18 July 1994 GST/HST Interpretation 1994-07-18[1] - Interpretation of Section 23 of Part VI of Schedule V to the Excise Tax Act with Respect to the Delivery of Water

This refers to your facsimile and memorandum to us dated July 28 and October 15, 1993, respectively, concerning our interpretation of section 23 of Part VI of Schedule V to the Excise Tax Act with respect to the delivery of water.

As you know, our interpretation of section 23 was originally outlined in our letters dated July 28 and September 17, 1992, to XXXXX. We have reviewed this matter again but must advise that our interpretation regarding the application of the GST to the supply of water has not changed.

Section 23 of Part VI of Schedule V to the Act exempts the supply of unbottled water including the service of delivering the water when made by a person other than a government or a government designated to be a municipality. Where a person such as a water hauler acquires water, i.e., it purchases the water or otherwise has possession of or title to the water and sells and delivers it to its customers it is considered to be supplying and delivering water and the exemption in section 23 of Part VI applies.

Where, however, a person such as a water hauler is contracted to provide a service of delivering water on behalf of another person, i.e., it does not own or take possession of the water that it delivers, that person is providing a delivery service only. The supply of the delivery service in these circumstances is not exempt pursuant to section 23 of Part VI but rather is a taxable supply. It is our interpretation that the exemption in section 23 of the delivery service only applies where the supply of the service of delivering water is made by the same person making the supply of the water. Both the Department of Justice and the Department of Finance concur with our decision in this matter.

In your above-noted correspondence with this office you requested our assistance in determining whether XXXXX, a water hauler, was making an exempt supply pursuant to section 23 of Part VI of Schedule V. In your telephone conversation with Mr. Neil Minken of this office on April 7, 1994, you advised that you have resolved the issue concerning XXXXX and do not require any further action from us regarding this matter.

Thank you for writing to us on this matter. If you require any further information concerning this letter please contact Neil Minken at (613) 954-4395.

J.A. Venne
Director
Tax Policy - Special Sectors
Policy and Legislation
Excise/GST

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