13 August 1997 GST/HST Interpretation HQR595 - Supplies by Municipalities

Dear XXXXX

We write in response to your request for a Goods and Service Tax (GST) interpretation, which was received at our XXXXX on May 10, 1995. Please accept our apologies for the delay of our response.

You inquire concerning the status, for purposes of the GST, of certain transactions between the municipalities of XXXXX and XXXXX in the province of XXXXX.

The XXXXX uses a land fill site that is owned by the municipality of XXXXX to dispose of waste. Under the terms of an agreement the XXXXX pays to the municipality of XXXXX fifty per cent of both capital costs and operating costs incurred by the latter in respect of the site.

The XXXXX also provides to the municipality of XXXXX a service of treating leachate produced by the latter's land fill site. The leachate is treated at a sewage treatment facility owned and operated by the XXXXX In 1992, the XXXXX charged for this service a fee of XXXXX gallons of leachate treated at it sewage treatment plant. In the course of providing this service, the XXXXX uses its trucks to gather the leachate from the land fill site to the sewage treatment plant; a separate charge is payable by the municipality of XXXXX for this transportation service.

With respect to the use by the XXXXX of the municipality of XXXXX land fill site, the Department takes the position that the municipality of XXXXX makes a supply to the XXXXX of a right to deposit refuse within the contemplation of paragraph 20(l) of [P]art VI of [S]chedule V to the Excise Tax Act, for which the XXXXX is required to pay a portion of the operating and capital costs of the land fill site as consideration; accordingly the supply is exempt from GST, and the XXXXX is not required to pay GST on these amounts.

The supply by the XXXXX of the service of collecting and treating the leachate is, in our view a taxable supply of a service, there being no applicable exemption for it.

The supply by the XXXXX of the service of transporting the leachate from the land fill site to the sewage treatment plant, for which the XXXXX levies a separate charge, is also taxable because there is no exemption provided for it.

The foregoing comments represent our general views with respect to the subject matter of your request. 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.

We trust that the foregoing information is helpful. If you have any questions, please call Mr. Owen Newell, Policy Officer, Municipalities and Health Care Services at (613) 954-4280.

Yours truly,
Melvin Bellefontaine
A/Rulings Officer
GST/HST Rulings and Interpretations

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