21 April 2005 GST/HST Ruling 49665 - Tax status of Glycerine

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 (with attachments), to the XXXXX Tax Services office, further to GST/HST Interpretation XXXXX provided by that office. That interpretation outlined the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to charities, and indicated that you would need to provide agreements for more specific guidance with respect to your operations. Your request, along with the agreements, has been forwarded to our office for reply. We apologize for the delay in our response.

Statement of Facts

Our understanding of the facts is as follows:

1. XXXXX ("the Charity") is a charity as defined in subsection 123(1) of the Excise Tax Act (ETA) ^[xxv]1 that provides various programs and assistance to adults with disabilities, including the following:

1) XXXXX;

2) Adult group homes XXXXX;

3) Supportive independent living services XXXXX;

4) A sheltered workshop XXXXX; and

5) An activity centre XXXXX.

2. The Charity also operates XXXXX.

3. The Charity is not currently designated pursuant to section 178.7 of the ETA.

4. The Charity is a member of the XXXXX.

5. XXXXX.

6. XXXXX.

7. XXXXX.

8. XXXXX.

9. XXXXX.

10. XXXXX:

1) XXXXX.

2) XXXXX.

3) XXXXX.

4) XXXXX.

11. XXXXX.

12. XXXXX.

13. The Charity operates XXXXX adult group homes XXXXX for adults who have an intellectual disability and/or have multiple disabilities. XXXXX.

14. The Charity provides supportive living services XXXXX assisting people with intellectual disabilities to live independently in the community. XXXXX.

15. The Charity operates a sheltered workshop to provide employment/transitional training services to adults who have intellectual disabilities and/or multiple disabilities who require more structured supports. XXXXX.

16. The Charity operates an activity centre XXXXX to provide developmental and functional life skills services to adults who have intellectual disabilities and/or multiple disabilities who require more structured supports. XXXXX.

Ruling Requested

What is the tax status of these supplies made by the Charity?

Ruling Given

Based on the facts set out above, we rule that the following supplies made by the Charity are exempt under section 1 of Part V.1 of Schedule V to the ETA:

1) XXXXX;

2) the adult group homes;

3) the independent living services;

4) the sheltered workshop; and

5) the activity centre.

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act, or to our interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Explanation

Section 1 of Part V.1 of Schedule V to the ETA states that a supply made by a charity of any property or service is exempt, unless specifically excluded under paragraphs (a) to (n) of that section.

None of the exclusions in section 1 of Part V.1 of Schedule V to the ETA applies to the supplies of the above services made by the Charity. Therefore, the supplies of these services by the Charity are exempt.

Section 178.7 of the ETA allows certain charities to be designated for GST/HST purposes. In order to be eligible, one of the charity's main purposes must be to provide employment, training for employment, or employment placement services for individuals with disabilities, or to provide instructional services to assist such individuals in securing employment. As well, the charity must supply, on a regular basis, services that are performed, in whole or in part, by individuals with disabilities.

Once designated, specified services that the charity provides to GST/HST registrants will be excluded from the general exemption in section 1 of Part V.1 of Schedule V to the ETA, and the charity may be eligible to claim input tax credits in respect of those supplies. A designated charity is not allowed to use the net tax calculation for charities. However, a designated charity may use the Special Quick Method for Public Service Bodies for calculating its net tax remittances.

A "specified service" means any service, other than a service that is the care, employment or training for employment of individuals with disabilities, or an employment placement service rendered to such individuals, or the provision of instruction to assist such individuals in securing employment, when the recipient is a public sector body or a board, commission or other body established by a government or a municipality.

However, any services supplied by the charity that are exempt under other provisions of the ETA will not be affected by the designation. For example, 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 a designated charity for the purpose of providing such service will still be exempt pursuant to section 2 of Part IV of Schedule V to the ETA.

A request for designation may be made to the following address:

Director, Public Services Bodies and Governments Division
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor 320 Queen Street
Ottawa ON K1A 0L5

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 957-8253.

Yours truly,

Jacqueline Russell
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

2005/04/08 — RITS 51793 — The Eligibility of a Daycare Activity for the Self-government Refund