31 May 2007 General Information Letter 89397 - PROPOSED LAW/REGULATION Eligibility for Accommodation Rebate

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 XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to supplies of accommodation by your client, XXXXX (the Hotel).

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

We understand that XXXXX (the Company) has entered into an arrangement with the Hotel XXXXX.

You have provided a copy of XXXXX (the Agreement) between the Hotel and XXXXX (the Sponsor). The Hotel and the Sponsor entered into the Agreement XXXXX.

XXXXX (the Convention) is scheduled to be held in XXXXX. Under the Agreement, the Hotel agrees to provide XXXXX room nights for use by the attendees of the Convention, XXXXX.

The room rates are subject to the applicable taxes, including GST, in effect at the time of check in, and are also available XXXXX days before and XXXXX days after the scheduled convention dates. The attendees will pay their own room, tax, and incidentals incurred by them at the Hotel.

Reservations by attendees must be received on or before XXXXX (the "cut-off date") under the Agreement. At the cut-off date, the Hotel will review the reservation pick up for the Convention, release the unreserved rooms for general sale, XXXXX.

XXXXX.

XXXXX. XXXXX, the Company will act as agent for the non-resident individuals in filing their rebate claims with the Canada Revenue Agency (the CRA).

Interpretation Requested

You would like to know whether the accommodation available to the non-resident attendees is eligible for the rebate under the GST/HST Visitor Rebate Program (VRP).

Interpretation Given

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 proposed FCTIP will provide GST relief (including the federal component of the HST) in respect of certain property and services used in the course of conventions held in Canada and the accommodation portion of tour packages for non-residents.

Generally, under the proposed FCTIP, a non-resident person that acquires short-term accommodation under the above conditions will not be eligible for a rebate of the GST 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 XXXXX rooms for use by certain persons attending the Convention scheduled to be held on XXXXX. The rooms are available at the convention group rate for the XXXXX nights of XXXXX, and the XXXXX nights before and the XXXXX nights after these dates. 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 supplies under the agreement to non-resident persons attending the Convention. As a result, non-resident individuals attending the Convention may receive a GST rebate for accommodation supplied by the Hotel for the XXXXX nights of XXXXX, and up to XXXXX nights before and/or XXXXX nights after these dates that are supplied at the convention group rate. Rooms that are reserved by convention attendees after the cut-off date XXXXX are considered to be supplied under the Agreement if they are provided at the convention group rate specified in the Agreement, and therefore are also eligible for the rebate. 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 Canada Revenue Agency;

•   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 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 as set out in the attached letter.

For additional information, please refer to the enclosed GST/HST Info Sheet GI-026, Visitor Rebate Program - Accommodation Rebate for Non-Residents.

The foregoing comments represent our general views with respect to the proposed amendments to the ETA as they relate to the subject matter of your request. Any change to the wording of these proposed amendments or any future proposed amendments to the ETA, 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 GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, 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 call me directly at (613) 957-8253.

Yours truly,

Jacqueline Russell, CGA
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
XXXXX

Case Number: 89397

XXXXX

This confirms that the supply of short-term accommodation at XXXXX (the Hotel) made available to non-resident individuals attending the 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 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 are met.

In addition to the restrictions and conditions set out in the Excise Tax Act, qualifying non-residents must provide sufficient documentary evidence to establish their entitlement to the rebate, including:

•   original invoices, receipts or other documents that verify the amount of GST charged by the Hotel and paid by the non-resident;

•   a copy of the hotel folio showing the number of nights of accommodation made available to a non-resident individual in a particular room at the Hotel during a period that includes XXXXX, and the Folio Group Designation XXXXX;

•   evidence that the non-resident acquired the accommodation at the Hotel while attending the XXXXX (e.g., confirmation of registration); and

•   a copy of this letter.

XXXXX 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.

Yours truly,

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

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