File 11660-2(sm)
Section 273
Telephone No. (613) 954-8585
Fax No. (613) 990-1233
Dear XXXXX
Thank you for your letter dated June 7, 1995, with documents attached. This letter is in response to our letter dated May 19, 1995, and requests that the Department accept a blanket election form for the joint ventures entered into after 1990 where XXXXX is the operator. XXXXX had not completed election forms for the individual participants/joint ventures as the joint ventures were entered into. It is estimated that there are XXXXX joint ventures and XXXXX participants.
We understand that XXXXX is currently under audit by the Department.
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 had reviewed the three joint venture agreements that XXXXX submitted XXXXX . It was our opinion as stated in our previous letter 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. The third joint venture agreement has the required wording making the election. However, there is other basic information missing from that agreement as well as the first two 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.
With the exception of the registration numbers of the participants, you have provided the missing information in your letter of June 7, 1995. We note, however, that the GST 355, Streamlined Joint Venture Election, has not been signed and that the certification area has been deleted. We also note that, although the effective date of the election may be coterminous with the date of the commencement of the joint venture, it is not necessarily so.
As we stated in our telephone conversation of July 20, 1995, we are unable to comment on whether the blanket joint venture election is satisfactory. From an interpretative policy standpoint, it is our view that the blanket election does not meet the requirements of section 273. Any decision as to its acceptability, given the circumstances in which XXXXX finds itself, should therefore be made by the auditor assigned to audit the books and records of XXXXX . Accordingly, we have forwarded the information to the XXXXX Tax Services Office for their review.
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.
Finally, we would like to thank you once again for raising this matter with our office, and for providing copies of the joint venture agreements and other documentation, all of which has helped us to better understand joint venture arrangements within the oil and gas industry. As a result, we have amended our policy under development on the prescribed form and prescribed information necessary for a valid election. In particular, we have expanded the policy so that a joint venture election which is contained in the joint venture agreement itself or in an appendix thereto, will be considered valid by our Department, provided that all the required information is contained in the agreement. In this regard, we would again invite you to submit for our review and ultimate approval, a standard election provision to be included in future joint venture agreements.
If you require any further information, please contact Sherry Moran at (613) 952-8807 or Sandy Marr at (613) 957-8253. The appendices are enclosed as requested.
Sincerely,
H.L. Jones
Director
General Applications Division
GST Rulings and Interpretation Directorate
Attachments
| c.c.: |
S. Marr - XXXXX
S. Moran
XXXXX |
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