16 December 1998 General Information Letter HQR0000865 - GENERAL INFORMATION LETTER Comprehensive Integrated Tax Coordination Agreements

Dear XXXXX

Thank you for your letter of September 22, 1997 concerning the Comprehensive Integrated Tax Coordination Agreement (CITCA) and the requirement under the CITCA for suppliers to collect tax from the three participating provinces.

You have asked for confirmation that supplies made in Canada, outside of a participating province, are subject to the tax applicable under subsection 165(1) of the Excise Tax Act when purchased by a participating province (i.e. New Brunswick, Newfoundland, Nova Scotia), and whether this tax will be refunded to the participating provinces by way of rebates made on a bi-weekly basis.

Under part I of the CITCA, XXXXX "harmonized sales taxes means the CVAT and the PVAT".

Where

"CVAT means the value-added tax, or that portion of the tax, imposed under Part IX of the Excise Tax Act in respect of property and services supplied in or imported into Canada, and that generally applies to both a participating province and a non-participating province;" and

"PVAT means a value-added tax, or that portion of the tax, substantially the same as the CVAT and that is imposed in respect of property and services supplied in or imported or brought into a participating province and that would not apply if the property or services were supplied in or imported into a non-participating province."

Part XVI of the CITCA deals specifically with government purchases. Clause 72 requires Canada and the participating provinces "to pay the harmonized sales taxes in respect of supplies acquired by their respective governments, agents and entities thereof." Therefore, the participating provinces are required to pay, and the suppliers are required to collect and remit, the 7% tax applicable under subsection 165(1) on supplies purchased in non-participating provinces.

Clause 73 of the CITCA provides that the harmonized sales taxes will then be subject to rebate upon application to Revenue Canada. Under clause 74, the rebates will be made on a bi-weekly basis and, at the direction of the province, paid either to the province or to the entity which paid the tax.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-9218.

Yours truly,

Brent Fleming
Governments Unit
Public Service Bodies and Government Division
GST/HST Rulings and Interpretations Directorate