November 27, 1992
Dear XXXXX:
Please refer to my letter to you dated December 14, 1990 concerning the application of the GST to the operations of XXXXX. The ruling contained in. that letter is amended.
Following a new administrative policy regarding transfer payments (i.e. grants, contributions, subsidies and similar payments), it is now our option that the funding provided to the clinics by the Attorney General XXXXX (through the XXXXX Legal Aid Plan) is not consideration for a supply. Therefore, the monthly payments to the clinics are outside the scope of the GST.
Furthermore, as non-profit organizations providing services for no consideration, the clinics' supplied to eligible clients are deemed to be exempt supplies for GST purposes. Clinics are not entitled to register to GST if they provide exempt services only.
Qualifying non-profit organizations (that is, those that receive at least 40% of their funding from government sources) are entitled to a rebate of 50% of the GST paid on their purchases used in carrying on exempt activities.
Enclosed are Departmental publications entitled "Goods and Services Tax treatment of grants and subsidies" and "Information for Non-Profit Organizations".
Additional information regarding the GST may be obtained by contacting the XXXXX[.]
Yours sincerely,
J.A. Venne
Director
Tax Policy - Special Sectors
GST Policy and Legislation
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