9 August 2007 GST/HST Ruling 86167 - GST/HST status of revenues received from fees in respect to the XXXXX Card

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 and our subsequent telephone conversation concerning the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) content of an airline ticket purchased by you with loyalty program points XXXXX, for purposes of claiming an input tax credit.

Statement of Facts

1) XXXXX you redeemed 3,800 XXXXX (accumulated under the XXXXX) for an XXXXX airline ticket. You paid an additional $XXXXX for the ticket. The ticket was for air travel from Vancouver to New York on XXXXX, and New York to Vancouver XXXXX. The itinerary issued by XXXXX shows that the $XXXXX consists of a loyalty administration fee of $XXXXX, a Canada Air Security Charge of $XXXXX, a Nav Canada , Fuel and Security surcharge of $XXXXX, as well as various other U.S. taxes and fees. XXXXX has stated to you that there is no GST in the amount of $XXXXX.

2) XXXXX you changed the date of your return flights XXXXX and you were charged a $XXXXX change fee and $XXXXX GST, according to XXXXX fare summary XXXXX. The fare summary also shows an amount of XXXXX Combined Taxes line, and another amount of $XXXXX Canada GST.

3) You are a GST registrant and the above travel is made in the course of your commercial activities.

Interpretation Requested

You would like to know how much GST you are eligible to claim as input tax credit (ITC).

Interpretation Given

Based on the information provided, you are eligible to claim as ITC the amount of $XXXXX GST paid in respect of the air ticket in question.

Explanation

As XXXXX explained to you, it did not charge you GST when you redeemed your points for an airline ticket. The breakdown of the amount of $XXXXX is provided by XXXXX at the bottom of page 3 of the Itinerary XXXXX. It includes various taxes, service fees and an administration fee, but no GST.

On the amounts listed on XXXXX Fare Summary of XXXXX has informed us that you paid a total of $XXXXX, including $XXXXX GST. The amount of $XXXXX GST appears to be a matter between XXXXX and XXXXX, and it is not an amount of GST paid or payable by you. You may wish to contact XXXXX if you wish to receive further details on that amount.

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.

For your convenience, find enclosed a copy of GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 954-1433.

Yours truly,

Bao Tran
Specialty Tax Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate

2007/06/25 — RITS 87690 — Application of the GST/HST to the Activities of a XXXXX Receiver]