7 April 2006 GST/HST Interpretation 58897 - Supply of Natural Gas

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 letter XXXXX (with attachments), concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to contracted services provided to XXXXX (Bank) by XXXXX (Corporation). You have provided additional information related to the services provided to the Bank by the Corporation XXXXX.

Statement of Facts

Our understanding of the facts is as follows:

1. The Bank is a Canadian bank licensed pursuant to the Bank Act (Canada). The Bank is the issuer of XXXXX credit cards and credit card products.

2. You have provided a copy of a XXXXX Agreement dated XXXXX, the Bank entered into with the Corporation which outlines the rights, duties and responsibilities of each party and a copy of XXXXX Package XXXXX.

3. Pursuant to the XXXXX Agreement, the Corporation has agreed to provide direct marketing of the Bank's credit card products and services at sporting events, community events, trade shows, and universities and colleges.

4. The Corporation sets up and staffs booths and displays at the agreed upon events and venues. The Bank provides all the posters, promotional gifts, premiums, original copies of applications, and other items used to promote its programs.

5. The Corporation's personnel solicit applications for the Bank's credit card products at the agreed upon events and venues. The sales representatives explain the features and benefits of the Bank's financial services, respond to queries from prospective cardholders related to the financial services, and assist prospective cardholders in completing applications.

6. To enable the sales representatives to respond to queries and explain the features and benefits of the Bank's financial services, the sales representative has to be fully familiar with the Bank's products and policies. The Bank provides the Corporation with a XXXXX Package and requires that all sales representatives be educated/trained on how to represent the Bank and respond to queries posed by potential cardholders in accordance with the information contained in the education package. The XXXXX Package provides information on the organization, the features and benefits of the Banks card, payment options, payment protection (optional insurance), interest rates, annual fees, rewards programs, and standard scripts to be used in addressing applicants and queries posed during the process.

7. Under the XXXXX Agreement, the Corporation represents, warrants and covenants that its representatives are and will remain properly and adequately educated in credit application completion and in those statutes, regulations and rules governing tabling applications and solicitations, and that they will comply with all applicable laws and regulations.

8. The information requested on the application includes social insurance number, date of birth, name, address, employment and income information, school information (if applicable), and additional credit card information. The application clearly states it is for Canadian residents only and that the applicant must have reached the age of majority in their province of residence.

9. Once an application is completed, the sales representative verifies the applicant's full name, permanent address and social insurance number (if provided) by requesting a valid drivers' licence, picture identification or other form of identification. The sales representative who solicited the application initials it, indicates what identification was used to verify the identity of the applicant and includes their identification number on the application.

10. The Corporation is paid a fee for each qualified application received. In order to be considered a "qualified application" the application must:

(a) be legible and complete, with all fields filled with the exception of the social insurance number which is optional;

(b) contain accurate information verified with the identification of the applicant;

(c) not be declared fraudulent by the Bank;

(d) be received by the Bank no later than one business day from receipt of the application by the Corporation.

11. After the event, the Corporation batches the qualified applications from those that are incomplete, submits a report to the hotline and delivers both to the Bank. The Corporation does not attempt to contact applicants whose applications are incomplete.

12. Upon receipt of the application, the Bank will determine whether the applicant should be approved in accordance with internal lending philosophy. This will include, among other things, a review of the applicants credit history, sources of income, expense requirements and available credit through other institutions. The Bank will either decline or approve the applicant. If the applicant is approved, a credit threshold is assigned based upon either the applicant's request for credit or based upon their credit worthiness.

13. According to the terms of the XXXXX Agreement, the Bank makes all credit decisions and bears all credit risks to each application delivered to it by the Corporation.

Ruling Requested

You are requesting a ruling in respect of the application of the GST/HST on the contracted services provided by the Corporation to the Bank under the XXXXX Agreement XXXXX.

Ruling Given

Based on the facts set out above, we rule that the supply of the services, as described above in paragraphs 4, 5, 9 and 11, by the Corporation to the Bank under the XXXXX agreement is an exempt supply of a financial service.

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act, or to our interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at 613-952-9262.

Yours truly,

Susan Mills
Financial Institutions Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate

2006/05/23 — RITS 50777 — Supply of Computer Data Files by a Charity