11842-8
XXXXX
Attention: XXXXX June 26, 1995
Dear XXXXX
This letter is in response to your telephone call of May 8, 1995, to Joanne Hoople of my staff, enquiring about the eligibility for relief from the Goods and Services Tax (GST) on taxable domestic purchases, on behalf XXXXX. XXXXX. These persons have been assigned on XXXXX orders to XXXXX , in connection with an XXXXX which is jointly staffed and operated by XXXXX governments. Thank you for faxing the Memorandum of Understanding (MOU) between XXXXX XXXXX which explain the arrangements for the joint facility. A copy of this document has been forwarded to the Department of Finance for their information.
We agree with the opinion of Mr. William Bowden of the Office of Protocol, Department of Foreign Affairs, in his letter dated May 6, 1995, to XXXXX : namely, that a misunderstanding has occurred with respect to the GST relief available to XXXXX. Canada provided tax relief to certain persons at XXXXX in XXXXX under the provisions of a bilateral agreement which was first incorporated into an Order in Council P.C. 74/1188 of March 8, 1950, and, more recently, for GST purposes, XXXXX in XXXXX Remission Order (1990). These tax privileges ceased at midnight on September 30, 1994, when XXXXX and their families vacated the XXXXX premises. At the same time, the last remaining XXXXX which was covered by the provisions of the bilateral agreement, reverted to the XXXXX.
I understand that Joanne Hoople discussed with you the forms of GST relief which are available to members of a visiting force who are stationed in Canada, such as the Visiting Forces Personnel Remission Order (importations) and the Visiting Forces and Visiting Forces Personnel Alcoholic Beverages Remission Order.
We would also advise that you contact XXXXX at the XXXXX He may be able to tell you whether GST relief for the unit's official purchases in Canada can be provided under the Visiting Forces (Part IX of the Excise Tax Act) Remission Order. If you have further questions, please contact Joanne Hoople at (613) 952-8533. x
Yours truly,
J.A. Venne
Director
Special Sectors
GST Rulings and Interpretations
Policy and Legislation
c.c.: XXXXX
William Bowden,
Office of Protocol,
Foreign Affairs
XXXXX
Claudine Gagnon,
Department of Finance
XXXXX
XXXXX
Val Morin,
Diplomatic Liaison Office,
Mgt. Services
XXXXX
Joanne Hoople [Domus 2195] XXXXX
Domus 2195 - Analysis
XXXXX
As a result of exceptional tax relief treatment of U.S. military personnel and spouses, civilian employees and U.S. contractors associated with the recently closed naval base at XXXXX (eligibility for rebates on goods but not services) for personal use on the base, the question of "What is a XXXXX Leased Base?" needs clarification. As recently as June, 1995, a XXXXX in XXXXX claimed to a Revenue Canada officer in XXXXX that its personnel should not have to pay GST on domestic purchases, on the assumption that it is a "XXXXX Leased Base."
A ruling dated April 11, 1988, issued by XXXXX formerly with the XXXXX , to XXXXX then XXXXX answers the question, "What is a XXXXX Leased Base?" and explains the difference between the entitlements of such a base and a U.S. visiting forces unit. Following are the main points of the ruling:
• The operation of leased bases in XXXXX can be traced back to the signing of the "American Bases Act" between the United Kingdom and the U.S.A. in 1941. When XXXXX acceded to confederation, Canada accepted the provisions of this agreement.
• A "leased base" as referred to in the agreement was defined as a "leased area" in respect of which a lease is or will be entered into. In effect, leases were entered into for the establishment of bases at XXXXX and XXXXX The XXXXX base no longer exists.
• XXXXX remained [prior to its closing XXXXX ] the only "leased base" operational in Canada although a number of visiting forces have contingents in this country. While the presence in Canada of a visiting force is normally the direct result of separate inter-governmental agreements, the entitlements or benefits accorded to members always fall under the provisions of the Status of Forces Agreement (SOFA). SOFA is a regulation under the Visiting Forces Act (VFA), and is not recognized as separate legislation. It more properly concerns the general treatment of forces in Canada, and does not contain any tax provisions that are not already contained in the VFA.
• There is no provision in SOFA which would give a member of a visiting force tax relief on purchases for personal use. Provision of relief from GST is provided by the Visiting Forces (Part IX of the Excise Tax Act) Remission Order which permits a visiting forces unit to obtain relief from GST on purchases for their unit and for the use of the U.S. Nationals in their unit. The U.S. XXXXX at XXXXX is a visiting forces unit to whom this order applies.
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