11 July 2007 GST/HST Interpretation 94608 - Supplies of Services Rendered by Personal Care Workers

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) to the XXXXX levy on which you request a ruling.

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

Statement of Facts

•   The Ministry of Finance XXXXX has passed legislation to implement a levy in respect of XXXXX, which would be imposed under the XXXXX Act.

XXXXX

Ruling Requested

You would like to know if the XXXXX levy would meet the requirements of paragraph 3(b) of the ETA Taxes, Duties and Fees (GST/HST) Regulations (Regulations) and therefore would not be subject to GST.

Ruling Given

Based on the facts set out above, we rule that the XXXXX Levy, currently set at XXXXX percent and payable by the recipient would not be included in the value for consideration by virtue of paragraph 154(2)(b) of the ETA and the Regulations. Accordingly, GST would not be applicable to the levy implemented under the XXXXX Act.

Explanation

Paragraph 154(2)(b) provides that the consideration for a supply of property or a service includes "any provincial levy payable by the recipient, or payable or collectible by the supplier, in respect of that supply, or in respect of the consumption or use of the property or service, other than a prescribed provincial levy that is payable by the recipient."

Pursuant to subsection 154(1), a provincial levy means "a tax, duty, or fee imposed under an Act of the legislature of a province in respect of the supply, consumption or use of property or a service."

Pursuant to paragraph 3(b) of the Regulations, a tax is prescribed under the Regulations for purposes of section 154 if it is imposed under an Act listed in the definition of "general sales tax rate" in subsection 2(1) of the Regulations, where it is in respect of property or a service, and

"(i) the tax is calculated as a percentage of the value or price of the property or service,

(ii) the tax is payable by the recipient of a supply of the property or service,

(iii) the tax is not included in the value or price of the property or service for purposes of calculating any other tax under that Act in respect of that property or service, and

(iv) the total of the rates of all taxes that are imposed under that Act in respect of the property or service and calculated as a percentage of the value or price of the property or service does not exceed the specified tax rate of the province."

The "general sales tax rate" of a province is defined in subsection 2(1) of the Regulations and includes XXXXX.

The "specified tax rate" of a province is also defined in subsection 2(1) of the Regulations. It is defined as "the rate that is the greater of (a) 12%, and (b) the general sales tax rate of the province plus 4%".

Therefore, a tax imposed by an act listed in subsection 2(1) of the Regulations in respect of property or a service is prescribed for purposes of section 154 where it meets all the requirements under paragraph 3(b) of the Regulations. Pursuant to section 154 a prescribed provincial levy is not included in the consideration for a supply of property or a service, and therefore is not subject to GST. However, should other and/or increased rates of taxes be imposed under the XXXXX Act on the XXXXX products under consideration the ruling may have to be reconsidered.

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 ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613 952 9220.

Yours truly,

Larry Springstead
Specialty Tax Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate

2007/06/27 — RITS 94831 — Penalty Imposed Under Section 283 of the Excise Tax Act