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: 104557
XXXXX
June 2, 2008
Subject:
GST/HST INTERPRETATION
Rate of tax on credit of consideration
Dear XXXXX:
Thank you for your XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to consideration credited by a supplier to XXXXX
All legislative references are to the Excise Tax Act (ETA) and the regulations thereunder, unless otherwise specified.
We understand that XXXXX received an invoice dated XXXXX from one of its suppliers. That invoice included current charges for services as well as a credit for unconsumed services. The credit for unconsumed services related to charges that were originally invoiced in XXXXX. The supplier charged GST at the rate of 6% on the consideration for the services included in the XXXXX invoice. In the XXXXX invoice, the supplier credited GST at the rate of 5% on the consideration for the unused services previously invoiced in XXXXX.
Interpretation Requested
You would like to know the rate of GST the supplier should have applied on the credit for the unused services.
Interpretation Given
Where a supplier pays or credits an amount to a customer, the supplier may choose to pay or credit the GST to the customer. If a supplier pays or credits an amount to a customer on or after January 1, 2008, the rate of GST that applies to the amount of the adjustment will be the same rate that applied to the original supply.
Based on the information provided, the supplier should have applied GST at the rate of 6% on the credit adjustment as the supplies of the unused services to which the adjustments relate were subject to the GST at the rate of 6%.
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) 954-7931. 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,
Anne Kratz
General Operations Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED