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
Case Number: 84115
XXXXX
April 7, 2008
Subject:
GST/HST INTERPRETATION
Application of GST to commemorative coins
Dear XXXXX:
Thank you for your letter XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the sale of commemorative coins by a charity. We apologize for the delay in responding to your enquiry.
All legislative references are to the Excise Tax Act (ETA) and the regulations thereunder, unless otherwise specified.
Effective January 1, 2008, the rate of the GST has been reduced from 6% to 5% and the rate of HST from 14% to 13%. The new rates apply to supplies for which the GST/HST is paid on or after January 1, 2008, without having become payable before that date. Specific transitional rules apply to certain supplies, for example, real property. For more information on the transitional rules for the reduction of the GST/HST rate, please refer to GST/HST Notice 226, GST/HST Rate Reduction in 2008 on the Canada Revenue Agency (CRA) Web site at www.cra-arc.gc.ca/E/pub/gi/notice226/README.html.
We understand that a charity (the Charity) will conduct a fundraising activity. The Charity is a registered charity for purposes of the Income Tax Act and a charity for purposes of the ETA.
The Charity will purchase commemorative coins XXXXX, made of inexpensive metal, from a mint to be used in the fundraising activity. XXXXX will have a face value of $1.00. The Charity will pay less than the face value for the purchase of the XXXXX. The Charity plans to sell the XXXXX to participating retailers for their face value of $1.00.
When providing change to their customers the retailers may offer them a XXXXX instead of a Canadian $1.00 legal tender coin. Customers may choose to keep the XXXXX as a commemorative souvenir, or may instead return it to a local bank which has agreed to exchange the XXXXX for a $1.00 legal tender coin. Retailers or the bank can return XXXXX to the Charity for their face value of $1.00.
As you were unable to provide all of the facts surrounding each transaction, such as the nature of the relationship between the charity and the retailers or the bank, we are unable to provide more specific guidance. Rather, we can only provide a general interpretation of the provisions of the ETA which may apply to the transactions.
Interpretation Requested
How does GST apply to the XXXXX in the above transactions?
Interpretation Given
The XXXXX are considered to be tangible personal property (TPP) for GST/HST purposes. TPP generally includes objects or things that may be seen and touched, and that are movable at the time the supply is made. Supplies of TPP are generally taxable for GST/HST purposes, unless there is an exemption which may apply to the supply.
Section 1 of Part V.1 of Schedule V to the ETA provides a general exemption for supplies by charities. However, paragraph (d) of this section excludes from this general exemption a supply of TPP (other than that supplied by way of lease, licence or similar arrangement along with an exempt supply of real property made by the charity by way of lease, licence or similar arrangement) that was acquired, manufactured or produced by the charity for the purpose of making a supply of the property and was neither donated nor used before the charity's acquisition. As the XXXXX are new property that were acquired by the Charity for the purpose of their re-supply, this paragraph will exclude the Charity's supplies of the XXXXX from this general exemption.
Section 3 of Part V.1 of Schedule V provides, in part, that a supply by way of sale of TPP by a charity in the course of a fund-raising activity of the charity is an exempt supply, other than a supply of any property where:
(i) the charity makes supplies of such property in the course of that activity, or
(ii) the agreement for the supply entitles the recipient to receive from the charity property,
on a regular or continuous basis throughout the year or a significant portion (30% or more) of the year.
Where the XXXXX are sold for more than their direct cost by the Charity and neither section 1 nor section 3 of Part V.1 of Schedule V apply to exempt the supply, then generally, the Charity's supply of the XXXXX will be taxable.
The supply of TPP when made by persons other than charities and certain other public service bodies is generally a taxable supply. A supply, for GST/HST purposes, is considered to mean, subject to sections 133 and 134, the provision of property or a service in any manner, including sale, transfer, barter, exchange, licence, rental, lease, gift or disposition. If the person making a taxable supply of TPP is a GST/HST registrant, it would generally be required to charge GST/HST.
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 XXXXX. 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,
XXXXX
Financial Institutions Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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