Telephone: (613) 954-8585
Fax: (613) 990-1233
XXXXX 12000-3(sb)
Subsections 123(1) and 240(1.1)
This is in reply to your fax to Dave Caron of my staff dated August 28, 1996 in which you inquired as to whether the leasing of a taxi licence (a taxi franchise or a right to operate a taxi) is considered to be operating a taxi business and, therefore, requiring the lessor to be registered for GST purposes pursuant to subsection 240(1.1) of the Excise Tax Act, whether or not the lessor exceeds the small supplier threshold.
Answer
It is our policy that leasing of a taxi licence does not qualify as operating a taxi business as defined in the Act.
In places where licences are used, the licence is a permit that gives someone the right to operate a taxi in that jurisdiction. It is our policy that the business of leasing a licence to operate a taxi does not qualify as a taxi business as defined in the Act. This is because the supply of leasing a licence is not a supply of transporting passengers.
Put differently, the supply of leasing a licence is a supply of a right and not a service. The leasing of the licence transfers the right to operate a taxi business to the lessee of the licence. The provision of a service of transporting the passengers is made by the person who operates the taxi under the right given by the licence. The intent of the definition of a taxi business is to capture persons who are providing the service of transporting the passengers and not those persons who are only providing the right to operate a taxi.
I hope the above will be useful to you. If you require further information, please contact Serge Bernier at (613) 952-9580.
Yours truly,
H.L. Jones
Director
General Applications Division
GST Rulings and Interpretations
GOBI #: 3276(GEN)
| c.c.: |
M. Matthews
S. Bernier |
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