17 April 2007 GST/HST Interpretation 86353 - Application of Section 232

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.

Excise and GST/HST Rulings Directorate Place de Ville, Tower A, 15th floor 320 Queen Street Ottawa ON K1A 0L5	XXXXX XXXXX XXXXX
XXXXX XXXXX	Case Number: 86353
XXXXX XXXXX	April 17, 2007

Subject:

GST/HST INTERPRETATION PROPOSED LAW/REGULATION FOREIGN CONVENTION AND TOUR INCENTIVE PROGRAM

Dear XXXXX:

Thank you for your XXXXX concerning the rebate of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) on supplies of property and services acquired by persons for use in connection with XXXXX (the Conference).

Our understanding of the facts is as follows:

1. XXXXX.

2. XXXXX.

3. XXXXX (the Sponsors) have joined together to convene the Conference in XXXXX.

4. The theme of the Conference XXXXX.

5. With respect to the admissions to the Conference, the Sponsors expect that XXXXX% of the admissions will be sold to residents of the United States, XXXXX% will be sold to residents of Canada, and XXXXX% will be sold to residents of other countries. The Conference is not open to the general public.

6. XXXXX.

7. The official site venue for the Conference is XXXXX (the Hotel). The Sponsors entered into a written agreement with the Hotel on XXXXX. Pursuant to the agreement:

(a) the Hotel will hold a block of approximately XXXXX room nights for use by persons attending the Conference;

(b) the guest room rates will vary depending on the type of occupancy;

(c) the guest room rates will be available XXXXX days prior and XXXXX days after the Conference, based on availability;

(d) the guest room rates will be subject to the appropriate taxes, including GST, in effect at the time of the Sponsors' meeting; and

(e) in the event a guest room is not available for a guest holding a guaranteed reservation, the Hotel will pay for the guest's lodging (room and tax) at a comparable facility, transportation to and from such property and two long distance phone calls per day until the Hotel can accommodate the guest.

8. The persons attending the Conference are responsible for booking accommodation directly with the Hotel.

9. Pursuant to the written agreement between the Sponsors and the Hotel:

(a) the Hotel will hold function and meeting space, to be assigned by the Hotel at its discretion, based on the number of persons guaranteed to attend the Sponsors' function - the Sponsors will receive meeting and banquet space on a complimentary basis;

(b) the Hotel will provide internet access for XXXXX days for XXXXX booths for $XXXXX - there will be no charge for internet access in the Sponsors' office space; and

(c) the Hotel will provide electrical hook-up for lights, computers, etc. for a XXXXX charge of $XXXXX.

10. The Sponsors expect approximately XXXXX exhibitors to participate at its trade show portion of the Conference. The exhibitors will not sell merchandise on the exhibit floor, although they will provide some samples and giveaways.

11. XXXXX,

XXXXX.

12. The Hotel uses the services of an event co-ordinator that supplies any additional items (e.g., drapes, skirted display tables, chairs, etc.) required by the exhibitors for an additional fee plus applicable taxes. The Sponsors have not entered into a written agreement with the event co-ordinator.

13. Pursuant to the written agreement between the Sponsors and the Hotel, all banquet food and beverage arrangements must be made through the Hotel - only food and beverages purchased from the Hotel may be served on the Hotel's property.

14. The XXXXX entered into a written agreement with XXXXX (Hotel 2) on XXXXX. The agreement provides that Hotel 2 will hold a block of approximately XXXXX overflow room nights for use by persons attending the Conference.

Interpretation Requested

You would like to know:

1. Whether the Conference is a "foreign convention" for GST/HST purposes?

2. If the Conference is a "foreign convention", are the Sponsors, non-resident exhibitors and non-resident persons attending the Conference eligible for a rebate of the GST/HST on supplies of property and services acquired by them for use in connection with the Conference?

Interpretation Given

On September 25, 2006, the Government of Canada announced that the GST/HST Visitor Rebate Program (the VRP) would be cancelled as part of a package of spending restraint measures. Budget 2007 confirmed the cancellation of the VRP and proposed a new Foreign Convention and Tour Incentive Program (the FCTIP).

With respect to foreign conventions, the proposed FCTIP provides a rebate of the GST and the federal component of the HST paid on certain property and services acquired by qualifying sponsors, organizers and exhibitors. In its current form, the proposed FCTIP does not provide a rebate of the provincial component of the HST unless the property or services are supplied under a written agreement entered into before September 25, 2006, for a foreign convention that begins before April 2009.

Whether the Conference is a "foreign convention"

The term "foreign convention" is defined in subsection 123(1) of the Excise Tax Act (ETA). Generally, a meeting or assembly is a "foreign convention" where:

(a) the event is a "convention" as defined in subsection 123(1) of the ETA;

(b) at least 75% of the admissions to which are, at the time the sponsor of the convention determines the amount to be charged as consideration therefore, reasonably expected to be supplied to non-resident persons; and

(c) the sponsor of which is an organization whose head office is situated outside Canada or, where the organization has no head office, the member, or majority of members, of which having management and control of the organization is or are non-resident.

Regarding the first criterion, it is our understanding that the Conference is a "convention" as defined in subsection 123(1) of the ETA because it is a formal meeting or assembly that is not open to the general public, and the principal purpose of the Conference is not:

(a) to provide any type of amusement, entertainment or recreation,

(b) to conduct contests or games of chance, or

(c) to transact the business of the convenor or attendees

(i) in the course of a trade show that is open to the general public, or

(ii) otherwise than in the course of a trade show.

Regarding the second and third criteria, it is our understanding that the Sponsors (i.e., the persons who convene the convention and supply admissions to it) expect that approximately XXXXX% of the admissions to the Conference will be supplied to non-resident persons and the Sponsors' head offices are situated outside of Canada. Consequently, the Conference is characterized as a "foreign convention" for GST/HST purposes given that all three criteria are met.

Rebate for sponsors under the proposed FCTIP

The proposed FCTIP provides that the sponsors of a foreign convention will be eligible for a rebate of the GST paid in respect of:

•   a supply of property or services relating to the convention made by a registrant who is the organizer of the convention;

•   a supply made by a registrant who is not the organizer of the convention, of property or services that are acquired for consumption, use or supply by the sponsor as related convention supplies or of the convention facility; or

•   property that is imported by the sponsor or an imported taxable supply (as defined in section 217 of the ETA) of property or services that are imported by the sponsor for consumption, use or supply by the sponsor as related convention supplies.

Consequently, the Sponsors will be eligible for a rebate of the GST paid to the Hotel for the function and meeting space, banquet space, internet access, electrical hook-up and food and beverages relating to the Conference. However, the Sponsors will only be eligible for a 50% rebate of the GST paid on property or services that are food or beverages or that are supplied under a contract for catering. The above rules and the restriction on food and beverages are similar to the rules and restrictions that were in effect under the VRP.

For additional information, please refer to the enclosed GST/HST Info Sheet GI-029, Foreign Convention and Tour Incentive Program - Rebate for Sponsors of Foreign Conventions.

Rebate for non-resident non-registered exhibitors under the proposed FCTIP

Section 189.2 of the ETA provides that the sponsors of a foreign convention do not charge or account for GST/HST on:

•   supplies by way of lease, licence or similar arrangement of real property for use by the recipient of the supply exclusively as the site for the promotion, at the convention, of property or services supplied by, or a business of, the recipient (e.g., supplies of exhibit booths); or

•   supplies of related convention supplies made to a recipient of a supply referred to in the previous paragraph.

The proposed FCTIP does not affect section 189.2 of the ETA. Consequently, the Sponsors do not charge or account for GST/HST on exhibit booths or related convention supplies rented or sold to Canadian or non-resident exhibitors attending the Conference.

However, under the proposed FCTIP, a non-resident non-registered exhibitor attending a foreign convention (i.e., the Conference) will be eligible for a rebate of the GST paid on supplies of the exhibit booth and related convention supplies when acquired from someone other than the Sponsors. For example, a non-resident non-registered exhibitor that rents an exhibit booth from a registrant hotel will be eligible for rebate of the GST paid on the supply of the booth.

For additional information, please refer to the enclosed GST/HST Info Sheet GI-028, Foreign Convention and Tour Incentive Program - Rebate for Non-Resident Non-Registered Exhibitors.

Accommodation rebate for non-resident attendees

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

(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.

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/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.

In this particular case, the Sponsors entered into a written agreement with the Hotel before September 25, 2006, to hold a block of rooms for use by certain persons attending the Conference between XXXXX. Pursuant to the grandfathering rules, the GST/HST 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 Conference.

Please note, the ETA sets out various restrictions with respect to non-resident persons claiming a rebate of the GST/HST paid on short-term accommodation. For example:

•   the Hotel cannot pay or credit the rebate to a non-resident person unless payment for the short-term accommodation is made at a place outside Canada where the Hotel, or an agent of the Hotel, is conducting business;

•   a non-resident person must pay a total of at least $200 (excluding taxes) for the short-term accommodation acquired from the Hotel; and

•   where a non-resident person files a rebate application with the Canada Revenue Agency (the CRA), the person must file the application within one year after the day the GST/HST to which the rebate relates became payable, and the person must be a non-resident at the time the application is made.

Also, where a non-resident person files a rebate application with the CRA in respect of the GST/HST paid on the supply of short-term accommodation, the person must provide a copy of the attached letter that we have prepared for you to distribute to persons attending the Conference, or the agreement between the Sponsors and the Hotel, as proof that the rebate is grandfathered under the VRP. In addition, the non-resident person must provide all documents set out in the attached letter.

A non-resident person acquiring short-term accommodation from Hotel 2 is not eligible for a rebate under the grandfathering rules because XXXXX did not enter into a written agreement with the hotel before September 25, 2006.

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 amendment(s) to the Excise Tax Act as it (they) relate(s) 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.

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 613-957-8224.

Yours truly,

Christopher Lewis
Services and Intangibles Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

Attachment to case number 86353 - Certification letter

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: 86353

XXXXX

April 17, 2007

Subject:

XXXXX GST/HST Visitor Rebate on Short-term Accommodation

This confirms that the supply of short-term accommodation made available to non-resident individuals at XXXXX (the Hotel) between XXXXX, (the Period) 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.

Qualifying non-residents may file form GST176, Application for Visitor Tax Refund, with the Canada Revenue Agency to obtain a rebate of the GST/HST paid on the short-term accommodation acquired from the Hotel during the Period. 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/HST 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 the Period;

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

•   a copy of this letter.

Christopher Lewis
Services and Intangibles Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

2007/04/24 — RITS 86718 — Sale Real Property by XXXXX (the "Estate")