Telephone: (613) 954-8585
Fax: (613) 990-1233
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XXXXX
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File: 11745-5(glr), ss. 340(3), (6)
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Attention: XXXXX
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August 5, 1994
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Attached is a copy of a letter dated January 27, 1994 (File: XXXXX), written by Ms. XXXXX, Tax Enquiries Officer, XXXXX District Excise/GST Office, to the above-referenced registrant concerning the application of the Goods and Services Tax (GST) to automobile lease payments.
In her letter Ms. XXXXX states that subsection 340(3) of the Excise Tax Act (Act) grandfathers lease payments and payments made toward the purchase of the automobile provided they are made under a written agreement entered into before 1991 and the payments are made before 1994. Ms. XXXXX also states that all automobile lease payments are taxable at a rate of 7% as of January 1, 1994, regardless of when possession of the vehicle occurred.
The statement regarding subsection 340(3) is correct. However, Ms. XXXXX statement to the effect that effective January 1, 1994, all automobile lease payments are subject to the GST is incorrect.
Subsection 340(6) of the Act provides that the GST does not apply to any consideration payable under a written agreement in respect of the lease of tangible personal property (if the property is a capital property of the supplier), where the agreement was entered into prior to August 8, 1989. Relieved under this provision are both lease and lease buy-out payments. If an automobile was leased prior to August 8, 1989, and was a capital property of the lessor, the lease payments continue to be grandfathered.
If you have any questions, please contact Mr. Garry Ryhorchuk of my staff at (613) 952-6743.
H.L. Jones
Director
General Tax Policy
Excise/GST
Policy and Legislation
Att.
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R. Allwright, GTP: XXXXX
G. Ryhorchuk
J. C. Laporte |
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