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, 11th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 212992
Dear [Client]:
Subject: GST/HST RULING
Question on eligibility for 83% Public Service Bodies Rebate
Thank you for your letter dated [mm/dd/yyyy], concerning the eligibility of […](the Corporation), to claim the 83% public service body (PSB) rebate of the goods and services tax/harmonized sales tax (GST/HST) payable for costs incurred in construction of a hospice.
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
We understand, from your letter dated [mm/dd/yyyy]], with supporting documentation; from correspondence you sent, and […]; from phone conversations […]; and from the Corporation’s website […], that:
1. The Corporation is a registered charity within the meaning assigned to that expression by subsection 248(1) of the Income Tax Act and is a “charity” for purposes of Part IX of the ETA.
2. The Corporation is not a registrant for GST/HST purposes. It claims PSB rebates under Business Number […].
3. The Corporation currently operates a [#]-bed palliative care facility (residential hospice) located […][in Province A]
4. Construction for the Facility began on [mm/dd/yyyy].
5. The Facility was opened to residents on [mm/dd/yyyy].
6. The Corporation provides palliative care for people […]
7. The Corporation filed and received the 50% PSB rebate for charities for all reporting periods from [mm/dd/yyyy] to [mm/dd/yyyy]. The Corporation filed and received the 83% PSB rebate for facility operators for the months of [mm/dd/yyyy] to [mm/dd/yyyy].
8. You state that the Canada Revenue Agency (CRA) has approved the Corporation to claim the facility operator rebate commencing [mm/dd/yyyy], the date that the Facility was opened to patients.
9. Your position, as indicated in your letter of [mm/dd/yyyy], is that the Corporation is a facility operator and eligible to claim the 83% PSB rebate on GST, and the federal part of the HST, paid or payable on all property and services acquired (including construction of the Facility), to the extent that they were acquired for the purpose of making eligible facility supplies, including property and services acquired prior to the commencement of operations on [mm/dd/yyyy].
You believe that acquisitions (e.g., construction) made for the purposes of making facility supplies, even if in the future those facility supplies will be made, should be eligible for the 83% rate.
RULING REQUESTED
You would like to know whether the Corporation was a facility operator entitled to claim an 83% PSB rebate of the GST and the federal part of the HST […], incurred on construction and other costs for all reporting periods prior to the opening of the Facility on [mm/dd/yyyy].
In other words, as you mention in your [mm/dd/yyyy] letter, you wish to know whether the Corporation became a facility operator only at the time of opening and caring for patients at the Facility, or whether it was also a facility operator during the period of time when it was, as you state, […]
RULING GIVEN
Based on the facts set out above, we rule that the Corporation is not entitled to claim an 83% […] PSB rebate of the non-creditable tax charged (Footnote 1) in respect of property and services related to the construction of the Facility and other costs prior to the opening of the Facility and operations beginning.
However, as a charity, the Corporation is entitled to claim a 50% PSB rebate of the GST and the federal part of the HST […] of the non-creditable tax charged on eligible purchases and expenses on construction and other costs prior to the opening of the Facility and operations beginning.
EXPLANATION
Subsection 259(3) provides for the availability of PSB rebates for selected public sector bodies. A “selected public sector body” is defined in subsection 259(1) to include:
(a) a hospital authority,
(b) a school authority that is established and operated otherwise than for profit,
(c) a university that is established and operated otherwise than for profit,
(d) a public college that is established and operated otherwise than for profit,
(e) a municipality,
(f) a facility operator, or
(g) an external supplier.
To be eligible for an 83% […]PSB rebate of the GST and the federal part of the HST paid or payable on its purchases prior to the opening of the Facility on [mm/dd/yyyy] (during the hospice construction time), the Corporation would have had to qualify as a “hospital authority” or a “facility operator”.
Hospital Authority
A “hospital authority” is defined in subsection 123(1) as “an organization that operates a public hospital and that is designated by the Minister [of National Revenue] as a hospital authority”.
The Corporation does not operate a public hospital. As well, the Minister of National Revenue has not designated the Corporation as a “hospital authority”. Please refer to GST/HST Memoranda Series Chapter 25.2, Designation of Hospital Authorities, for information on the administrative criteria for designation as a hospital authority.
Since the Corporation does not operate a public hospital, and has not been designated by the Minister as a “hospital authority”, it is not a hospital authority for GST/HST purposes.
As the Corporation is not a “hospital authority”, to determine if there is eligibility for the 83% […] PSB rebate, it is necessary to determine if the Corporation is a “facility operator”.
Facility Operator
A “facility operator” is defined in subsection 259(1) as meaning “a charity, a public institution or a qualifying non-profit organization (other than a hospital authority), that operates a qualifying facility”.
Qualifying Facility
Subsection 259(2.1) sets out three criteria that must be met for a facility, or part of a facility, other than a public hospital, to be a “qualifying facility”, for a fiscal year, or any part of a fiscal year, of the operator of the facility or part.
A facility, or part of a facility, will be considered a “qualifying facility” if:
(a) supplies (Footnote 2) of services that are ordinarily rendered during that fiscal year or part to the public at the facility or part would be facility supplies if the references in the definition of “facility supply” in subsection 259(1) to “public hospital or qualifying facility” were references to the facility or part;
(b) an amount, other than a nominal amount, is paid or payable to the operator as qualifying funding in respect of the facility or part for the fiscal year or part; and
(c) an accreditation, licence or other authorization that is recognized or provided for under a law of Canada or a province in respect of facilities for the provision of health care services applies to the facility or part during that fiscal year or part.
The requirements contained in (a) to (c) above must be met in order for a particular facility to be a “qualifying facility” for purposes of section 259.
During the construction phase, the Corporation was not a facility operator as it did not operate a facility that qualified as a qualifying facility. It was, therefore, not entitled to claim an 83% […] PSB rebate.
However, as indicated above, as a charity, the Corporation was entitled to claim a 50% […] PSB rebate of the non-creditable tax charged paid or payable on eligible purchases and expenses related to the construction of the hospice.
You suggest that the Corporation is a facility operator and eligible to claim the 83% […] PSB rebate “for all property and services acquired, to the extent that they were acquired for the purpose of making an eligible facility supply, including with respect to goods and services acquired prior to the commencement of operations on [mm/dd/yyyy]”. As mentioned earlier, in order to determine the amount of the rebate, the Corporation has to meet the definition of facility operator first. This current scenario should not be compared to situations where an entity’s eligibility relates to the operation of their facilities as there may be significant differences in the circumstances.
For more information on the calculation of the rebate, please refer to GST/HST Guide RC4034, GST/HST Public Service Bodies' Rebate. This guide is available on our website.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the ruling given in this letter provided that: none of the issues discussed in the ruling are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 306-807-5296. 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,
John Ware
Health Care Sectors Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
FOOTNOTES
1 In general terms, “non-creditable tax charged” means the GST/HST paid or payable on property or services for which the Corporation cannot claim in any other way other than by claiming the public service bodies' rebate. For more information, see GST/HST Memorandum 13.5, Non-creditable Tax Charged.
2 “A “supply” is defined in subsection 123(1), in part, to mean “the provision of property or a service in any manner”.
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