21 August 2006 GST/HST Ruling 64292 - Fund-raising campaign

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 the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the supply provided by XXXXX. We apologize for the delay in replying.

All legislative references are to the Excise Tax Act (ETA) and the regulations therein, unless otherwise specified.

Effective July 1, 2006, the rate of the GST has been reduced from 7% to 6% and the rate of the HST from 15% to 14%. The new rates apply to supplies for which the GST/HST is paid on or after July 1, 2006, without having become payable before that date. Specific transitional rules apply to certain supplies, for example, real property. For more information on the transitional rules for the reduction of the GST/HST rate, please refer to Reduction in the Rate of the GST/HST - Questions and Answers (http://www.cra-arc.gc.ca/agency/budget/2006/gstrateqa-e.html) on the CRA Web site.

We understand the following information from your letter.

•   XXXXX is a company resident in Canada and is registered for GST/HST purposes.

•   XXXXX a forwarding agent XXXXX for the export of a XXXXX.

•   XXXXX.

•   XXXXX crated by XXXXX, located in XXXXX. The cargo will not be processed, transformed or altered in any way prior to export.

•   XXXXX.

•   The cargo will be zero rated for GST purposes as it is for direct export and all documentation, invoices and Bills of lading will be supplied accordingly.

•   XXXXX will XXXXX be crating the cargo XXXXX.

Interpretation Requested

You would like to know whether the supply of the crating service XXXXX could be exempted from GST on the basis that it is part of the export process.

Interpretation Given

Although the crating service XXXXX may relate to property that is to be exported, based on the information provided there is no legislative provision in the ETA that would provide for a GST exemption with respect to the supply of the service.

The supply of the crating service XXXXX is a taxable (other than zero-rated) supply that is made in Canada and subject to GST.

A taxable supply that is made in Canada is subject to GST at the rate of 6%, or HST at a rate of 14% where the supply is deemed to be made in a participating province unless the supply is zero-rated (taxed at 0%). The three participating provinces are Nova Scotia, New Brunswick, and Newfoundland and Labrador.

Paragraph 142(1)(g) of the ETA deems a supply of a service to be made in Canada if the service is, or is to be, performed in whole or in part in Canada. Paragraph 142(2)(g) of the ETA deems a supply of a service to be made outside Canada if the service is, or is to be, performed wholly outside Canada.

The supply of the crating service XXXXX is made in Canada as it is performed in Canada XXXXX. There is no provision that would zero-rate the supply. As a result, XXXXX is required to collect GST in respect of the supply.

It should also be noted that the service XXXXX is not considered to be a freight transportation service for GST/HST purposes.

As defined in Part VII of Schedule VI to the ETA, a "freight transportation service" means a particular service of transporting tangible personal property and, for greater certainty, includes any other property or service supplied to the recipient of the particular service by the person who supplies the particular service, where the other property or service is part of or incidental to the particular service, whether there is a separate charge for the other property or service. As XXXXX is not supplying a service of transporting tangible personal property, it may not be considered to be supplying a freight transportation service.

The foregoing comments represent our general views with respect to the subject matter of your request. These comments are not rulings and, in accordance with the guidelines set out in GST/HST Memorandum 1.4, Goods and Services Tax Rulings, do not bind the Canada Revenue Agency with respect to a particular situation. Future changes to the ETA, regulations, or our interpretative policy could affect this interpretation.

For your convenience, find enclosed a copy of GST/HST Memorandum 1.4, Goods and Services Tax Rulings.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 952-6743.

Yours truly,

Cheryl R. Leyton
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

2006/08/15 — RITS 64492 — Tax Status of Memberships