File: 11735-1(go)
XXXXX
April 10, 1995
Reference is made to your E-Mail of February 1, 1995 concerning the ruling issued by you in connection with the audit conducted on the XXXXX
You indicated that initially an interpretation was to be provided to Audit on the issue. However, the XXXXX wanted a copy of the letter to Audit, which you felt you could not provide to them. However, you decided to issue a letter containing the relevant details directly to the XXXXX in the form of a ruling because all the facts were understood and a definite answer could be provided.
As you know, the standard disclaimer in ruling letters provides that the ruling is binding so long as the issue is not "under audit, objection or appeal". A ruling is also precluded, pursuant to paragraph 20(a) of GST Memorandum 100-3, where a transaction is in dispute.
You took the position that the audit had been finalized and was no longer in progress. You wish to know at what point a ruling can be issued if the same issue has been the subject of an audit.
A ruling should not be issued on a question that is the subject of an audit, even where the audit has been finalized. If a notice of assessment is raised, then the issue will be settled through the appeals process and the courts. If the registrant wants to know the position of Interpretation and Services or the advice provided to Audit, they can request that information from the auditor. If a notice of assessment is not raised, then presumably the registrant is provided with written notification to that effect.
Where the facts have changed to a meaningful degree (e.g., new arrangements are entered into between the XXXXX and its carriers which could conceivably result in a different conclusion) a ruling can be issued with respect to those new arrangements. However, this should be done with caution, as the registrant may try to argue subsequently that the new arrangements are not really new and in fact existed during the period under assessment.
You should be aware that the Notice of Objection filed by the XXXXX claims that it did not request (at least not in writing) a ruling and that the facts relied upon in the ruling were not provided by the XXXXX . While the ruling is not the issue and should not impact significantly upon the outcome, (the auditor's findings and the Notice of Assessment which resulted from those findings are the relevant issues), the ruling may be used by the XXXXX in an attempt to create an unfavourable impression as to the accuracy of the work done by the Department.
If you have any further questions, please contact Gunar Ozols at (613) 952-9589.
H.L. Jones
Director
General Tax Policy
Rulings and Interpretations/GST
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