the definition of financial service in subsection 123(1) if it complied with paragraph (j.1) of that definition and was not excluded by paragraph (r).
In other words, your company’s service would be exempt if the following conditions were met:
* the service is provided to an insurer or a person who supplies a service which is referred to in paragraph (j) (i.e., a provincially licensed adjuster who provides a service of investigating and recommending the compensation in satisfying an insurance claim that is not in the nature of accident and sickness or life insurance);
* the service is not provided by an accountant, actuary, lawyer or notary in the course of a professional practice; and
* where the service is in respect of damaged property, your company inspects the property and provides an appraisal of the damage caused to the property.
If your company is supplying an appraisal in the case of a loss of property, the first two conditions listed above must apply and your company must inspect the last-known place where the property was situated.
Since your company did not inspect the damaged property in either of the two cases submitted to us, neither of these cases satisfies the conditions required to be considered an exempt supply under paragraph 123(1)(j.1).
For your convenience, find enclosed a copy of GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-4394. 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,
Doris McMullan
Insurance and ITC Allocations Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate
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