23 June 2006 GST/HST Ruling 81008 - The GST/HST Status of the Supply of a Service

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.

This memorandum is in respect of XXXXX request for assistance XXXXX sent to Chris Lewis of the Services and Intangibles Unit. You provided the following information and asked the following questions regarding business claims for visitor rebates.

Currently, Summerside TC receives business visitor rebate claims with summary sheets attached to most of these claims. The Summary sheets may include supplier name, invoice number, invoice date and GST amount. When Summerside assesses these claims they will indicate which amounts on the summary sheets are reduced or denied. If an amount has already been rebated to one or more of the business' employees, Summerside will indicate on the summary that the particular amount has already been rebated. When the assessment is complete, Summerside will return a copy of the summary sheet (sometimes by fax) to the business. Visitor Rebate Programs also requires copies of the hotel folios plus a certified list of all non-resident individuals who used short-term accommodation.

Your questions:

1) Although the employee's name is not on the summary sheet the business can use the information on the summary sheet to determine which employee stayed in the hotel room that night, and that the particular employee has already received the rebate. Could this be construed as being in contradiction to our privacy laws?

2) If we start to assess a business claim and find out that a high percentage of the business's staff have alEYy applied for and received a rebate for the GST for the same hotel during the same visit dates we would like to deny this claim in full. Can we do this or do we have to assess the claim in its entirety? (only then to have to re-assess it when it comes in with the "already paid" claimants removed). If we can deny the claim under these circumstances, what percentage would be considered high? (10%, 20% etc)

3) Would you please confirm CRA has a legal obligation to assess all claims that we receive. Most Non-resident rebate claims received in Summerside under $150.00 are auto paid. The client does receive a notice of assessment with their cheque. Are these rebates considered "assessed"?

Our Response:

1) Pursuant to paragraph 295(5)(b) of the Excise Tax Act (ETA), the CRA may provide to a person confidential information that can reasonably be regarded as necessary for the purposes of determining any liability or obligation of the person or any refund, rebate or input tax credit to which the person is or may become entitled under the ETA. As such, as long as the employer is legally entitled to claim the rebate we can return the summary sheet to them with indications of which claims have been previously claimed by the employee. We cannot however provide the employer with information pertaining to whether the employee actually physically stayed in the accommodations. The CRA should not be used as a conduit for employers to monitor their employees' actions while away from the office. The ETA does not require that the employee physically stay in the accommodations. The ETA only requires that the accommodations were held and made available to the employee.

2) Subsection 297(1) of the ETA requires the Minister to consider all rebate applications and assess the amount of the rebate, if any, payable to the person. The legislation does require the CRA to assess the application in its entirety but that does not mean that we can deny the entire rebate where there is entitlement to a partial rebate unless the application does not meet the statutory requirements needed to make a claim in the first place.

3) As stated in the response to question 2 above, subsection 297(1) of the ETA requires the Minister to consider all rebate applications and assess the amount of the rebate, if any, payable to the person. Therefore, all auto paid claims of under $150.00 are considered to have been assessed and a notice of assessment would be required to be issued upon assessment.

Should you have any further questions regarding the above responses feel free to contact myself at (613) 952-0419 or you may also contact Anne Kratz at    (613) 954-7931.

2006/06/21 — RITS 81176 — Services by Registered Massage Therapists