File 11695-4-1(rs)
May 1, 1995
XXXXX
This is further to your request for our comments with respect to the above referenced matter.
We have limited our review to the issue of third party remittances. Based on the documentation previously submitted to us, we have nothing to add to the description of the facts of the situation and the interpretation of the contracts contained in the bulk of the directive.
With respect to the identification of the problem on page 3 of the directive, it is our understanding that assessments for net tax were raised against franchisees because they failed to account for the tax collectible on their portion of the discounting services. If this is the case, the directive should be amended to reflect this scenario.
We suggest that the following sentences be added to the last paragraph at the end of the section identified as Problem Area:
It is not the Department's intention to collect the tax twice on the same supply. As a result, the Department will resolve this situation administratively to ensure that the tax is accounted for and remitted by only one of the parties involved.
The directive is silent on whether XXXXX will continue to operate under the third party remittance policy or will they change their accounting system to ensure that each party accounts for and remits their portion of the GST. From a revenue protection point of view, it is preferable that XXXXX continues to account for and remit the entire amount of GST collected if XXXXX is collecting the GST from the clients.
Given that other XXXXX services may be collecting GST in the same manner as XXXXX perhaps the directive should be expanded to include all XXXXX as opposed to singling out XXXXX . For example, the title of the directive could be changed to XXXXX - Remittance of GST.
H.L. Jones
Director
General Applications Division
| c.c.: |
M. Boivin
D. Caron
S. Moran
R. Smith |
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