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
Case Number: 99917
XXXXX
December 9, 2008
Dear XXXXX:
Subject:
GST/HST INTERPRETATION
Documentary Requirements for FCTIP Rebate
Thank you for your XXXXX, and the additional information you provided XXXXX, concerning the documentary requirements for claiming a rebate of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) under the Foreign Convention and Tour Incentive Program (FCTIP).
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
We understand that XXXXX are affiliates whose corporate offices are in XXXXX. XXXXX is the parent company of XXXXX and XXXXX. XXXXX and XXXXX are both GST/HST registrants.
XXXXX
XXXXX
XXXXX
XXXXX
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XXXXX.
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The companies estimate that in a given year XXXXX, XXXXX and XXXXX will purchase over XXXXX rooms for their guests who take overnight stays in Canadian hotels as part of their tours in Canada, XXXXX.
XXXXX currently receives invoices from most of the hotels where the XXXXX guests have Canadian overnight stays. Invoices are usually generated to XXXXX from each hotel where the XXXXX guests stayed overnight in Canada. XXXXX You have provided a copy of an original invoice from XXXXX major hotel vendors, XXXXX, along with internal documents XXXXX that accompany the invoice throughout the payment process internally XXXXX. XXXXX.
XXXXX, XXXXX and XXXXX, the companies will no longer keep any original invoices. Rather, all invoices will be scanned using a state of the art electronic imaging system for a record retention of invoices paid. The original invoices will then be destroyed.
XXXXX, XXXXX toXXXXX.
XXXXX.
XXXXX, XXXXX and XXXXX are concerned that they may not receive the rebates that they feel they are entitled to receive under the FCTIP, either because they will not meet the documentary requirements for the rebate, or the documentary requirements will be too administratively burdensome for the companies to pursue. As indicated in the booklet RC4160, Rebate for Tour Packages, Foreign Conventions, and Non-Resident Exhibitor Purchases, and on the form GST115, GST/HST Rebate Application for Tour Packages, original invoices are to be submitted with a claim for a FCTIP rebate.
For invoices stored electronically, the companies propose to send electronic copies of documents used to support billings. They propose to provide an internally generated report with the required information as evidence to support any rebate claim, and to provide a CD (or multiple CDs if required) of the electronic copies of invoices. Currently those invoices are in a Portable Document Format (pdf) format.
For billings where there is no invoice XXXXX, the companies propose to provide an internally generated electronic report showing all the relevant information that would otherwise be provided on an invoice.
For both proposals, the internally generated report would include the guest name and address, itinerary description or tour number, the amount charged for the hotel stay while on the tour, the amount of GST relating to the hotel stay while on the tour, and the total amount paid by the guest.
Interpretation Requested
You would like to know whether the electronic copies of the scanned invoices and the internally generated report meet the documentary requirements for claiming rebates under the FCTIP.
Interpretation Given
Before dealing with whether electronic copies of the scanned invoices and internally generated reports meet the documentary requirements for claiming rebates under the FCTIP, it is necessary to determine whether XXXXX, XXXXX andXXXXX would be eligible for such a rebate.
FCTIP Rebate:
Under the FCTIP, a non-resident non-GST/HST-registered tour operator is eligible for a rebate of the GST/HST paid on purchases of short-term and/or camping accommodation under certain conditions. Generally, a tour operator is a person that, in the ordinary course of a business of the person, packages or sells tours that are ultimately sold to, or for the use of, either a group of travellers or an individual traveller.
To be eligible for the rebate under the FCTIP, the tour operator must have sold the accommodation as part of an eligible tour package. The eligible tour package must have been sold to another non-resident and payment for that sale must have been made outside Canada at a place where the tour operator or its agent is conducting business. Furthermore, the accommodation in the eligible tour package must have been made available to a non-resident individual.
For GST/HST purposes, a tour package is a combination of two or more services, or of property and services, that includes transportation services, accommodation, a right to use a campground or trailer park, or guide or interpreter services, where the property and services are sold together for an all-inclusive price. A tour package is a single supply for GST/HST purposes.
For purposes of claiming a FCTIP rebate, an eligible tour package is a tour package that includes either short-term and/or camping accommodation in Canada and at least one service, and that is sold for an all-inclusive price. Generally, an all-inclusive price means a single price for all property and services sold together in a package. However, in the tourism industry, prices for certain items are sometimes listed on the invoice for information purposes. Even where this is the case, in some circumstances, the package may still be considered to be sold for an all-inclusive price. However, a package is not sold for an all-inclusive price when the prices of the items are listed separately on the invoice because some or all of the items are sold separately or sold on behalf of other persons.
Based on the information provided, we understand that XXXXX separates the amounts payable for XXXXX and hotel stays on the XXXXX issued to its customers for information purposes. Consequently, XXXXX appears to be selling eligible tour packages when a hotel stay in Canada is included with a XXXXX selected by a guest. As well, the XXXXX with stays in a hotel XXXXX are eligible tour packages.
The land tours offered by XXXXX also appear to be eligible tour packages. However, as XXXXX is a GST/HST registrant, it does not qualify for a rebate under the FCTIP. However, it can recover the GST that it pays or owes on purchases of property or services acquired for use in making taxable supplies of eligible tour packages by claiming input tax credits on its GST/HST return.
Claiming the FCTIP Rebate:
Non-resident non-registered tour operators that purchased short-term and/or camping accommodation and sold it as part of an eligible tour package must use the form GST115 to file a rebate claim with the CRA, and must provide sufficient documentary evidence to establish their entitlement to the rebate.
As indicated on theform GST115, tour operators purchasing short-term and/or camping accommodation are required to send in the following information with their rebate claims to prove that they have met the eligibility requirements:
• original invoices or receipts that show the amount of GST/HST paid for the short-term and/or camping accommodation; and
• itineraries for, or detailed descriptions of, the eligible tour packages (these can be on paper or CD).
This information confirms: the amount of GST/HST charged to, and paid by, the non-resident tour operator for the accommodation; that the accommodation was sold as part of a tour package; that the tour package was an eligible tour package; and the number of nights of short-term and/or camping accommodation in Canada included in the eligible tour package.
A list that only indicates the tour number would not provide sufficient information about a tour package; the tour operator would also have to provide itineraries or detailed descriptions of all of the tour packages to support a rebate claim.
Scanned Invoices:
Invoices are part of the books and records of a person. Every person who carries on a business or is engaged in a commercial activity in Canada, every person who is required to file a GST/HST return, and every person who makes an application for a rebate or refund, is required to keep books and records. These must be kept in English or in French, in Canada or at such other place and on such terms and conditions as the Minister may specify in writing, and in such form and containing such information as will enable the determination of the person's liabilities and obligations or the amount of any rebate or refund to which the person is entitled.
Paragraph 6 of GST/HST Memorandum 15.1, General Requirements for Books and Records, states that all books and records as well as source documents that originate in paper format must be retained in such format except where an acceptable imaging or microfilming program is in place. Paragraphs 10 to 16 of Memorandum 15.1 provide more information including the standards that must be met. Paragraph 15 states that paper source documents that have been imaged in accordance with the latest national standard of Canada may be disposed of and their images kept as permanent records.
GST/HST Memorandum 15.2, Computerized Records, provides guidance regarding books and records where business records are computerized, including the retention of electronic invoices.
The CRA will accept scanned images of invoices in support of an input tax credit or a rebate claim if the requirements of Memorandums 15.1 and 15.2 are met. We have enclosed copies of Memorandums 15.1 and 15.2 for your convenience.
Reverse Invoicing:
For input tax credit purposes, the CRA has stated that it will accept documentation prepared by the recipient of the supply (i.e., reverse invoicing) if there is agreement between the supplier and the recipient and there is sufficient information to verify the accuracy of the documentation.
For purposes of a rebate under the FCTIP, the CRA will accept documentation prepared by the non-resident tour operator (i.e., reverse invoicing) provided that the documentation includes the information that would be included on the original invoices or receipts prepared by the supplier. This information must include:
• details of the supplier (hotel name, address, telephone number, GST/HST registration number);
• details of the recipient (company name, address, telephone number);
• details of the supply (description of accommodation, number of nights, price);
• the GST/HST charged; and
• proof that the amount was paid (e.g., copy of cancelled cheque, wire payment confirmation number).
In addition to this documentation, itineraries for, or detailed descriptions of, the eligible tour packages must be included with the rebate claim. These detailed itineraries or descriptions of each tour package must be sufficient to indicate that the tour operator sold the accommodation included in the rebate claim as part of an eligible tour package.
The internally generated reports that the companies are proposing to use in support of transactions with XXXXX hotels and intercompany transactions would need to include all of the above information to be acceptable for the rebate.
Additional Supporting Documentation:
The information filed with the rebate claim does not necessarily prove that a non-resident non-registered tour operator has met all of the requirements under the ETA to be eligible for the rebate. To be eligible for the rebate, the tour operator must have sold the eligible tour package to a non-resident and payment for the sale must have been made at a place outside Canada where the tour operator or its agent is conducting business. As well, the short-term accommodation included in the eligible tour package must have been made available to a non-resident individual. However, non-resident tour operators who file rebate claims under the FCTIP do not necessarily have to send supporting documents with their rebate claim to prove that they met the preceding requirements, unless asked by the CRA. In any case, non-resident tour operators must keep these documents with their books and records.
The form GST115 indicates that if asked by the CRA, a non-resident non-registered tour operator will also have to provide the following information from its books and records:
• a list of names and addresses of the non-residents who purchased the eligible tour packages;
• the name(s) of the agent(s) through whom they sold the eligible tour packages (if applicable);
• copies of invoices issued to non-residents who purchased the eligible tour packages; and
• a list of the names and addresses of the non-resident individuals to whom the short-term and/or camping accommodation was made available.
The CRA may accept other types of documents if those other documents allow us to confirm that the eligibility requirements are met. The information demonstrating that the non-resident non-registered tour operator has met the eligibility requirements for the rebate does not have to be on separate documents. All the necessary information may be contained in only one or two documents. These could include electronic documents capable of being rendered into writing.
The supporting documents must be kept in Canada, unless the non-resident gets permission to keep the records at a place outside Canada. Non-residents must write to a CRA Tax Services Office (TSO) to get permission to keep their supporting documents at a place outside Canada.
Intercompany Transactions:
Please note that with respect to the intercompany transactions, when a supply of property or a service is made between persons not dealing with each other at arm's length for consideration less than the fair market value of the property or service at the time the supply is made, and the recipient of the supply is not a registrant who is acquiring the property or service for consumption, use or supply exclusively in the course of commercial activities of the recipient, the value of the consideration is deemed to be equal to the fair market value of the property or service at that time for GST/HST purposes.
Related persons are deemed not to deal with each other at arm's length for GST/HST purposes, and persons are related for GST/HST purposes if they are related pursuant to the Income Tax Act. Generally, a person (including a corporation) is related to another corporation if the person controls the corporation or is a member of a related group that controls the corporation. Corporations are also related if they are controlled by the same person or group of persons.
As XXXXX controls XXXXX, XXXXX and XXXXX are related persons for GST/HST purposes. If XXXXX is charging XXXXX less than fair market value for the supplies of accommodation, then XXXXX will be required to charge and account for the tax based on the fair market value of the supply.
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) 952-7909. 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,
Jacqueline Russell, CGA
Services and Intangibles Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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