13 July 2007 GST/HST Interpretation 95253 - Penalty imposed under section 283 of the Excise Tax Act

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:

The purpose of this letter is to provide clarification with respect to the application of the GST/HST to the supply of interment rights, and to advise those persons who have made prior written enquiries to the Canada Revenue Agency ("CRA") with respect to the application of the GST/HST to cemetery products and services, of CRA's interpretive policy on this issue.

GST/HST Technical Information Bulletin B-093, Application of the GST/HST to Cemetery Products and Services, sets out CRA's interpretive policy with respect to the application of the GST/HST to the supply of interment rights. TIB B-093 is available on the CRA Web site at: http://www.cra.gc.ca/E/pub/gm/b-093.

Generally, a lot or plot in a cemetery, a crypt, a niche, or any other similar place used for the interment of human remains, is not provided by way of sale. Cemetery operators generally provide interment rights, which are a form of real property for GST/HST purposes, by way of lease, licence or similar arrangement. Given the specific use and purpose of the lot, plot, crypt or niche, and the fact that a purchaser may have little or no control over it, supplies of such real property are generally supplies made by way of licence. Please refer to GST/HST Memorandum 19.1, Real Property and the GST/HST, for more information on leases, licences and similar arrangements.

The tax status of a supply of interment rights may differ depending upon the person who is making the supply (e.g., charities, public institutions or public service bodies). Pages 12 to 14 of TIB B-093 provide detailed information regarding the supply of interment rights and related services provided by such persons.

Supplies made by charities (other than a public institution)

Generally, supplies of real property (e.g., interment rights) made by charities are exempt from the GST/HST, whether the supply is made by way of lease, licence or similar arrangement.

Supplies made by public service bodies (other than charities but including a public institution)

Generally, supplies of real property (e.g., interment rights) by such public service bodies (other than a financial institution, a municipality or a government) are taxable where the supplies are made by way of licence in the course of a business carried on by the body. However, supplies of real property by such bodies are exempt where the supplies are made by way of lease, and the period throughout which continuous possession or use of the property is provided under the lease is one month or more.

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the Excise Tax Act, 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 section 1.4 of Chapter 1 of the GST/HST Memoranda Series, do not bind the CRA with respect to a particular situation.

If you require clarification with respect to any of the issues discussed in this letter, please do not hesitate to contact me at (613) 952-9212.

Yours truly,

Carmela Antonelli
Real Property Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate

2007/07/13 — RITS 95254 — Application of the GST/HST to Cemetery Products and Services - Supply of Interment Rights