17 May 2006 GST/HST Ruling 80098 - Tax Status of Osteopathic Manual Therapy Services

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 fax XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to XXXXX membership dues.

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

We understand that as per the XXXXX By-laws, annual fees are required to be billed to the members not less than XXXXX days prior to the commencement of each fiscal year of the XXXXX, which is XXXXX. These fees are due and payable on that date.

Interpretation Requested

You would like to know at what rate the Goods and Services Tax should be charged to and collected from your members in your upcoming membership dues renewal.

Interpretation Given

Based on the information provided, since the notices for the membership renewal will be issued before July 1, 2006 and as such the GST would be considered payable before July 1, 2006, the rate of GST to be charged by XXXXX on its membership dues renewals would be 7%.

Pursuant to subclause 3(1) and paragraph 3(2)(a) of Bill C-13, proposed amendments to subsection 165(1) of the ETA, GST at the rate of 6% will apply to supplies made on or after July 1, 2006.

Subsection 165(1) under the proposed amendments will still be subject to subsections 168(1) and 152(1) of the ETA.

Subsection 168(1) is the provision that establishes when GST in respect of a taxable supply is payable by the recipient. The general rule is that tax is payable by the recipient on the earlier of the day that consideration for a taxable supply is paid or the day that consideration becomes due.

Subsection 152(1) deems consideration for a taxable supply to become due on the earliest of the following days:

(a) the day that the supplier first issues an invoice in respect of the supply;

(b) the day of the invoice;

(c) the day when, but for an undue delay, the supplier would have issued an invoice in respect of the supply; and

(d) the day that consideration is due pursuant to an agreement in writing.

Therefore, GST at the rate of 7% is applicable regardless of the fact that the membership dues renewal pertains to a period beginning on July 1, 2006.

The foregoing comments represent our general views with respect to the proposed amendments to the Excise Tax Act as they relate to the subject matter of your request. Any change to the wording of these proposed amendments or any future proposed amendments to the ETA, if enacted, could have an effect on the interpretation provided herein. 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.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 952-0419.

Yours truly,

Catherine Séguin-Ouimet
General Operations Unit
General Operations & Border Issues Division
Excise and GST/HST Rulings Directorate

2006/06/02 — RITS 80179 — GST Rate Reduction and Lease Contracts