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.
XXXXX
XXXXX
XXXXX
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 124920
Business Number: XXXXX
Attention: XXXXX XXXXX
September 23, 2010
Dear XXXXX:
Subject:
GST/HST RULING
Section 2 of Part V of Schedule VI
Thank you for your XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to supplies made by XXXXX.
Effective July 1, 2010, HST applies at the rate of 15% in Nova Scotia, 13% in New Brunswick, Newfoundland and Labrador, and Ontario, and 12% in British Columbia. The GST continues to apply at the rate of 5% in the remaining provinces and territories.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
Statement of Facts
We understand the following:
1. XXXXX is a Canadian corporation based in XXXXX and is registered for purposes of the GST/HST XXXXX.
2. XXXXX packages and supplies local land based tours ("shore excursions") to cruise ships that stop in XXXXX. The operators of the cruise ships (i.e., the cruise lines) are non-residents of Canada that are not registered for purposes of the GST/HST.
3. The shore excursions include transportation to and from local events and attractions, admission to the events and attractions and the services of a tour guide.
4. The cruise lines acquire the land based tours for re-supply to their passengers.
5. Passengers may reserve a shore excursion at the same time a cruise is booked or at any time afterwards up until the time of the excursion. Passengers pay the cruise lines for the shore excursions.
6. XXXXX invoices and receives payment from the cruise lines for the supply of the shore excursions.
Ruling Requested
In a letter dated XXXXX from Excise and GST/HST Rulings - XXXXX, we concluded based on a similar factual scenario that the supply of a tour excursion made to a cruise line was a supply of a tour package that did not include any non-taxable portion that would be zero-rated under Part VI of Schedule VI.
In your submission, you state that you "XXXXX." Further in your letter you state "XXXXX."
However, you ask that we reconsider the zero-rates status of the supply by XXXXX on the grounds that section 2 of Part V of Schedule VI would zero-rate the supply of the tour packages to the cruise lines.
Ruling Given
Based on the facts set out above, we rule that the supply of the tour packages (i.e., shore excursions) by XXXXX to the non-resident non-registrant cruise lines is not a zero-rated supply under section 2 of Part V of Schedule VI.
This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.
Explanation
Section 2 of Part V of Schedule VI zero-rates a supply of property or service made to a non-resident person who is not registered for purposes of the GST/HST, where the property or service is acquired by the person for consumption, use or supply by the person
(a) where the person carries on a business of transporting passenger or property to or from Canada or between places outside of Canada by ship, aircraft or railway, in the course of so transporting passengers or property. ...
The CRA considers that in order for a supply of property or service to be zero-rated under this provision the person must be transporting passengers or property to or from Canada or between places outside of Canada at the time the person consumes, uses or supplies the property or service; and consumption, use, or supply of the property or service by the person must be connected with or arise from the service of transporting the passengers or property.
Section 2 of Part V of Schedule VI does not zero-rate a supply of a tour package or any elements therein, as described in the aforementioned facts, when made to a cruise line. Neither the tour package nor its composite elements have a direct relationship with, or arise from, the transportation of passengers to or from Canada or between places outside of Canada.
The tour packages (i.e., shore excursions) are acquired by cruise lines for resupply to their passengers. While shore excursions may serve to allow the cruise lines to offer an additional entertainment product to passengers, and may also provide an additional source of revenue for the cruise line, as you have indicated, it is our position that regardless of whether the excursions are purchased in advanced or not, the excursions do not have a direct relationship with, nor do they arise from (i.e., are not required for) the transportation of passengers to or from Canada, or between places outside of Canada. Similarly, the elements of the tour package (see description in Fact #3) if considered separately, would not be zero-rated under section 2 as they too do not have a direct relationship with, or arise from transporting passengers to or from Canada, or between places outside of Canada.
We would also like to confirm that our position regarding the application of section 2 of Part V of Schedule VI with respect to the situation described in example (c) of obsolete GST/HST Policy Statement P-076 Meaning of the words "in the course of so transporting passengers or property" continues to be that section 2 of Part V of Schedule VI would not zero-rate the supplies described in the example.
In addition to the above, we would like to confirm that it is our position that section 2 of Part V of Schedule VI does not zero-rate a supply of the part of a tour package that is the taxable portion of the package.
The supply of a part of a tour package may be zero-rated under section 1 of Part VI of Schedule VI which zero-rates the part of a tour package that is not the taxable portion of the package. By definition, the non-taxable portion of a tour package means all property or services included in the tour package and in respect of which tax under Division II would not be payable if the property or service were supplied otherwise than as part of a tour package. If, as in this case, a tour package consists of only taxable portions (as we all agree), then section 1 of Part VI does not apply to zero-rate any part of that tour package.
If you require clarification with respect to any of the issues discussed in this letter, please call me at (613) 957-7841. 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,
Dwayne Moore
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
XXXXX
UNCLASSIFIED
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