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: 120155
Attention: XXXXX XXXXX
April 12, 2010
Dear XXXXX:
Subject:
GST/HST INTERPRETATION
Self assessing of Ontario portion of HST
Thank you for your XXXXX of XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transitional rules on goods and services supplied during the period July 1, 2010, to December 31, 2010, that are prepaid before May 2010. We apologize for the delay in responding to your enquiry.
The Government of Canada and the Government of Ontario have signed a Comprehensive Integrated Tax Coordination Agreement for the implementation of HST in Ontario. The HST will come into effect in Ontario on July 1, 2010, at a rate of 13% consisting of 5% federal part (equivalent to the existing GST) and an 8% provincial part.
Legislation required to implement the HST in Ontario has received Royal Assent by the Parliament of Canada and the Legislative Assembly of Ontario. However, many of the rules which would apply to transactions will be contained in regulations made under the Excise Tax Act (ETA). Although the Government of Ontario has announced details of the rules which may eventually apply, the required regulations have not yet been made by the Government of Canada.
All legislative references are to the ETA unless otherwise specified.
The following interpretation is based on the transitional rules as announced in Information Notice No. 3, released by the Government of Ontario on October 14, 2009. This interpretation should not be taken as a statement by the Canada Revenue Agency (CRA) that these transitional rules will be made in their current form.
We understand
• The XXXXX (the municipality) is registered for GST.
• The XXXXX, a department of the municipality, has received invoices for the annual rental of property for the period January 1, 2010, through December 31, 2010.
• The supply of the annual rental of property is taxable.
• The rental of property is an input into an exempt supply of a XXXXX service by the municipality.
• The invoices are dated November XXXXX, 2009, and are due January XXXXX, 2010.
• The supplier has charged PST and GST on the annual rental amount.
Interpretation Requested
You would like to know how the municipality complies with the requirement to self-assess for the provincial part of the HST when invoiced prior to May 1 for a supply which takes place on or after July 1, 2010 and is subject to HST at the rate of 13%. You would also like to know how the municipality claims the 78% rebate of the provincial part of the HST for which it self-assesses.
Interpretation Given
The portion of the supply of property made by way of lease, licence or similar arrangement relating to the period July 1, 2010 to December 31, 2010 is subject to the HST, unless it is an exempt supply. However, where the amount is prepaid before May 2010, the supplier is not required to collect the provincial part of the HST.
Persons who are not consumers may be required to self-assess the Ontario part of the HST on consideration that becomes due, or is paid without having become due, after October 14, 2009, and before May 2010, for a supply of property by way of lease, licence or similar arrangement, to the extent that the consideration is for the part of the supply attributable to the period that is on or after July 1, 2010.
The requirement to self-assess the provincial part of the HST in these situations would only apply to persons who are not consumers:
• who acquire these supplies for consumption, use or supply otherwise than exclusively in the course of their commercial activities (for example, a business making GST/HST-exempt supplies);
• who use simplified procedures available under the ETA for calculating their net tax (such as certain charities, public service bodies, and small businesses);
• to the extent that they acquire property or services that are subject to input tax credit restrictions as proposed in the 2009 Ontario Budget and Information Notice No. 5 issued by the Ontario Ministry of Revenue in February 2010;
• to the extent that they acquire property or services that are subject to net tax adjustments under the ETA; or
• who are selected listed financial institutions that use a special attribution method to determine their net tax.
The municipality is acquiring the rental of property for use in its exempt supply of XXXXX services. As stated above, persons such as the municipality acquiring supplies for use otherwise than exclusively in commercial activities, are required to self-assess the provincial part of the HST and would account for that tax by the due date of their GST/HST return for the reporting period that includes July 1, 2010, if that return is due before November 2010. In all other cases, the provincial part of the HST would be required to be self assessed on Form GST489, Return for Self-Assessment of the Provincial Part of Harmonized Sales Tax (HST) before November 2010. The form is currently being revised and will be available in the coming months.
The municipality is eligible to claim a public service body rebate consisting of a 100% rebate of the federal part of the HST and a 78% rebate of the provincial part of the HST using form GST66 (Application for GST/HST Public Service Bodies' Rebate and GST Self-Government Refund). The amount of the rebate should be entered on line 111 of the GST return.
You may wish to review the transitional rules and the winding down of the RST in Ontario Information Notice No. 3, General Transition Rules for Ontario HST. It is available on the Ontario Ministry of Revenue website at http://www.rev.gov.on.ca/en/notices/hst/03.html.
The foregoing comments represent our general views with respect to the transitional rules as announced in Information Notice No. 3, released by the Government of Ontario on October 14, 2009, as they relate to the subject matter of your request. Any change to the wording of these transitional rules or any regulations regarding the HST in Ontario, if made, could have an effect on the interpretation provided herein. 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) 954-2488. 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,
Doug Campbell
General Operations Unit
General Operation and Border Issues Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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