Telephone No. (613) 954-8585
Fax No. (613) 990-1233
File 11660-2(sm)
Section 273
Dear XXXXX
Thank you for your facsimile dated February 14, 1995, the meetings with officials of this Department on March 6, 1995, and May 15, 1995, and the joint venture information you provided to the Department on March 6, 1995. You have requested a Goods and Services Tax (GST) interpretation with respect to the replacement of the prescribed form by the joint venture agreement where an operator and the participants of the joint venture make an election pursuant to subsection 273(1) of the Excise Tax Act.
Subsection 273(4) states that
"An election or revocation under this section made jointly by an operator and a co-venturer is not a valid election or revocation unless it is made in prescribed form containing prescribed information and specifies the effective date of the election or revocation." (emphasis added)
Therefore, the participants in a qualifying joint venture must satisfy the following requirements in order to make a valid election under section 273:
(a) the election is made jointly by the operator and the co-venturer;
(b) the election specifies the effective date; and
(c) the election is in the prescribed form and contains prescribed information.
The first requirement will be satisfied by the operator and the co-venturer both signing the form, or authorizing another person to sign on their behalf.
The operator and the co-venturer will satisfy the second requirement by identifying a date that the election becomes or became effective. The date specified cannot be earlier than the date that the parties formed the joint venture. The effective date of the election may, however, be earlier than the date on the formal joint venture agreement, provided that the agreement was evidenced in writing on the effective date. As a result of the requirement that an effective date be specified, the participants in the joint venture may complete the election after the fact.
Subsection 123(1) says that "prescribed" means
"(a) in the case of a form or the manner of filing a form, authorized by the Minister,
(b) in the case of the information to be given on a form, specified by the Minister,
(c) in the case of the manner of making or filing an election, authorized by the Minister, and
(d) in any other case, prescribed by regulation or determined in accordance with rules prescribed by regulation".
As we indicated in the meeting on March 6, 1995, the Department is currently reviewing the use of the forms prescribed for the joint venture election (GST 21 and GST 355) and whether they can be replaced by another document. In this regard, we note that section 32 of the Interpretation Act provides that, if a form is prescribed, deviations from that form, not affecting the substance or calculated to mislead, do not invalidate the form used. Therefore, it is the Department's opinion that another form can replace the departmental form provided that the information that has been prescribed is located in the other form. This other form may be provided in the joint venture agreement as an appendix provided it ensures that the co-venturers are aware of their obligations under section 273.
For purposes of the subsection 273(1) election, the operator and the co-venturer would have to complete and retain on their files either the departmental form or a form they have drafted which contains the following information:
1. the operator's complete legal name;
2. the operator's registration number for purposes of the GST;
3. the operator's mailing address;
4. the name, title and telephone number of a contact person for the operator;
5. the complete legal names of the other participants making the election;
6. the registration number of the other participants, if any;
7. the mailing address of the other participants;
8. the name, title and telephone number of a contact person for the other participants;
9. the name of the joint venture, if any;
10. a brief description of the joint venture activity;
11. a statement certifying that the joint venture operates according to an agreement evidenced in writing and that the joint venture is organized in a manner other than a partnership or corporation;
12. the effective date of the election;
13. a certificate, signed by the operator, indicating that the information given in the form is true, correct and complete in every respect to the best of the operator's knowledge and that the person signing is authorized to sign on the operator's behalf;
14. the signature of the other participants, unless the operator is authorized in other supporting documentation, which is signed by the other participants, to sign the election form on their behalf; and
15. a statement which acknowledges that, by signing the form, the joint venture participants elect jointly to have the person identified as the operator account for the GST in respect of all properties and services that are supplied, acquired or imported by the operator on behalf of the co-venturers in the course of the activities of the joint venture while the election is in effect.
If any information is missing, the Department will determine on a case-by-case basis whether the substance of the joint venture election is affected.
We have reviewed the three joint venture agreements that XXXXX submitted (the XXXXX ; the XXXXX and the XXXXX ). It is our opinion that the agreements do not contain enough of the prescribed information for us to consider the agreements as replacements for the prescribed form. In particular, two of the joint venture agreements contain provisions authorizing the operator to make the election on behalf of the participants, but they do not, in fact, contain wording which would indicate that the election is actually being made. There is other basic information missing from the joint venture agreements; e.g., the addresses and registration numbers of the parties involved in the agreement and a statement to the effect that the joint venture is not a partnership.
As indicated, an appendix to the joint venture agreement containing the prescribed information is satisfactory as a replacement to the GST 21 or the GST 355. We would be pleased to review any draft form you develop or discuss with you the information outlined above that would be required in the appendix.
You have also asked about the status of XXXXX request that the operation of straddle plants be prescribed for purposes of the section 273 election. The request is currently under review by the Department of Finance and we expect to hear from them shortly. We will advise you as soon as we receive formal notification in this regard.
This interpretation is based upon our current understanding of the Excise Tax Act and regulations thereunder in their present form and does not take into account the effects of any proposed or future amendments thereto or future changes in interpretation.
Further, while we trust that our comments are of assistance to you, we would advise that they do not constitute a GST ruling and are, therefore, not binding upon the Department in respect of any particular fact situation.
If you require any further information, please contact Sherry Moran at (613) 952-8807 or Sandy Marr at (613) 957-8253.
Sincerely,
H.L. Jones
Director
General Applications Division
GST Rulings and Interpretation Directorate
| c.c.: |
S. Marr
GTP XXXXX
S. Moran |
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