23 March 2005 Form 59195 - Form B254: ATSC and GST/HST Refunds XXXXX

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.

I refer to our two conference calls XXXXX concerning XXXXX and the corresponding ATSC and GST/HST impacts. This memorandum outlines the respective refund eligibility of XXXXX customers for the Air Travellers Security Charge (ATSC) and the GST/HST on the ATSC. Specifically, this memo covers the application of section 33 of the Air Travellers Security Charge Act (ATSCA) and sections 133 and 261 of the Excise Tax Act (ETA) where XXXXX has provided no air transportation service.

Where a passenger uses no part of an air transportation service, a designated air carrier or the CRA may refund the ATSC to that individual. Pursuant to section 33 of the ATSCA, individuals can apply to the CRA for a refund of the ATSC, using Form B254. Section 33 is subject to a statutory two-year time limit. Information addressing this topic can also be found in ET/SL Notice 0045, a copy of which is enclosed. ET/SL Notice 0045 is available on the CRA Web site and can be forwarded to the public.

For GST/HST purposes, the entering into an agreement to supply a service is treated as a supply of the service made when the parties enter into the agreement. The actual provision, if any, of the service is treated as being part of the supply made when the agreement is entered into and not as a separate supply.

The agreement for the supply of an air passenger transportation service is entered into when a ticket is purchased. Although XXXXX does not actually render the service, it is nevertheless considered to have supplied the service when the ticket was purchased, for GST purposes. Since a consumer pays the purchase price when they enter into an agreement, the GST is payable at that time. An airline is required to account for the GST collected in its net tax calculation for the reporting period that includes that time, and it is required to remit any resulting positive amount of net tax.

Where a person receives a refund of the ATSC, they are entitled to a refund of the GST/HST that was paid in respect of that ATSC amount. The person has two years from the time they paid the GST/HST on the ATSC to claim a refund under subsection 261(1) of the ETA.

When processing a properly completed B254, the ATSC and the GST/HST on the ATSC can be refunded to an eligible claimant.

The foregoing comments represent our general views with respect to this situation. Proposed amendments to the ATSCA or the ETA, if enacted, could have an effect on the interpretation provided herein. Should you or your team members have any ATSC-related questions, feel free to call me anytime at 957-8154 or Michael Moskovic at 957-9877.

2004/02/03 F — RITS 56436 — Marques commerciales