21 June 2006 GST/HST Interpretation 59099 - Interpretation of section 174 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:

This letter is subsequent to our telephone conversation XXXXX. XXXXX the Canada Revenue Agency (CRA) provided a ruling in response to your letter XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to supplies of workshops made to Indian bands. This interpretation replaces that ruling letter as the CRA has changed its position due to a decision in a recent court case.

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

The Minister of Finance announced in the Federal Budget of May 2, 2006, a proposal to reduce the rate of the GST and the federal portion of the HST by 1%, effective July 1, 2006. The general rule is that the rate of GST will be reduced from 7% to 6% and the rate of the HST from 15% to 14% on supplies for which the GST/HST is paid on or after July 1, 2006, without having become payable before that date. Specific transitional rules apply to certain supplies, for example, real property. For more information on the transitional rules for the reduction of the GST/HST rate, please refer to Reduction in the Rate of the GST/HST - Questions and Answers (http://www.cra-arc.gc.ca/agency/budget/2006/gstrateqa-e.html) on the CRA Web site.

Statement of Facts

The facts below have been taken from the CRA's letter to you XXXXX. XXXXX.

1. XXXXX (the Partnership) are in the business of providing workshops in XXXXX and are not presently making any supplies in XXXXX. The Partnership is currently registered for GST/HST purposes.

2. As part of its business, the Partnership renders consulting workshops to early childhood educators who are employed by, or members of, Indian bands XXXXX. The Indian bands register their employees or members for attendance in the workshops and the Partnership invoices the Indian bands for the fees to attend the workshops. There are no written agreements entered into between the Partnership and the Indian bands.

3. The Partnership charges a $XXXXX workshop attendance fee per participant which includes a training manual and various handouts. XXXXX.

4. The workshops take place in the city of XXXXX, which is not on a reserve. Each workshop is a two-day course, currently offered in one of three main subject areas:

•   early language development and planning parent workshops;

•   behaviour management and preventing discipline problems; and

•   what early childhood educators need to know about fetal alcohol spectrum disorder.

5. Attendance at any one workshop is not a prerequisite for attendance at another. There are no tests administered, nor any requirement for attendees to invest time and effort outside of workshop hours. The workshops do not lead to any formal recognition of skills nor does the completion of them attest to the competence of individuals to practice or perform a trade or vocation. The workshops do not follow any curriculum designated by a school authority. Although each attendee receives a certificate of participation upon completion of a workshop, it does not lead to any formal accreditation, designation or recognition.

Ruling Requested

In your letter XXXXX, you requested a ruling as to whether GST would apply to supplies of the above workshops made by the Partnership to Indian bands for their employees or members to attend when held off a reserve. You also requested information on what documentation you would be required to maintain to verify that the workshops were provided to Indian bands under tax relieved conditions if applicable.

Interpretation Given

Based on the facts set out above, we cannot provide a definitive ruling. Information as to the use for which the bands acquired or will acquire the workshops is not available. However, an interpretation is being provided that should assist you in making a determination on a case-by-case basis as to whether the workshops can be provided to Indian bands relieved of tax.

Supplies of the above listed workshops held off a reserve made by the Partnership to an Indian band for its employees or members to attend are supplies of admissions that are not subject to the GST when the Indian band is acquiring the workshop for band management activities and a certificate is provided by the band to the Partnership. In order for tax relief to apply, the remaining conditions of Technical Information Bulletin - Administrative Policy - Application of GST/HST to Indians (B-039R2) must be met. The definition of "band management activities" and an example of the certificate that is to be provided by the band can be found in the enclosed copy of B-039R2.

Workshops held off a reserve that are supplied to individual Indians will not be relieved of tax.

The foregoing comments represent our general views with respect to the subject matter of your letter. 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 section 1.4 of Chapter 1 of the GST/HST Memoranda Series, do not bind the Canada Revenue Agency with respect to a particular situation.

Explanation

As you are aware, the above interpretation is contrary to the ruling you received XXXXX. This interpretation reflects the CRA's current position with respect to supplies of conferences, workshops, and seminars. The CRA's position on these supplies of intangible personal property has always been that they will be relieved of GST when supplied to an Indian band where there are sufficient connecting factors to situate the property on a reserve. In a recent decision made by the Tax Court of Canada, the judge determined that supplies of conferences would be considered situated on a reserve when acquired by an Indian band for band management activities.

Therefore, a supply of a right to attend a conference or a seminar, which is a supply of intangible personal property, will be considered situated on a reserve when acquired by an Indian band for band management activities. Based on the facts provided, the workshops provided by the Partnership are supplies of intangible personal property. Therefore, the Partnership can supply the rights to attend the workshops to Indian bands relieved of tax when acquired by the band for band management activities and the band provides a certificate similar to the example in B-039R2 to the Partnership.

Where the Partnership has collected GST, it can reimburse the purchaser where the conditions for tax-relief at the time of acquiring the workshop were met. That is, where the Partnership has supplied workshops to Indian bands and the GST was charged but the conditions in B-039R2 were met, and the Partnership maintains appropriate documentary evidence (e.g. a certificate from the band) that the supply of the workshop was made to an Indian band for band management activities, the partnership may reimburse the Indian band.

Subsection 232(1) of the ETA allows the supplier to make an adjustment to the amount charged or collected as or on account of tax that was in excess of the amount collectible. Therefore, where GST has been charged to an Indian band and the required documentation (the certificate) is subsequently provided to the supplier, the supplier may reimburse the tax. That is, subsection 232(1) of the ETA provides that where a supplier charged or collected GST from a person in excess of what was collectible, the supplier may refund or credit the excess amount to the person.

It should be noted that adjustments under subsection 232(1) are limited to two years after the day the amount was so charged. The supplier must issue a credit note containing prescribed information, unless the purchaser issues a debit note containing the prescribed information. More information on credit/debit notes can be found in the GST Policy Statement - P-030R Credit/Debit Notes and Net Tax Adjustments (copy enclosed).

After the amount of tax has been refunded or credited, the supplier may then subtract (on its GST return) the amount of tax adjusted, refunded or credited from net tax owing to the extent it was previously added to net tax. In other words, if tax is collected and reported on the supplier's GST/HST return or included in its net tax, the tax must first be refunded or credited to the purchaser before the supplier may claim any credit for it.

For your convenience, find enclosed a copy of GST/HST Memorandum 1.4, Goods and Services Tax Rulings, GST Policy Statement - P-030R Credit/Debit Notes and Net Tax Adjustment, and Technical Information Bulletin - B-039R2 Administrative Policy - Application of GST/HST to Indians.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-7954.

Yours truly,

Karen Chesterman
Aboriginal Affairs Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate

2006/07/20 — RITS 62066 — [Application of the GST on Supplies of Sponsorship by a Non-profit Organization]