7 October 1997 GST/HST Interpretation HQR0000453 - Operating Fees - Permits, Certificates and Registration of Designs

                                                                        GST/HST Rulings and Interpretations
Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Road
Vanier, Ontario
 XXXXX                                                                                K1A 0L5

Dear XXXXX

Thank you for your letter of December 3, 1996 concerning the application of the Goods and Services Tax (GST) to the following transaction (s).

Our understanding of the facts is as follows:

Statement of Facts

1. XXXXX is a corporation established pursuant to subsection 16(1) of the Safety Codes Act (SCA) and is not an agent of the crown.

2. The Council is responsible for developing and overseeing safety codes and standards in nine disciplines under the SCA.

3. Pursuant to subsection 21.2(1) of the SCA, the Council may, with the approval of the Minister, for the purpose of enabling the Council to carry out activities and services it is directed or authorized to carry out under the SCA, collect money by the levy of assessments (i.e. operating fees) on the persons who apply for, or hold certificates or permits or who apply to register, or register, designs. These fees are being referred to as "operating fees".

4. Pursuant to subsection 21.2(2) of the SCA, "The Council may require an accredited municipality, accredited corporation, accredited agency or the organization that issues certificates or permits or registers designs to collect the money referred to in subsection (1) and remit it to the Council."

Ruling Requested

Please confirm that section 154 of the Excise Tax Act (ETA) applies to the Operating Fees charged by the Council. Therefore, where section 154 applies, the GST status of the Operating Fee is dependent upon the GST status of the other supply (i.e. a permit, certificate or service of registering the designs).

Ruling Given

Based on the facts set out above, we rule that section 154 of the ETA includes in consideration for the supply of a certificate, permit or design registration, the fees collected either by the Council under subsection 21.2(1) of the SCA, or by an accredited municipality, accredited corporation, accredited agency or other organization that issues certificates or permits or registers designs under subsection 21.2(2) of the SCA.

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection or appeal, that there are no relevant changes in the future to the Excise Tax Act, its interpretation or administrative policy and that you have fully described all necessary facts and transactions for which you requested a ruling.

Ruling Requested

The issuance of a permit or certificate or registration of a design made by a government or municipality or by a board, commission or other body established by a government or municipality is an exempt supply pursuant to section 20 of Part VI of Schedule V to the ETA.

Interpretation Given

We are unable to provide a ruling on the issue of the tax treatment of permits, certificates or design registrations as the tax treatment of this type of document can vary and you have not provided specific examples of those documents. Rather, we have provided a interpretation of the way in which the ETA applies to the provision of these types of documents. If you would care to provide us with specific permits, certificates or design registrations we would be pleased to provide a ruling regarding the tax status of the documents.

Section 20 of Part VI of Schedule V to the ETA exempts from tax several supplies provided by a government, municipality or body established by a government or municipality. Certain types of permits, certificates and registrations are dealt with in that section.

Permits

With the exception of a right to import alcoholic beverages; licences, permits and similar rights are exempt under paragraph 20(c) of Part VI of Schedule V to the ETA. A licence or permit is generally considered to be a permission to do something the recipient would not otherwise be entitled to do. For example, an operator's licence permits an individual to drive a specific type of vehicle. However, if a licence provides a person with another supply, it is the status of that supply which must be classified. For example, if a licence entitles a person to access or use the property of a municipality that supply would be taxable pursuant to section 146 of the ETA and paragraph 20(l) of Part VI of Schedule V to the ETA.

Certificates

Certificates which evidence title or right to property or any encumbrance in respect of property are exempt under paragraph 20(e) of Part VI of Schedule V to the ETA. Certificates which attest to the status of a person are exempt under 20(d) of Part VI of Schedule V to the ETA. (Part III of Schedule V to the ETA also exempts certificates in respect of a courses, or in respect of a professional or trade accreditation or designation recognized by a regulatory body when made by specified suppliers.)

Design Registration

Paragraph 20(a) of Part VI of Schedule V to the ETA exempts from tax the service of registering any property. This would include the registration of a design.

The foregoing comments represent our general views with respect to the treatment of permits, certificates and design registrations provided by governments, municipalities or boards, commissions, or other bodies established by a government or municipality. Proposed amendments to the Excise Tax Act, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST Memoranda Series, do not bind the Department with respect to a particular situation.

Should you have any further questions or require clarification on the above or any other GST matter, please do not hesitate to contact me at (613) 954-7947.

Yours truly,

Darlene Wladyka
Governments Unit
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate