Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
Case Number: 104339
May 9, 2008
Subject:
GST/HST RULING
City of XXXXX Accommodation Tax
Dear XXXXX:
Thank you for your XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the accommodation tax XXXXX imposed by the City of XXXXX.
All legislative references are to the Excise Tax Act (ETA) and the regulations thereunder, unless otherwise specified.
Statement of Facts
We understand the following:
1. XXXXX.
2. XXXXX.
3. On XXXXX, City Council adopted XXXXX, to impose a XXXXX% tax on accommodations for periods of XXXXX nights or less (referred to as "short-term accommodation") effective XXXXX. There are certain exceptions to the application of the tax imposed via the XXXXX. The accommodation tax may also be referred to as the XXXXX. XXXXX.
4. XXXXX.
5. The City has requested of the Province of XXXXX that the accommodation tax not be subject to the provincial retail sales tax. A XXXXX states the provincial government will amend XXXXX accordingly. The provincial retail sales tax will continue to apply to accommodations, but the accommodation tax will not be part of the retail sales tax base.
Ruling Requested
You would like to know whether the accommodation tax imposed via XXXXX, effective XXXXX, of the City of XXXXX under the authority of XXXXX
(a) is a "provincial levy" for purposes of section 154 of the ETA, and
(b) if the accommodation tax is a provincial levy, is it a "prescribed provincial levy" enumerated in the Taxes, Duties and Fees (GST/HST) Regulations for purposes of section 154 of the ETA so as to be excluded from consideration for GST purposes?
Ruling Given
Based on the facts set out above, we rule that the accommodation tax imposed via XXXXX, effective XXXXX, of the City of XXXXX under the authority of XXXXX
(a) is a "provincial levy" for purposes of section 154 of the ETA, and
(b) is not a "prescribed provincial levy" enumerated in the Taxes, Duties and Fees (GST/HST) Regulations for purposes of section 154 of the ETA to be excluded from consideration for GST purposes - i.e. the accommodation tax is part of the consideration for the supply of the accommodation upon which GST is calculated.
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
Paragraphs 154(2)(b) and 154(2)(c) of the ETA outline the requirements for including provincial levies in the consideration and state that the consideration for a supply of property or a service includes
(b) any provincial levy that is payable by the recipient, or payable or collectible by the supplier, in respect of that supply or in respect of the consumption or use of the property or service, other than a prescribed provincial levy that is payable by the recipient; and
(c) any other amount that is collectible by the supplier under an Act of the legislature of a province and that is equal to, or is collectible on account of or in lieu of, a provincial levy, except where the amount is payable by the recipient and the provincial levy is a prescribed provincial levy.
The term "provincial levy" is defined in subsection 154(1) of the ETA as "a tax, duty or fee imposed under an Act of the legislature of a province in respect of the supply, consumption or use of property or a service." Provincial levies that are prescribed for purposes of section 154 of the ETA are found in the Taxes, Duties and Fees (GST/HST) Regulations (the "Regulations").
The accommodation tax will be levied via a by-law under the authority of a provincial statute, namely the XXXXX, which grants the City (and other municipalities) the right to impose its own taxes subject to the conditions therein. The accommodation tax will be levied pursuant to a by-law of the City under the authority granted to it by the provincial statute.
Furthermore, the accommodation tax cannot be excluded from the requirements for section 154 of the ETA under the Regulations because only certain levies imposed under the provincial Acts listed in the Regulations are prescribed. In the case of XXXXX, only certain levies imposed under XXXXX, XXXXX, XXXXX, and The XXXXX referred to in the Regulations are prescribed provincial levies. Consequently, the accommodation tax will not meet the criteria necessary under any of the paragraphs of section 3 of the Regulations.
Paragraph 3(a) of the Regulations
A tax, duty or fee in respect of a transfer of real property is prescribed under the Regulations for purposes of section 154 of the ETA where it is imposed by or under an Act listed in paragraph 3(a) of the Regulations. A prescribed tax, duty or fee under paragraph 3(a) of the Regulations is a tax, duty or fee, in the case of XXXXX, that is imposed by or under XXXXX.
With respect to the accommodation tax, the accommodation tax will not meet the requirements of paragraph 3(a) of the Regulations. The accommodation tax will be imposed under a different Act via a by-law of the City under the authority of XXXXX.
Paragraph 3(b) of the Regulations
A tax can also be prescribed for purposes of section 154 where all the requirements of paragraph 3(b) of the Regulations are met. A tax, in the case of XXXXX, imposed under XXXXX of XXXXX, is a prescribed tax if it meets the conditions of paragraph 3(b) of the Regulations.
With respect to the accommodation tax, the accommodation tax will not meet the requirements of paragraph 3(b) of the Regulations. The accommodation tax will be imposed under XXXXX City under the authority of XXXXX.
Paragraph 3(c) of the Regulations
Furthermore, XXXXX, is not an Act specifically listed in paragraph 3(c). Pursuant to paragraph 3(c) of the Regulations, a tax is prescribed under the Regulations for purposes of section 154 if it is a tax in respect of a service or an item of personal property imposed by or under specified Acts listed therein and meets additional conditions of paragraph 3(c) of the Regulations.
Specified taxes of XXXXX are those imposed in XXXXX, XXXXX, and XXXXX. Additional conditions to meet would include that no tax in respect of the property or service would be payable under XXXXX. In this case, the accommodation tax is in addition to a tax imposed under XXXXX.
Summary
The accommodation tax is levied via a municipal by-law under the authority of a provincial statute, namely XXXXX, that grants the City the right to impose its own taxes subject to the conditions therein. Accordingly, the accommodation tax imposed via the by-law under the authority of XXXXX is part of the consideration for GST purposes for the supply of the short-term accommodation. Generally, the supply of short-term accommodation is a taxable supply; the value of consideration upon which GST applies and is calculated is increased accordingly by the value of the accommodation tax.
Please be advised that a request for exclusion of the accommodation tax from the GST should be sent to the Department of Finance.
If you require clarification with respect to any of the issues discussed in this letter, please call me at 613-952-8811. 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,
Wm Parker
Specialty Tax Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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