11 December 2007 GST/HST Interpretation 99963 - GST/HST Formulas

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 Light Housekeeping Plan offered by XXXXX (the Company).

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

Effective January 1, 2008, the rate of the GST will be reduced from 6% to 5% and the rate of the HST from 14% to 13%. The new rates will apply to supplies for which the GST/HST is paid on or after January 1, 2008, without having become payable before that date. Specific transitional rules will 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 GST/HST Notice 226, Proposed GST/HST Rate Reduction in 2008 on the CRA Web site at www.cra-arc.gc.ca/E/pub/gi/notice226/README.html.

We understand the Company is a fishing/hunting resort XXXXX. The Company offers fishing and hunting packages in an American Plan and a Light Housekeeping Plan, which are sold for an all-inclusive price.

The majority of the Company's clients purchase the American Plan which includes meals, lodging, a rented boat and a guide. The Company understands that these clients are eligible for the GST/HST rebate under the new Foreign Convention and Tour Incentive Program (FCTIP).

The Company also rents a couple of cabins under the Light Housekeeping Plan for clients with a private boat. Under this plan, the Company offers the following services along with the cabin rental:

•   parking in a supervised parking lot

•   boat launch ramp service

•   wharfage XXXXX

•   concierge services, including hauling luggage, getting bait and ice, and gassing up boats.

Interpretation Requested

You would like to know whether the Light Housekeeping Plan is eligible for the GST/HST rebate under the new FCTIP.

Interpretation Given

The new FCTIP provides a rebate to a nonresident for a portion of the GST/HST paid on an eligible tour package.

For the purposes of the rebate, an eligible tour package includes either short-term and/or camping accommodation in Canada and at least one service, and it must be sold for an all-inclusive price, but does not include a tour package that includes a convention facility or related convention supplies.

As in any transaction, it is important to properly characterize what is being sold in order to determine how the GST/HST applies to that transaction. For example, when a person combines two or more services, or property and services together, the person must determine whether it is making a single supply or multiple supplies, and must characterize that supply or those supplies accordingly. The determination of whether a transaction consists of a single or multiple supplies is a determination of fact. GST/HST Policy Statement P-077R2, Single and Multiple Supplies, provides guidelines to help in making that determination, including the following principles:

1. Every supply should be regarded as distinct and independent.

2. A supply that is a single supply from an economic point of view should not be artificially split.

3. There is a single supply where one or more elements constitute the supply and any remaining elements serve only to enhance the supply.

Policy Statement P-077R2 notes that an element may generally be regarded as any property or service that could reasonably be supplied on its own. However, an element can also be an input to a supply or part of a supply.

If the transaction is a single supply, then the next step is to determine what is being supplied.

The elements provided in the Light Housekeeping Plan consist of the cabin rental, parking and concierge services, and the boat launch ramp and wharfage. The cabin rental is the main element of the supply and the other elements enhance that supply. The other elements would not be provided without the cabin rental. Based on the principles outlined in Policy Statement P-077R2, there is a single supply of accommodation being provided in this case.

It is our view that the parking, concierge services, the boat launch ramp, and wharfage are amenities that are part of the accommodation. Therefore, the Light Housekeeping Plan is not a tour package and it is not eligible for the GST rebate under the new FCTIP.

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, Excise and GST/HST Rulings and Interpretations Service, 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.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 952-7909. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.

Yours truly,

Jacqueline Russell, CGA
Services and Intangibles Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

2007/11/23 — RITS 82476 — XXXXX Printed Materials