Telephone #: (613) 954-8585
Fax #: (613) 990-1233
XXXXX File #: 11640-3(glr)
XXXXX ss. 123(1)
XXXXX Sch. VI/V/9, 23
Dear XXXXX
I refer to your letter of July 16, 1996, concerning the application of the Goods and Services Tax (GST) to services supplied to persons claiming refugee status in Canada.
You advise that your firm's client is a law firm that supplies services to individuals claiming refugee status in Canada. The services are not being supplied to a legal aid plan. You are specifically concerned about the services of assisting refugee claimants in the preparation for and presentation of their applications for Convention Refugee Status to the Immigration and Refugee Board (IRB). In the majority of cases, the law firm acts as the refugee claimants' personal representative before the IRB. The IRB has no restrictions on who may act as an individual's personal representative.
You also advise that normally, refugee claimants are already in Canada at the time they request your client's services and they usually remain in Canada pending the outcome of their IRB application. The process before the IRB currently takes about one year before a decision is made. If the individual's claim for refugee status is rejected, the claimant is typically sent back to his/her country.
The following questions were raised in your query, as follows:
(a) Are refugees non-residents for purposes of the Excise Tax Act (Act)?
(b) Does the "sojourn rule" contained in paragraph 250(1)(a) of the Income Tax Act apply to refugee claimants such that after they have been in Canada for 183 days, they are considered on their 183rd day in Canada to have become a resident of Canada for GST purposes?
(c) Do the services of acting as a refugee claimant's personal representative before the IRB constitute an advisory, consulting, or professional service?
(d) If it (the services outlined in (c) above) is an advisory or consulting service, does the classification of this service change it if it provided by a lawyer?
Interpretation Given - Current Legislation
(a) Subsection 123(1) of the Act states that "'non-resident' means not resident in Canada". The term "resident" is not defined in the Act.
Attached for your information is a copy of Policy Statement P-086 entitled "Meaning of 'Non-Resident'" as it applies to individuals". You will note on page 6, under the heading "(B) Individuals entering Canada", that where an individual enters Canada and establishes residential ties within Canada (refer to pages 3, 4 and 5 of the statement), the individual will generally be considered to have become a resident of Canada for purposes of the Act on the date the individual entered Canada.
Whether any particular person will be considered to be a non-resident for purposes of the Act can only be determined on a case-by-case basis. The Department will examine all residential ties of an individual to determine whether the individual is resident in Canada. However, it appears that refugee claimants would be considered as residents of Canada.
(b) The answer to this question is provided under the heading "Interpretation Given - Proposed Legislation".
(c) The Department generally considers the term "advisory" service as referring to a service of giving an opinion, or counsel, or of recommending a plan or course of action. A "consulting" service refers to a service of providing information, instruction or expert advice. A consultant generally provides services relating to a field of specialized knowledge or training.
The word "research" is not defined in the Act and is, therefore, given its ordinary meaning. The term generally imports a diligent and systematic inquiry or investigation into a subject in order to discover or revise facts, theories, applications, laws, etc. A "research" service does not, however, include any work that might be undertaken or performed as a result of the plans and recommendations which may follow the inquiries and investigations performed in the course of rendering the service.
The services your firm's client performs, i.e., assisting refugee claimants in the preparation for and presentation of their applications for Convention Refugee Status to the IRB, appear to be advisory and consulting services. However, as stated above, it appears that refugee claimants would be considered as residents of Canada. Therefore, the zero-rating provisions of Schedule VI, Part V, section 9 would not apply to the supply of the services.
(d) No. The meanings of "advisory" and "consulting" services, as outlined above, apply both to Schedule VI, Part V, section 9 and Schedule VI, Part V, section 23 to the Act. However, section 23 also zero-rates a "professional" service supplied to a non-resident person, subject to certain exclusions, which are outlined in paragraphs (a) to (d).
A "professional" service refers to a service provided by an individual whose vocation or occupation requires special, usually advanced, education and skills. The individual providing the service should be a member of a professional association, a professional corporation or a similar body, which is recognized by a statute in at least one province or territory or by one federal body, and enforces standards of professional practice as well as a code of ethics.
If the services your client supplies to refugee claimants are categorized as "professional" services, and the refugee claimants are determined to be non-residents, the supplies could qualify for zero-rating under Schedule VI, Part V, section 23. However, as stated above, it appears that refugee claimants would be considered to be residents of Canada. As a result, the provisions of Schedule VI, Part V, section 23 would not apply to zero-rate the supplies of the services.
The foregoing comments represent our general views with respect to the subject matter of your message. Proposed or future amendments to the legislation may result in changes to the interpretation. These comments are not rulings and, in accordance with the guidelines set out in Section 1.4 of the GST Memoranda Series, do not bind the Department with respect to a particular situation.
Interpretation Given - Proposed Legislation
(b) On April 23, 1996, the Honourable Paul Martin, Minister of Finance, tabled a Notice of Ways and Means Motion to amend the Act. Proposed paragraph 132(1)(d) deems those individuals who are deemed to be resident in Canada under subsection 250(1) of the Income Tax Act, other than sojourners deemed resident by virtue of paragraph (a) of that subsection, to be resident in Canada for GST purposes.
Although sojourners are not deemed resident by virtue of the proposed paragraph, the fact that these individuals have been in Canada for more 183 days or more would be one of the factors taken into account when determining the refugee claimants' residency status.
The foregoing represents our general views with respect to the proposed amendment to the Act relating to the subject matter of your letter. These comments are not rulings and, in accordance with the guidelines set out in Section 1.4 of the GST Memoranda series, do not bind the Department with respect to a particular situation.
Please contact me at (613) 952-6743 if you have any questions or require further information.
Yours sincerely,
Garry L. Ryhorchuk
Senior Policy Officer
Border Issues Unit
General Operations and Border Issues Division
GST Rulings and Interpretations
Policy and Legislation Branch
Attachment
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