26 November 2007 GST/HST Ruling 99314 - – Tax status of XXXXX

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.

XXXXX:

Thank you for your letter XXXXX concerning your clients' eligibility to claim a rebate of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) paid on short-term accommodation under the Visitor Rebate Program (VRP).

This letter does not make any references to the HST, unless otherwise noted, since the supply takes place in XXXXX.

Statement of Facts

•   XXXXX (the Company) is requesting a ruling on behalf of XXXXX (the Sponsor) who held its meeting (the Convention) in XXXXX (the Hotel) XXXXX.

•   The Company will act as agent for the non-resident individuals (i.e., persons who attended the Convention and their guests) in filing their rebate claims with the Canada Revenue Agency (the CRA). For this service, the Company will receive a fee from the non-resident individuals.

•   You have provided a copy of XXXXX (the Agreement) between the Hotel and the Sponsor that was entered into on XXXXX.

•   The Hotel agreed to hold a block of approximately XXXXX guestroom nights XXXXX for use by attendees of the Convention and their guests. Pursuant to the agreement, the room rate for a single/double room at the Hotel is $XXXXX Canadian and is applicable for the Convention. Each extra person sharing a room will be charged an additional $XXXXX Canadian per night.

•   The Hotel will identify attendees of the Convention and their guests by the group folio designation of XXXXX in the hotel folio.

•   The attendees and their guests will pay for their own room, applicable taxes (including the GST) and incidentals incurred by them at the Hotel.

•   Pursuant to the agreement, the reservations due date was XXXXX for guestroom accommodation. After the reservations due date, all room nights which have not been reserved will be returned to the Hotel's general inventory. Based on the remaining guestroom inventory, the Hotel will determine whether or not it can offer the Convention group rate to late requests.

Ruling Requested

You would like to know if the non-resident attendees at the Convention and their guests are eligible for a rebate of GST paid on short-term accommodation under the VRP.

Ruling Given

Based on the facts set out above, we rule that the non-resident attendees and their guests who stayed at the Hotel and were identified under the group folio designation of XXXXX, are eligible for a rebate of GST paid on short-term accommodation, provided that they meet all of the requirements.

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

Explanation

Under the VRP, a non-resident person is eligible for a rebate of the GST/HST paid in respect of short-term accommodation where the person meets the conditions for the rebate including:

(a) the non-resident person is the recipient of a supply made by a registrant of short-term accommodation;

(b) the short-term accommodation is acquired by the person otherwise than for supply in the ordinary course of a business of the person of making such supplies; and

(c) the short-term accommodation is made available to a non-resident individual.

On September 25, 2006, the Government of Canada announced that the VRP would be cancelled effective April 1, 2007, as part of a package of spending restraint measures. On March 19, 2007, Budget 2007 confirmed the cancellation of the VRP, and announced the introduction of the Foreign Convention and Tour Incentive Program (FCTIP). The FCTIP became law on June 22, 2007.

Generally, under the FCTIP, a non-resident person that acquires short-term accommodation will not be eligible for a rebate of the GST/HST if the accommodation is first made available after March 2007. However, special grandfathering rules provide that the GST/HST rebate under the VRP continues to apply if the short-term accommodation is purchased under a written agreement entered into before September 25, 2006, and if the first night of continuous accommodation at the same facility starts before April 1, 2009.

The Sponsor entered into a written agreement with the Hotel before September 25, 2006, to hold a block of approximately XXXXX rooms for use by certain persons attending the Convention held from XXXXX to XXXXX. The rooms were available at the Convention group rate. Pursuant to the grandfathering rules, the GST rebate under the VRP will continue to be available in respect of the short-term accommodation that the Hotel supplied under the agreement to non-resident persons who attended the Convention and their guests. As a result, non-resident individuals may receive a GST rebate for accommodation supplied by the Hotel at the Convention group rate. The Hotel will identify attendees of the Convention and their guests by the group folio designation XXXXX in the hotel folio. Rooms that were reserved by Convention attendees and their guests after the reservations due date of XXXXX, were supplied under the agreement if they were also identified by the group folio designation XXXXX in the hotel folio. Of course, all other eligibility requirements for obtaining the rebate must still be met.

Where the Company files a rebate application with the CRA on behalf of the non-resident person in respect of the GST paid on the supply of short-term accommodation, the Company must provide a Power of Attorney signed by the non-resident person. A Power of Attorney is an authorization given by one person to another to act on their behalf. As indicated on the CRA's web site at http://www.cra-arc.gc.ca/tax/nonresidents/visitors/becoming-e.html, the following mandatory information must be clearly stated on your Power of Attorney:

•   that you are a private company and are not affiliated with the Government of Canada or the CRA;

•   complete upfront disclosure of your fee structure (i.e. the cost to the claimant for using your services);

•   that it is for a refund of the GST;

•   the client's first name and last name, address, telephone number, email address (if applicable) and signature; and

•   the client service mailing address, telephone and fax numbers, and email address of your Company.

The Power of Attorney must not include any sentence that would allow for any sub-contracting of the non-resident visitor's claim.

Also, where the Company files a rebate application with the CRA on behalf of the non-resident person in respect of the GST paid on the supply of short-term accommodation, the Company must provide a copy of the applicable attached letter, or the agreement between the Sponsor and the Hotel, as proof that the rebate is grandfathered under the VRP.

In addition, the Company must provide all the documents of the non-resident person(s) as set out in the attached letter.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-9700.

Yours truly,

Michèle Routhier
GST/HST Rulings Officer
Services and Intangibles Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

APPENDIX

Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5

XXXXX
XXXXX
XXXXX

Case Number: 99314

November 14, 2007

XXXXX
XXXXX

This confirms that the supply of short-term accommodation made available to non-resident individuals at XXXXX (the Hotel) between XXXXX to XXXXX, (the Period), identified under group folio designation XXXXX, is supplied under an agreement in writing entered into before September 25, 2006, and is grandfathered under the GST/HST Visitor Rebate Program, as amended by Budget 2007.

XXXXX (the Company) may file form GST176, Application for Visitor Tax Refund, with the Canada Revenue Agency (the CRA) on behalf of qualifying non-residents to obtain a rebate of the GST paid on the short-term accommodation acquired from the Hotel during the Period provided that all applicable conditions and restrictions are met pursuant to the Excise Tax Act. The Company must also provide a Power of Attorney acceptable to the CRA for each non-resident individual, authorizing it to act on the individual's behalf in completing the rebate application.

Qualifying non-residents must provide sufficient documentary evidence to establish their entitlement to the rebate, such as original invoices, hotel folio, receipts or other documents that show:

•   the amount of GST charged by the Hotel and paid by the non-resident;

•   the number of nights of accommodation made available to a non-resident individual in a particular room at the Hotel during a Period; and

•   the Hotel group folio designation XXXXX.

Also, a copy of this letter should be sent with the rebate application.

Yours truly,

Michèle Routhier
Services and Intangibles Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

2008/07/10 — RITS 84428 — Application of GST/HST to the Sale of Serviced Mortgages