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: 181981
Dear [Client]:
Subject: GST/HST RULING
Prescribed property and services for the purposes of the Public Service Body Rebate (GST/HST) Regulations
Thank you for your letter of January 24, 2017, concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to […] (the Charity)’s entitlement to claim a public service bodies’ rebate (PSB rebate) of the goods and services tax (GST)/harmonized sales tax (HST). We apologize for the delay in our response.
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%. HST implications will not be discussed in this letter because the property and services at issue are supplied in [a non-participating province] and the charity is only resident in [a non-participating province].
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
We understand
The Charity is a registered charity for purposes of the Income Tax Act (ITA) and is a charity for purposes of the ETA.
The Charity is not registered for GST/HST purposes. However, the Charity files for the PSB rebate using the GST/HST account number […].
The Charity operates a church in […][a non-participating province]. Adjacent to the church is a separate building used by the Charity as an office where church business is conducted and a residential unit for the parish priest or priests. A detached 3 bay garage is included on the property. The garage is used by the charity to house equipment used in the operation of the church and residence (e.g., lawn mower, snow blower, etc.) and by the parish priest to park his personal vehicle.
You have provided a copy of the floor plan for the main floor of the separate building adjacent to the church. The main floor includes a waiting and reception area with an adjoining bathroom and three offices. The three offices are all for parish business. The larger one is for the priest, the second is for a second priest when one is on site, and the third office is for counting cash, accounting and recording information for receipt tracking. Additionally, the main floor includes a kitchen with breakfast area, a dining room, a living room, a bathroom and two bedrooms.
You have not provided a floor plan for the lower level but you have stated that it includes a storage area for records, a furnace room, a living area used for meetings and small gatherings, a bedroom and a laundry room.
You have stated that on occasion a seminarian is assigned to the parish. The seminarian would use the second bedroom on the main floor. The third bedroom is used when there are visiting priests, which happens around Easter for confessions.
The Charity incurs expenses related to the property that includes the office, residential unit and garage. The expenses such as power, gas, security, telephone, fax, cable and repairs and maintenance are paid for by the Charity.
The parish priest is charged a rent of $270 per month. You have confirmed that there is no written employment contract or written lease agreement between the Charity and the parish priest.
You have provided a form T1223, Clergy Residence Deduction, completed by the Charity and the parish priest which shows an amount of $3240 as “actual rent and utilities paid” by the parish priest in 2016. You have also provided the parish priest’s form T4, Statement of Remuneration Paid for 2016. There is no amount included in Box 30 of the T4. No amount in box 30 of the T4 reflects no amount of taxable benefit made available to the parish priest for board and lodging.
According to the T1223,the parish priest ordinarily occupied the residence for 12 months during the year 2016.
RULING REQUESTED
You would like to know if the Charity is entitled to claim a PSB rebate of 50% of the GST or the federal part of the HST paid or payable on property and services acquired in the course of making a supply of the residential unit to the parish priest.
RULING GIVEN
Based on the facts set out above, we rule that the Charity is entitled to claim a PSB rebate of the GST paid or payable on property and services acquired in the course of making a supply of the residential unit to a parish priest.
EXPLANATION
A charity is entitled to claim a PSB rebate of 50% of the non-creditable GST charged and the federal non-creditable HST charged on property and services that are not prescribed. In general terms, “non-creditable tax charged” means the GST/HST paid or payable on property or services for which the charity cannot claim an input tax credit, rebate, refund or remission other than a PSB rebate.
Prescribed property and services are listed in section 4 of the Public Service Body Rebate (GST/HST) Regulations (the Regulations). In particular, paragraph 4(1)(a) of the Regulations excludes from the PSB rebate the tax paid or payable on property or services that are primarily for consumption, use or supply by the particular person in the course of making supplies by way of lease, licence or similar arrangement of a residential complex or a residential unit, subject to certain conditions. Paragraphs 4(1)(b) through 4(1)(j) of the Regulations have no application in this case.
Property or services not prescribed
Property and services that are primarily for consumption, use or supply by the Charity in the course of making supplies by way of lease, licence or similar arrangement of a residential complex or a residential unit to its employees are not prescribed in paragraph 4(1)(a) of the Regulations when that supply is of short-term accommodation or an exempt supply by reason of paragraph 6(b) or section 6.1 of Part I of Schedule V.
Paragraph 6(b) of Part I of Schedule V exempts a supply of a residential unit by way of lease, licence or similar arrangement for the purpose of its occupancy as a place of residence or lodging by an individual, where the consideration for the supply does not exceed $20 for each day of occupancy.
In this case, the Charity makes a supply of a residential unit by way of lease, licence or similar arrangement for the purpose of its occupancy as a place of residence by an individual for consideration equal to $9 for each day of occupancy. Therefore the supply is exempt pursuant to paragraph 6(b) of Part I of Schedule V and property and services that are primarily for consumption, use or supply by the Charity in the course of making these exempt supplies are not prescribed in paragraph 4(1)(a) of the Regulations.
The Charity is entitled to claim a PSB rebate of 50% of the non-creditable GST charged and the federal non-creditable HST charged on property and services for consumption, use or supply by the Charity in the course of making the supply of the residential unit.
The Charity is also entitled to claim a PSB rebate of 50% of the non-creditable GST charged and the federal non-creditable HST charged on property and services acquired in relation to the property that are for consumption, use or supply by the Charity in the course of the operation of the church.
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 343-573-6071. 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,
Trent MacDonald
Public Service Bodies and Rebates Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
Email this Content