10 June 2004 GST/HST Interpretation 51064 - Definition of specified person

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:

Thank you for your letter XXXXX concerning an application for determination of the XXXXX as a municipality under paragraph (b) of the definition of "municipality" in subsection 123(1) of the Excise Tax Act (the "ETA").

XXXXX

XXXXX

XXXXX

XXXXX

We would therefore ask for clarification of XXXXX status. Does XXXXX have status as a legal entity in its own right? Can it sue or be sued? Does it hold title to property and enter into contracts in its own name? Is it liable for its debts? Does it have its own employees? Are there any documents establishing XXXXX? XXXXX? If so, please provide copies.

In the event that XXXXX is a legal entity, we would also ask that you clarify whether XXXXX is requesting determination as a municipality or municipal designation of its public passenger transportation services. We understand that the request for municipal status has been made in order to retain the exempt status for GST/HST purposes of the public transit services provided to the public by XXXXX.

Your letter referred to the criteria for municipal determination as a special purpose provincially established organization that are set out in Technical Interpretation Bulletin B-046. We would point out that if XXXXX qualified for determination as a municipality under this category, it would be a municipality for all purposes of the ETA. However, this status would not necessarily exempt its supplies of transit services to the public. Transit services will only be exempt if they fall under section 24 of Part VI of Schedule V to the ETA.

Section 24 of Part VI of Schedule V exempts a supply made to a member of the public of a municipal transit service, or of a public passenger transportation service that has been designated by the Minister of National Revenue to be a municipal transit service. Therefore, for this exemption to apply, XXXXX must be a transit authority providing a municipal transit service to the public, or if it does not meet the definition of a transit authority, it must be providing a public passenger transportation service designated by the Minister to be a municipal transit service.

"Municipal transit service" is defined in section 1 of Part VI of Schedule V to mean "... a public passenger transportation service (other than a charter service or a service that is part of a tour) that is supplied by a transit authority all of substantially all of whose supplies are of public passenger transportation services provided within a particular municipality and its environs".

A "transit authority" is defined in section 1 of Part VI to Schedule V to be either a division, department or agency of a government, municipality or school authority, the primary purpose of which is to supply public passenger transportation services, or a non-profit organization that receives funding from a government, municipality or school authority to support the supply of public passenger transportation services or that has been established and operated for the purpose of providing public passenger transportation services to individuals with a disability.

At present, we do not have sufficient information to determine whether XXXXX would meet the definition of a transit authority. Further, we are not certain whether its supplies fall under the definition of a municipal transit service as XXXXX has been established to provide transit services for, and between XXXXX different municipalities.

To qualify as a municipal transit service or to be eligible for designation by the Minister to be a municipal transit service, all or substantially all of the transit service provided by XXXXX must be provided within a particular municipality and its environs.

The term "environs" is not defined the ETA. CRA's administrative position is that "environs" refers to an area, district or region adjacent to, or adjoining or surrounding a municipality. We do not consider an organization established to provide inter-city transportation to be providing municipal transit services.

As XXXXX is being created to provide transit services within and between the municipalities of XXXXX, its service does not appear to meet the definition of a municipal transit service and therefore, it may not qualify for designation under section 24 of Part VI of Schedule V.

If you have any questions or require clarification on the above matter, please contact me at (613) 952-9590 or Tim Krawchuk, Manager, Municipalities and Health Care Services at (613) 941-3268.

Yours truly,

Elaine Bonnah
Municipalities and Health Care Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate

2004/06/04 — RITS 51864 — Section 181.1 - Requirement for Written Notice