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.
[Addressee]
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 14th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 123659
Business Number: [...]
December 9, 2011
Dear [Client]:
Subject:
GST/HST RULING
GST/HST on False Alarm Fees
Thank you for your letter of [mm/dd/yyyy], concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to false alarm fees.
HST applies at the rate of 15% in Nova Scotia, 13% in New Brunswick, Newfoundland and Labrador, and Ontario, and 12% in British Columbia. GST applies 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 facts to be as follows:
1. As part of the City [...], the [...] (Police Service) is registered for GST/HST purposes. The supplies it makes are considered supplies made by a municipality for GST/HST purposes, pursuant to the definition of "municipality" in subsection 123(1).
2. The Police Service frequently responds to alarm incidents that turn out to be false. [...]
3. [...]
4. [...].
5. [...]
6. If owners or occupants register their security alarm systems with the Police Service, the police response to an alarm may be quicker since the Police Service would have information already in its database about the premises. On the other hand, if the owner or occupant has not registered their security alarm system, police response may be slower due to a need to gather information about the premises.
7. Where the owner or occupant of premises maintains a security alarm system, there is a fee of $[...] charged to this person for each response to a false alarm call attended to by the Police Service, pursuant to section [...] of [...]. If the Police Service is contacted about an alarm sounding, it attends to the alarm, and charges the owner or occupant $[...] in the case of a false alarm, regardless of whether the security alarm of the owner or occupant is registered with them. Receiving the attending service is non-optional.
8. The Police Service is not performing a service of testing or inspecting property for the purpose of verifying or certifying that the property meets particular standards of quality or is suitable for consumption, use or supply in a particular manner.
Ruling Requested
You would like to know if GST/HST applies to the $[...] fee charged to an owner or occupant for attending to a false alarm.
Ruling Given
Based on the facts set out above, we rule that the supply by the Police Service of attending to a false alarm is exempt from GST/HST pursuant to section 21 of Part VI of Schedule V.
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 21 of Part VI of Schedule V exempts a supply of a municipal service where
(a) the supply is
(i) made by a government or municipality to a recipient that is an owner or occupant of real property situated in a particular geographic area, or
(ii) made on behalf of a government or municipality to a recipient that is an owner or occupant of real property situated in a particular geographic area and that is not the government or municipality;
(b) the service is
(i) one which the owner or occupant has no option but to receive, or
(ii) supplied because of a failure by the owner or occupant to comply with an obligation imposed under a law; and
(c) the service is not one of testing or inspecting any property for the purpose of verifying or certifying that the property meets particular standards of quality or is suitable for consumption, use or supply in a particular manner.
The Police Service, by attending to a false alarm call, is providing a municipal service to an owner or occupant of real property situated in the city. The attending service is non-optional for the owner or occupant to receive. The purpose of the response is not to verify nor certify that the property meets particular standards of quality nor is suitable for consumption, use or supply. Therefore, the supply by the Police Service is an exempt supply and thus not subject to GST/HST.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-4390. 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
Municipalities and Health Care Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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