File: 11830-1(DRM)
Doc: 2169
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Subject:
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GST APPLICATION RULING
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I refer to your letter of January 4, 1995 wherein you requested clarification of the tax status of certain supplies made by the XXXXX[.]
Our understanding of the facts is as follows:
Facts
1. XXXXX is a registered charity within the meaning of the Income Tax Act (ITA) and therefore meets the definition of "charity" under subsection 123(1) of the Excise Tax Act (ETA).
2. XXXXX operates a workshop, the XXXXX which provides employment and training for individuals who are mentally handicapped. The workshop manufactures wood products (e.g. lawn furniture, ladders, etc.) that are supplied to distributors and consumers.
3. The workshop also provides manufacturing related services including the assembly of machine parts and the packaging of products on a contract basis to other businesses.
4. XXXXX also provides lawn mowing and snow removal services, none of which is provided by volunteers.
Ruling Requested:
Is the supply of the manufacturing and other services by XXXXX exempt of GST pursuant to section 2 of Part VI of Schedule V to the ETA?
Ruling Given:
Based on the facts, we rule that the manufacturing services, lawn mowing, and snow removal services offered by XXXXX are exempt supplies pursuant to section 2 of Part VI of Schedule V to the ETA.
This ruling is subject to the general limitations and qualifications outlined in the GST Memorandum Series (1.4). We are bound by this ruling provided that none of the above issues are presently under audit, objection, or appeal, there are no relevant changes in the future to the Excise Tax Act, and that you have fully described all necessary facts and transactions for which you requested a ruling.
Explanation:
Under the general provision of section 2 of Part VI of Schedule V to the ETA, goods and services supplied by a charity are exempt of GST unless they are enumerated in the exceptions to the exemptions listed in paragraphs (a) to (m). The services supplied by XXXXX are not listed in the exceptions to the general exempting provision of section 2 and are therefore exempt of GST.
Please note that the statement in your letter that "the override rules (of section 2) does (sic) not apply if the supplies are of a type made by a commercial business" is not accurate.
Also, although you have not requested a ruling concerning other supplies by XXXXX please note that goods manufactured by a charity such as, in this case, wood products, ladders, and lawn furniture, are typically taxable, unless the volunteer exemption (section 3 of Part VI of Schedule V) or direct cost exemption (section 6 of Part VI of Schedule V) apply.
If you have any questions concerning this ruling, please contact Dwayne Moore, Tax Policy Officer, at (613) 954-4206. For other queries regarding the GST, please contact your local Tax Services Office XXXXX[.]
J.A. Venne
Director
Special Sectors
GST Rulings & Interpretations
c.c.: J. Houlahan
D. Moore
XXXXX
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