16 December 1994 GST/HST Interpretation 65[2] - Application of Good and Services Tax (GST) to Wharfage Fees and Scope of Administrative Policy

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 your letter XXXXX concerning the application of the Goods and Services Tax (GST) to wharfage fees and stevedoring services. I regret the delay in responding to your letter.

In the memorandum XXXXX, the Department outlined its position that stevedoring and terminal operations performed at port side will be considered "freight transportation services" as defined in subsection 1(1) of Part VII of Schedule VI to the Excise Tax Act (the Act). These services when supplied to import and/or export movement of cargo will be zero-rated. The definition of "freight transportation service" includes any incidental property or service when supplied by the same person who supplied the freight transportation service. Ancillary services supplied as part of an import/export freight movement will also be zero-rated. Examples of ancillary services which may be incurred are tailgating, storage, container stuffing/destuffing.

A "freight transportation service" as defined in subsection 1(1) of Part VII of Schedule VI to the Act means:

"a particular service of transporting tangible personal property and, for greater certainty, includes

(a) a service of delivering mail, and

(b) any other property or service supplied to the recipient of the particular service by the person who supplies the particular service, where the other property or service is part of or incidental to the particular service, whether there is a separate charge for the other property or service, but does not include a service provided by the supplier of a passenger transportation service of transporting an individual's baggage in connection with the passenger transportation service."

Wharfage Fees

A wharfage fee is a freight charge levied by a Port Authority or a XXXXX. Generally, the wharfage fee is levied directly against the owner of the ship docked in the port XXXXX. In order to fall within the scope of the policy concerning a freight transportation service, the wharfage fee would have to be in respect of an incidental or ancillary supply of freight transportation. Our understanding of wharfage fees and of the role of the XXXXX Port Authority suggest that wharfage would not normally qualify as either incidental or ancillary to the supply of freight transportation services when billed by the XXXXX Port Authority.

The Scope of Administrative Policy

It is the view of the Department that persons who contract to provide freight transportation services whether or not they undertake to provide the service themselves, or they subcontract that service, will be considered providers of a freight transportation service and therefore fall within the definition of "carrier" as outlined in subsection 123(1) of the Act.

For example, a person enters into a contract to provide stevedoring services, storage services, loading and unloading services to a recipient. The stevedoring services will be provided at port side. The storage services and the services of loading and unloading will be provided off-dock. The person is not normally engaged in supplying stevedoring services and therefore acquires the services from a subcontractor. The person in agreeing to provide stevedoring services to the recipient is providing freight transportation services, and therefore is considered a "carrier" pursuant to the definition in subsection 123(1) of the Act.

Whether the storage service, and the services of loading and unloading provided off-dock, are considered incidental or ancillary to the supply of the freight transportation service is a question of fact. Each transaction must be analyzed and interpreted based on its own merits.

If, in the foregoing example, the goods are temporarily housed by the supplier in a storage facility located off-dock, and assuming the goods are awaiting transfer to another mode of conveyance; i.e., the storage facility is not the final destination, the storage may be considered incidental to the supply of the freight transportation service. Similarly, loading and unloading services provided off-dock by the supplier, under the same conditions, would be considered incidental to the supply of the freight transportation service.

If you have any questions or comments, please do not hesitate to contact Dwayne Moore, Tax Policy Officer at (613) 954-4206 or Tom Alley, Tax Policy Officer at (613) 952-9218.

J.A. Venne
Director
Tax Policy - Special Sectors
GST Policy & Legislation