11846-1
XXXXX March 4, 1994
Dear XXXXX
We are writing in response to your memorandum dated March 13, 1992 wherein you request a GST interpretation on the status of various fees imposed under the "Horned Cattle Purchases Act", the "Animal Products Act" and the "Cattle Marketing Deductions Act". As the status of three fees is being questioned, we will prepare a separate statement of facts and interpretation for each. The fees in question are: (1) the horned cattle deduction, (2) the livestock inspection fee, and (3) the check-off fee.
1) Horned Cattle Deduction
Statement of Facts:
1) This deduction is imposed on the cattle owner under the Horned Cattle Purchases Act (HCPA), and may be deducted from the selling price by a dealer (pursuant to section 3 of the HCPA), or collected from the owner by an inspector (pursuant to section 5 of the HCPA) as the case may be.
2) Pursuant to the HCPA, a dealer means a person who is or is required to be licensed as a livestock dealer in the province.
3) Pursuant to the HCPA, an inspector means a person appointed as or authorized to be an inspector under this Act.
4) Every dealer who purchases cattle with horns, (except pure bred cattle for breeding purposes) shall pay the current market price less the sum of $2 for each head of cattle with horns so purchased.
5) Every cattle owner who transports cattle to a place prescribed in Manitoba or Alberta under "The Livestock Inspection and Transportation Regulation, 1978" shall pay to the inspector, at the place of inspection, the amount imposed under the Horned Cattle Deductions Act (i.e. $2 per head of cattle).
6) Every dealer or inspector shall submit to the Minister (in prescribed form) a return and the amount deducted or collected under the HCPA.
7) A special Horned Cattle Trust Fund shall be kept by the Minister of Finance and any moneys deducted or collected and received by the Minister shall be deposited into the fund together with any income accruing therefrom.
8) With the approval of the Minister the Horned Cattle Trust Fund shall be used for:
a) paying or discharging expenses incurred in the administration of the HCPA;
b) making grants or other payments and discharging expenses for the purposes of:
i) the general improvement of cattle, including financial support for agricultural societies and exhibitions;
ii) improving the means or methods of managing, handling, housing, pasturing, nutrition or feeding of cattle;
iii) research with respect to the losses of cattle production caused by disease, insects or parasites;
iv) research with respect to the costs of production or losses associated with the breeding, rearing, feeding, finishing or marketing of cattle through experimental purposes; and
v) supporting projects pertaining to cattle and their products as approved by the committee.
9) The minister shall establish a committee called the Horned Cattle Purchases Act Advisory Committee, consisting of industry representatives.
10) The committee may meet from time to time at the request of the minister and shall act in an advisory capacity to the minister and may make recommendations with respect to programs, projects and policies deemed expedient, the cost of which, in the opinion of the committee, ought to be paid out of the trust fund.
Interpretation requested:
Is the horned cattle deduction subject to GST when deducted from the owner's selling price by the dealer, (2) when collected by the inspector from the cattle owner, and (3) when remitted by the dealer or inspector to the government?
Interpretation provided:
It is the Departments opinion that the horned cattle levy which is imposed on the cattle owner pursuant to section 3 or 5 of the HCPA is not in and of itself consideration for a supply.
However, the GST implications on the payment of the fee by the cattle owner must be addressed. The fee is payable by the cattle owner under one of two provisions under the HCPA.
Under the first provision, section 3 of the HCPA requires every dealer purchasing cattle with horns to deduct a $2 fee from the price paid to the cattle owner effectively imposing the fee on the supply of horned cattle being made by the cattle owner. In this situation, the provisions of section 154 come into play and the fee is included in the consideration payable by the dealer for the cattle. It should be noted that pursuant to section 1 of Part IV of Schedule VI the supply of livestock is zero-rated.
Under the second provision, section 5 of the HCPA, every owner who transports cattle out of the province must pay the amount mentioned in section 3 to an inspector before transporting the cattle. In this situation the fee is not imposed on the supplier or recipient of a supply and therefore section 154 is not relevant. Further, the fee itself is not consideration for a supply and is not subject to GST when paid to an inspector.
2) Livestock Inspection Fee
Statement of Facts:
1) This fee is imposed under the Animal Products Act (APA).
2) Under the APA, the Lieutenant Governor in Council may make regulations prescribing:
a) the fees and charges payable for any service performed under the APA, and the manner of collecting and administering any amount so payable;
b) the manner in which any fees are collected and prescribing the commission to be paid to the person who collects those fees.
3) An inspector may cause any animal or animal product to be detained for the purposes of establishing proof of ownership of the animal or animal product.
4) The Livestock Inspection and Transportation Regulations, 1978 govern the fees and charges payable for livestock inspection.
5) Pursuant to the Livestock Inspection and Transportation Regulation:
a) The department shall arrange for the inspection of livestock as required under these regulations.
b) The fees and charges for the inspection of livestock shall be as prescribed in Schedule A to these regulations and shall be payable by the person for whom the inspection services are performed;
c) No livestock shall be transported after inspection until the inspection fees and charges have been paid; or the department has approved alternate arrangements for their payment; and a livestock permit and any other such documents that may be required to be attached to the livestock permit as issued by an inspector.
Interpretation requested:
Is the brand inspection fee subject to GST?
Interpretation provided:
It is the Departments position that the brand inspection fee is payable for the service of inspecting cattle to establish proof of ownership of the animal. This is a taxable service and as such the brand inspection fee is subject to GST at 7% under the general taxing provisions of section 165.
3) Check-off Fee
Statement of Facts:
1) This fee is imposed under the Cattle Marketing Deductions Act (CMDA).
2) Pursuant to section 3 of the CMDA, every livestock dealer who purchases cattle shall deduct from the purchase price of each head of cattle purchased the sum of money that may be specified in the regulations.
3) Pursuant to section 5 of the CMDA, every owner who delivers cattle to any place in Alberta or Manitoba as prescribed shall pay to the inspector, at the place of inspection, $1.50 for each head of cattle inspected.
4) Every livestock dealer or inspector is required to submit a return to the Minister in prescribed form, together with the amount collected or deducted pursuant to section 3 or subsection 5(2) of the CMDA.
5) Any money deducted or collected under section 3 or 5 of the CMDA, along with any income accruing therefrom, shall be deposited into the Cattle Marketing Deductions Fund.
6) With the approval of the minister, any moneys deposited into the fund, along with any income accruing therefrom, shall be used for discharging expenses incurred:
a) in the administration of the Act; and
b) by the committee for the purposes of:
i) the general improvement of cattle;
ii) research with respect to losses of cattle caused by disease, insects or parasites;
iii) improving means or methods of the managing, handling, housing, pasturing, feeding or marketing of cattle by owners and livestock dealers;
iv) the extension or expansion of markets for cattle and beef;
v) the reduction of costs or losses incurred in the rearing, feeding or marketing of cattle;
vi) the development, improvement and promotion of the cattle industry, as the committee considers necessary.
vii) the reasonable support of any national organization that has as its object any of the purposes mentioned.
7) Any person may claim 8a refund of deductions made under the CMDA by filing a claim in prescribed form, not later than 31 days after the end of the calendar year for which the refund is being claimed and upon receipt and verification of the claim by the minister the refund shall be made to that person from the fund.
Interpretation requested
Is the check-off fee subject to GST when, (1) deducted from the owners selling price by the dealer, (2) when collected by an inspector from the cattle owner, and (3) when remitted by the dealer or inspector to the provincial government?
Interpretation provided:
It is the Departments position that the cattle check-off fee which is imposed on the cattle owner pursuant to section 3 or 5 of the CMDA is not in and of itself consideration for a supply.
However, the GST implications on the payment of the fee by the cattle owner must be addressed. The fee is payable by the cattle owner under one of two provisions of the CMDA.
Under the first provision, section 3 of the CMDA requires every dealer purchasing cattle to deduct a prescribed fee from the price paid to the cattle owner thus effectively imposing the fee on the cattle owner in respect of the supply of cattle. In this situation the provisions of section 154 come into play and the fee is included in the consideration payable for the supply of the cattle. It should be noted that the supply of livestock is zero-rated under section 1 of Part IV of Schedule VI of the Excise Tax Act.
Under the second provision, section 5 of the CMDA, every owner who transports cattle out of the province must pay to an inspector the amount mentioned in section 3 of the CMDA before transporting the cattle. In this situation the fee is not imposed on a supply nor is the fee itself consideration for a supply. Therefore, the fee is not subject to GST when paid to an inspector by the cattle owner. Further, there are no GST implications when the fee is remitted by the dealer or the inspector.
These interpretations are based upon our current understanding of the Excise Tax Act and regulations thereunder in their present form and do not take into account the effects of any proposed or future amendments thereto or future changes in interpretation.
If you have any questions please contact Marilyn Viger, Manager, Government Sectors at 613-954-3551 or Donna Harding at 613-952-8531.
Yours truly,
J.A. Venne
Director
Tax Policy - Special Sectors
Policy and Legislation
Excise/GST
| c.c.: |
M. Viger
D. Harding (1053) |
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