File #: 11895-1(on)
Case No. 1511(REG)
Sch V/VI/20(h)
I refer to the letter of September 28, 1995, from XXXXX of your office, sent by facsimile to the General Applications Unit of GST Rulings and Interpretations. As the issue relates to supplies made by the XXXXX (the Commission), the Public Service Bodies Unit of Special Sectors has been assigned the responsibility of replying to your request for assistance.
Facts
1. Under XXXXX of the XXXXX XXXXX (Order), a waste treatment system may be acquired, constructed, established, altered, controlled, managed, maintained or operated. The Commission was established under XXXXX of the XXXXX XXXXX[.] Under XXXXX of the XXXXX the Commission may assess, charge, and collect fees for services of acquiring, constructing, establishing, altering, controlling, managing and operating waste treatment facilities.
Under XXXXX of the XXXXX a commission created under subsection 18(1) of the XXXXX may levy rates in respect of water and sewerage under the XXXXX[.]
For the purposes of waste treatment, under XXXXX, the Commission may enter into an agreement with the XXXXX respecting the collection of an annual charge to householders for the collection of refuse and the supply of refuse carts.
XXXXX of the Real Property Tax Act provides for the taxation of real property within a municipality. Subsection (8)9 of the Real Property Tax Act provides for the levy and collection of fees for services respecting waste management charged by the commission pursuant to section 18 of the XXXXX[.]
2. Under XXXXX the Commission may acquire, construct, establish, alter, extend, control, manage, maintain or operate a waste management system to serve areas identified as XXXXX (the Region).
3. Under XXXXX, the Commission is mandated to:
• manage the tender process for the collection of refuse within the Region;
• administer the purchase or lease/purchase of refuse carts and supplementary equipment;
• administer the distribution of refuse carts to householders within the Region;
• determine the annual charge required for providing a refuse collection system; and
• promote the waste watch program jointly with the XXXXX[.]
4. The program is mandatory for all residents, including businesses and cottages dwellers in the Region.
5. The Commission entered into an equipment lease agreement (the agreement) with XXXXX[.] Under the terms of this agreement, XXXXX will lease to the Commission for a period of sixty months equipment consisting of compostainers, garbage containers, kitchen counter containers and transponder tags. Pursuant XXXXX the Commission agrees not to sell, assign, sublet, pledge, hypothecate, or otherwise encumber or suffer a lien upon or against the equipment. Pursuant to XXXXX the Commission has no right, title or interest in the equipment. Upon expiration of the term of the agreement, the Commission will return the equipment to XXXXX or may purchase the equipment for one dollar per household grouping consisting of one compostainer, one garbage container, one kitchen counter container and transponder tags.
6. The Commission allows participants to either purchase the equipment for a lump sum fee or to purchase the equipment through property taxes over a period of XXXXX years. Initially, those householders who chose to purchase the equipment paid XXXXX for the equipment, and pursuant to amendments made to the XXXXX received a provincial government subsidy of XXXXX for the cost of the compost cart. The net cost of the equipment to the householder was XXXXX[.] For householders who purchased the equipment, the monthly residential rate for the collection of garbage, including compostables, was set at XXXXX annually.
Householders who chose to purchase the equipment over the XXXXX year period were charged a monthly rate of XXXXX annually for the collection service including the equipment.
Information Requested
1. Is the Commission making a single supply or a multiple supply?
2. What is the tax status of the supply under the Excise Tax Act (the Act)?
Answer Provided
1. The supply of the refuse collection service and the supply of the refuse carts (the equipment) are two elements that are provided to householders. Given that these two elements are outputs and not inputs, it was necessary to determine whether the two elements are part of the same supply or constitute separate supplies. With reference to the policy statement entitled, Single and Multiple Supplies, the following three questions were asked:
1. If the householders do not receive all of the elements, would each, in itself, be, in the context of these transactions of any use to the householders?
2. Is the provision of a particular element contingent on the provision of another element?
3. Is the customer made aware of the specific elements (in detail) that are part of the package?
In response to the first question, both elements constitute a single supply. The householders are acquiring the refuse carts in order to get their refuse collected by the Commission. If the Commission did not collect their refuse, the carts would not have a separate use in the context of these transactions. The refuse collection service does not have a separate use, given that the Commission will not collect the refuse of householders who use other containers than those provided by the Commission.
In response to the second question, both elements are part of a single supply. The provision of the refuse collection service and of the refuse carts is contingent upon each other, given that the householders do not have the option of acquiring one element without acquiring the other.
In response to the third question, each element constitutes a separate supply. In the context of the transactions, the householders are made aware that they will receive a refuse collection service. In addition, they know the number of carts that they will be receiving, as well as the intended use and capacity of each cart.
In conclusion, the answers to the three questions indicate that both elements are part of a single supply.
2. Pursuant to paragraph 20(h) of Part VI of Schedule V to the Act, a supply of garbage collection services is an exempt supply when made by a government or municipality or by a board, commission or other body established by a government or municipality. The Commission was created by XXXXX to collect waste material. It is our opinion that the single supply is a supply of a garbage collection service. The annual charge of XXXXX for the garbage collection service included on the householders property tax bill represents an exempt supply of garbage collection service. Similarly, where the householder makes a prepayment of XXXXX which is a fee calculated in relation to the equipment, it is our opinion that they are paying for a supply of a basic garbage collection service. The supply of the garbage collection service for which an annual fee of XXXXX is charged, is exempt under paragraph 20(h) of Part VI of Schedule V to the Act.
Should you have any questions, please contact Ms. Joanne Houlahan, Manager, Public Service Bodies at (613) 954-7945 or Mr. Owen Newell, Policy Officer, Municipalities, Public Service Bodies, GST Rulings and Interpretations at (613) 954-4280.
Yours truly,
J.A. Venne
Director
Special Sectors
GST Rulings and Divisions
| c.c.: |
J. Houlahan
N. Minken
O. Newell
M. Bloom |
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