9 July 2004 GST/HST Ruling 52404 - Review of GST/HST Application Ruling XXXXX

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.

Dear XXXXX:

I refer to your letter addressed to the XXXXX GST/HST Rulings Centre regarding the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to XXXXX. Your letter was forwarded to me for reply.

XXXXX We are not able to provide a ruling as we have not been provided with detailed information, including signed contracts or agreements XXXXX or other related documentation. Therefore, this letter will provide you with our general views concerning the application of the Excise Tax Act ("ETA") to the issues raised in your ruling request.

Background

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Issues

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1) XXXXX

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A recipient of a taxable good or service made in Canada is required to pay GST at the rate of 7% or HST at a rate of 15% on the value of the consideration for the supply (i.e., the amount charged by the supplier for the good or service). XXXXX does not pay GST/HST on the consideration for taxable goods or services it acquires as it is part of the province XXXXX and is therefore immune from paying the GST/HST under the Constitution Act, 1867.

The fact that XXXXX provides funds to XXXXX to be used to acquire the supplies in question, will not permit the XXXXX to share XXXXX immunity from paying the GST/HST. If the XXXXX signs a service contract with a service provider and is the person liable to pay consideration for goods and services supplied by the provider, then XXXXX is the recipient of those supplies and not XXXXX. Accordingly, the XXXXX will be responsible for paying tax when he or she acquires taxable goods or services.

However, if XXXXX was also a party to the contract such that XXXXX was also liable to pay consideration for the goods and services provided, immunity from paying the GST/HST may apply. If this is an option that you are considering, we would be pleased to discuss this matter further.

2) XXXXX

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3) XXXXX

The XXXXX will still be the recipient of the services in question and liable to pay the GST/HST if the supplier sends XXXXX invoices for its taxable services and the XXXXX is the person required to pay for those services.

4) XXXXX

For GST/HST purposes, a person is an agent acting on behalf of another person if the person is an agent at law. Therefore, it will be a question of fact and law whether an agency relationship exists between XXXXX. The enclosed policy statement, P-182R, Agency, provides further information on the question of agency in the context of the ETA.

Exemptions from the GST/HST

As indicated above, the ETA provides exemptions from tax for certain goods and services. It is possible that some of the supplies acquired by XXXXX would not be subject to the GST/HST as they may fall under one of these exemptions.

For example, section 2 of Part II of Schedule V provides an exemption for institutional health care services made by the operator of a health care facility if the service is rendered to a patient or resident of the facility (not including services related to the provision of surgical or dental services for cosmetic purposes and not for medical or reconstructive purposes).

Section 13 of Part II of Schedule V provides an exemption for certain homemaker services rendered to an individual in the individual's place of residence whether the recipient is the individual requiring the services or another person. This exemption applies to services supplied by a government (meaning the federal, provincial or territorial governments) or a municipality. Homemaker services will also be exempt if a government, municipality or organization administering a government or municipal program for homemaker services pays an amount to a person for the acquisition of these services, or if payments are made by these bodies directly to the supplier in respect of its supply of homemaker services.

A "homemaker service" is defined in Part II of Schedule V as "a household or personal service, such as cleaning, laundering, meal preparation and child care, that is rendered to an individual who, due to age, infirmity or disability, requires assistance."

Section 2 of Part IV of Schedule V exempts a supply of a service of providing care, supervision and a place of residence to children, underprivileged individuals or individuals with a disability in an establishment operated by the supplier for the purpose of providing such service. In order for the service to be exempt of the GST/HST under this section, the operator of the establishment must provide the care, supervision and a place of residence.

Section 3 of Part IV of Schedule V provides an exemption to a supply of a service of providing care and supervision to an individual with limited physical or mental capacity for self-supervision and self-care due to an infirmity or disability, if the service is rendered principally at an establishment of the supplier.

Other exemptions in the ETA may apply depending on the status of the person providing the services.

Part V.1 and Part VI of Schedule V provide exemptions for many services provided by charities or public institutions. Therefore, if XXXXX enters into an agreement with a service provider that meets the definition of a charity or a public institution, then the services provided by that person may be exempt. An organization that is a registered charity under the Income Tax Act will generally be a charity or a public institution for purposes of the ETA.

I trust this information will be of assistance. Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-7656.

Yours truly,

P. Bertrand
Director General
Excise and GST/HST Rulings Directorate

Encl.

2004/06/28 — RITS 52950 — Temporary Importation of Amusement Rides