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Mr. W. McCloskey
Assistant Deputy Minister
Canada Customs and Revenue Agency
Implementation Team
Revenue Canada
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GST/HST Rulings and
Interpretations Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Road
Vanier, Ontario
K1A 0L5
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110 O'Connor Street
9th Floor
Ottawa, Ontario
K1A 0L5
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Case: HQR0000804File: 11848-7/RCReg: XXXXXOctober 28, 1997
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Dear Mr. McCloskey:
Thank you for your undated letter received July 30, 1997 (with attachments) concerning the registration requirements of the proposed Canada Customs and Revenue Agency (Agency) for purposes of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST).
Our understanding of the facts is as follows.
Statement of Facts
1. The Agency will be established as a body corporate and agent of Her Majesty in right of Canada for all purposes of the Act which creates it.
2. For GST/HST purposes the federal government registrant XXXXX includes "departments" as defined in the Financial Administration Act (FAA).
3. Pursuant to section 2 of the FAA
'department' means
(a) any of the departments named in Schedule I,
(a.1) any of the divisions or branches of the public service of Canada set out in column I of Schedule I.1,
(b) a commission under the Inquiries Act that is designated by order of the Governor in Council as a department for the purposes of this Act,
(c) the staffs of the Senate, the House of Commons and the Library of Parliament, and
(d) any departmental corporation;
(emphasis added).
4. Pursuant to section 2 of the FAA "'departmental corporation' means a corporation named in Schedule II".
5. Schedule I to the FAA includes the Department of National Revenue (Department).
6. Schedule II to the FAA will be amended to include the Agency.
7. Section 122 of the ETA states:
This Part is binding
(a) on Her Majesty in right of Canada; ...
8. Section 239 of the Excise Tax Act (ETA) permits a registrant, who engages in one or more commercial activities in separate branches or divisions, to file an application for authority to file separate returns in respect of a branch or division specified in the application.
9. The federal government registrant has applied for and been authorized to file separate returns for its branches and divisions.
10. The Comptroller General has issued the following delegation which permits departments to apply for and/or request changes to the number of returns filed by a department:
Authority is hereby delegated to the deputy heads of all federal government departments, as the term is defined in the Financial Administration Act, to add to, delete from or make any other amendments to the "Government of Canada reporting entities register" for the purposes of subsection 239(1) of the Excise Tax Act, as may be appropriate with respect to that portion of the Public Service for which the deputy head is responsible.
11. As it is bound by part IX of the ETA, the Department pays, collects and remits GST/HST, reporting tax through the filing of separate returns.
12. The GST Federal Government Departments Remission Order (Order) written pursuant to the FAA states:
His Excellency the Governor General in Council, considering that it is in the public interest to do so, on the recommendation of the Treasury Board, pursuant to section 23 of the Financial Administration Act, is pleased hereby to remit the tax that is paid or payable by a department under Part IX of the Excise Tax Act.
13. Pursuant to section 165 of the ETA, GST is imposed upon supplies made in non-participating provinces and HST is imposed on supplies made in participating provinces.
14. Subsection 123(1) of the ETA states:
In section 121, this Part and Schedules V to X,
"non-participating province" means
(a) a province that is not a participating province, or
(b) another area in Canada that is outside the participating provinces;
"participating province" means a province or area referred to in Schedule VIII....
Pursuant to Schedule VIII, Nova Scotia, New Brunswick and Newfoundland are participating provinces.
15. Generally, the Reciprocal Taxation Agreements (RTAs) define "provincial sales tax" as the retail sales tax imposed by that particular province and "provincial tax or fee" as a provincial tax or fee as defined for purposes of Part VII of the Federal Provincial Fiscal Arrangements Act (FPFAA), other than the provincial sales tax. For greater certainty each RTA includes in the definition of "provincial tax or fee" taxes or fees imposed under specified provincial statues.
Ruling Requested
What are the GST/HST registration requirements of the proposed Canada Customs and Revenue Agency?
Ruling Given
Based on the facts set out above, we rule that:
The proposed Canada Customs and Revenue Agency will not be required to register for GST/HST purposes as it will be part of the federal government registrant. However, if the Agency wishes to collect, report and remit tax in the same manner as the current Department of National Revenue, it will be required to apply for the authority to file separate returns.
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 there are no relevant changes in the future to the Excise Tax Act, or to departmental interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.
Although responsibility for the administration and interpretation of the RTAs rests with the Department of Finance, you have informed us that officials there have suggested you seek our opinion regarding the status of the Agency under the RTAs.
It is our opinion that as the Agency will be a department for purposes of the FAA it will be afforded the same treatment under the RTAs that the Department enjoys.
Currently, Canada has RTAs with all non-participating provinces and territories with the exception of Alberta. The RTAs define the obligations of specified federal government entities to pay, collect, report and remit specified provincial taxes; as well as the obligations of specified provincial government entities to pay, collect, report and remit specified federal taxes.
Under the RTAs federal government departments as defined in the FAA, such as the Department of National revenue (Department) do not pay "provincial sales tax" (as defined in the RTAs). In order to claim point of purchase relief from the provincial sales tax, the Department indicates the provincial sales tax licence number assigned to it by the particular province on all purchase documents. However, the Department is required to pay the provincial sales tax in respect of property or services acquired by employees on travel status or purchased out of petty funds without claiming a refund or rebate of that tax.
In accordance with the RTAs, the Department does pay any "provincial tax or fee" (as defined in the RTAs). Examples of these taxes or fees include provincial Gasoline, Fuel or Motive Fuel Tax, and Tobacco Tax, as well as taxes imposed under provincial acts such as Highway Traffic Acts, Motor Carrier Acts or Off-Road Vehicle and Motorized Snow Vehicle Acts.
Under the RTAs the Department is required to collect and remit the "provincial sales tax" or any "provincial tax or fee" and to pay any interest in respect of the collection and remittance of these taxes and fees in accordance with the law under which the tax or fee is imposed.
Upon the implementation of the HST, which contains both a federal and provincial component, the provincial sales tax was no longer charged in participating provinces. Pursuant to the ETA, the Department pays, collects and accounts for HST in the same manner as it does for GST.
Although Canada currently has RTAs with two of the participating provinces, the imposition of the HST has made certain provisions of the RTAs irrelevant. For example, the Department no longer requires an exemption from the provincial sales tax (as it is no longer charged) and the provisions relating to the payment of provincial sales taxes on employee and petty cash purchases are also irrelevant. However, the Department continues to be required to pay, collect and remit any "provincial tax or fee" in participating provinces.
You also made reference in your letter to the Agency's use of the GST Federal Government Departments Remission Order which relieves a department for both GST and HST paid or payable. Although it appears that the Agency will be entitled to use the Order, the responsibility for the Order rests with Treasury Board. Therefore, the Agency's entitlement to use the Order should be confirmed with Treasury Board.
Should you have any further questions or require clarification on the above matter, please do not hesitate to contact Donna Harding, A/Manager, Governments Unit at (613) 954-3551 or Darlene Wladyka, Senior Rulings Officer at (613) 954-7947.
Yours truly,
J.A. Venne
Director
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate
| c.c.: |
D. Harding
D. Wladyka
Sherry Moran |
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