Telephone: (613) 954-8585
Fax: (613) 990-1233
11650-10 (pl)
Sections 169 & 175
Dear XXXXX
Thank you for your letter dated March 5, 1996, in which you request clarification of our draft Policy Statement P-184: Credit card expenses and the registrant's use of the 6/106ths factor for claiming input tax credits as it relates to XXXXX[.]
Statement of Facts:
In your letter you state that where a company participates in XXXXX XXXXX corporate card system there is no one written agreement signed by the company, the card member and XXXXX but rather a series of written agreements are provided, some of which require no signature (e.g., you stated in a recent telephone conversation that the card member agreement is not required to be signed by the card members in certain provinces, yet the card members in those provinces are deemed to have accepted all of the conditions of the agreement upon use of the XXXXX card).
Your concern is that draft Policy Statement P-184, more specifically the first condition (described below), will not be satisfied by the company thereby precluding the company the use of the 6/106ths tax factor for the claiming input tax credits.
Your question is whether the Department would consider modifying the first condition stated in the said draft Policy Statement from:
1. there must be a signed agreement between the company, the card member and the credit card issuer stating that the card member is solely or jointly and severally liable with the company for the payment of all charges (e.g., purchases of goods and services, credit card fees, etc.) made in connection with the corporate card issued to the card member;
to read:
1. there must be one or more written agreements stating that the card member is solely or jointly and severally liable with the company for the payment of all charges (e.g., purchases of goods and services, credit card fees, etc.) made in connection with the corporate card issued to the card member.
Department's Position:
In your proposed changes to the first condition of the draft Policy Statement, we have identified the two following issues for our consideration:
1. would the Department consider that more than one corporate credit card agreement (rather than a single agreement) to establish the card member's liability of the credit card charges is sufficient documentary evidence; and
2. would the Department consider omitting the requirement that the written corporate credit card agreement be "signed" by all three parties since, in certain provinces, the card members are not required to sign any document.
With respect to the first issue, the meaning of the word "agreement" in draft Policy Statement P-184 may include one or more documents. Therefore, the Department does not require that the documentary evidence to prove that the liability for payment of the company credit card charges does rest entirely with the card member (or that the card member is jointly and severally liable with the company) must be provided on a single document. As long as the company retains all the necessary documentation as proof of the card member's liability for payment of the credit card charges, the Department will accept this information to be sufficient documentary evidence. However, please note that we have incorporated your recommended change (i.e., "... one or more written agreements ...") to the draft Policy Statement to eliminate any possible confusion or misinterpretation by the reader.
With respect to the second issue (i.e., the requirement for a "signed" agreement) it is our opinion that, in light of the fact that card members are not required to sign card member agreements in certain provinces, the Department cannot obligate a company based in one of those provinces to procure signatures from their card members. With this in mind, the Department has amended the draft Policy Statement accordingly by omitting any reference made to the requirement for card member signatures.
Lastly, for your information please find enclosed a copy of the draft Policy Statement P-184 which we recently submitted to our Field Services and Administration Division for inclusion on the Revenue Canada electronic database.
This interpretation is based upon our current understanding of the ETA and Regulations thereunder in their present form and does not take into account the effects of any 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 further information, please contact Michael Matthews, Manager, ITC and Co-ordination Unit at (613) 952-8806 or Paul Lafond, Policy Officer, at (613) 954-9700.
Yours truly,
H.L. Jones
Director
General Applications Division
GST Rulings and Interpretations
Attachment
GAD #: 2777 (GEN)
| c.c.: |
M. Matthews
P. Lafond |
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