25 July 1997 GST/HST Interpretation HQR0000727 - Payments Made Under Subsection 677(1)(b) of the Canada Shipping Act

                                                                        GST/HST Rulings and Interpretations Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Road
Vanier, Ontario
 XXXXX                                                                                K1A 0L5
 XXXXX
 XXXXX
XXXXX                                                                                 Case: HQR0000727
 XXXXX                                                                                File: 11848-7, 11710-1

                                                                        July 25, 1997

Dear XXXXX

Thank you for your letter of May 27, 1997 (with attachments) addressed to Gilles Beaulieu of Revenue Canada Legal Services. That letter, which was forwarded to this office for reply, concerned the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to payments made under the Canada Shipping Act (CSA). Although 2 situations are outlined in that letter, you have advised us in a letter of July 7, 1997, that you require a response to only the first situation. XXXXX

Our understanding of the facts, the transaction(s), and the purpose of the transaction(s) is as follows.

Statement of Facts

1. Subsection 677(1)(b) of the CSA states:

Subject to this Part, the owner of a ship is liable

(b) for costs and expenses incurred by

(i) the Minister,

(ii) a response organization to whom a certificate of designation has been issued pursuant to subsection 660.4(1),

(iii) any other person in Canada, or

(iv) any person in a state, other than Canada, this is a party to the Civil Liability Convention,

in respect of measures taken to prevent, repair, remedy or minimize oil pollution damage from the ship, including measures taken in anticipation of a discharge of oil from the ship, to the extent that the measures taken and the costs and expenses are reasonable, and for any loss or damage caused by such measures;

2. When a ship owner causes oil pollution damage and is liable for costs and expenses pursuant to paragraph 677(1)(b) of the CSA, Fisheries and Oceans Canada (F&O) either cleans up the oil spill itself or arranges and pays for the clean up. F&O then bills the ship owner who is liable for the costs.

3. No agreement exists between the ship owner and F&O in respect of the recovery of costs and expenses for oil pollution damage under paragraph 677(1)(b) of the CSA.

4. Fisheries and Oceans Canada is a federal government department and part of the Government of Canada registration number XXXXX

Ruling Requested

Is the amount charged by F&O to a ship owner pursuant to subsection 677(1)(b) of the CSA subject to GST or HST.

Ruling Given

Based on the facts set out above, we rule that the amounts charged to a ship owner by F&O pursuant to subsection 677(1) of the CSA are not subject to GST or HST.

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, or to departmental interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Should you have any further questions or require clarification on the above 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