20 July 2006 GST/HST Ruling 79287 - Tax status of memberships

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:

We are writing concerning your inquiry to our XXXXX GST/HST Rulings Centre about the application of the Goods and Services Tax (GST) to a funeral arrangement for the deceased XXXXX.

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

The Minister of Finance announced in the Federal Budget of May 2, 2006, a proposal to reduce the rate of the GST and the federal portion of the HST by 1%, effective July 1, 2006. Bill C-13 was tabled in Parliament on May 2, 2006, and received royal assent on June 22, 2006. The general rule is that the rate of GST will be reduced from 7% to 6% and the rate of the HST from 15% to 14% on 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 facts as follows:

1. XXXXX (Funeral Home A) transferred funds it held in trust for XXXXX to XXXXX (Funeral Home B).

2. XXXXX Funeral Home B received a cheque from Funeral Home A, XXXXX.

3. XXXXX passed away.

4. XXXXX Funeral Home B entered into a contract with XXXXX to provide at-need funeral goods and services for XXXXX.

5. The contract provided for a traditional funeral package and itemized all the charges.

6. Funeral Home B charged the GST on the amount payable under the contract.

Ruling Requested

You would like to know whether Funeral Home B was required to charge the GST on the at-need contract.

Ruling Given

Based on the information provided, we rule that Funeral Home B was required to charge the GST on the amount required to be paid to it under the at-need contract relating to funeral services for XXXXX.

This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Goods and Services Tax Rulings. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.

Explanation

Goods and services provided under a funeral arrangement in Canada are subject to the GST at 6% (7% before July 1, 2006). Every person who makes a taxable supply in Canada of such goods and services is required to collect the GST payable in respect of those goods and services. As the GST was properly charged in this instance, no refund of the GST paid on the amount of the at-need contract is possible.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 957-8223.

Yours truly,

Daniel Chamaillard
Services and Intangibles Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

2006/08/21 — RITS 79524 — Non-Resident Rebates