19 November 1998 GST/HST Interpretation HQR0001266 - Special Quick Method for Public Service Bodies

Dear XXXXX

Thank you for your letter of February 17, 1998, sent to XXXXX Tax Services Office concerning the Special Quick Method for Public Service Bodies (PSB's) as set out in the Streamlined Accounting Regulations. XXXXX TSO has asked that we respond to your query.

In your request you state that since no GST is collected on certain specified supplies (zero-rated supplies, supplies made outside Canada, etc.) there is no amount to be retained by the PSB in lieu of an input tax credit. Consequently, it is your view that subparagraph 21(1)C(b) of the Streamlined Accounting Regulations should include as deductions, input tax credits for specified supplies where no GST is exigible.

Interpretation Requested

Does the phrase in subparagraph 21(1)C(b) of the Streamlined Accounting Regulations:

"all amounts in respect of specified supplies made by the registrant that may be deducted under Division V in determining the net tax for the particular reporting period and that are claimed in the return under Division V in determining the net tax for the particular reporting period and that are claimed in the return under Division V filed by the registrant for the particular reporting period"

include all amounts which can reduce the net remittance that are included in subsection 225(1) of the Excise Tax Act (ETA)?

Interpretation Given

Once a registrant has elected to use a prescribed method for calculating net tax under section 227 of the ETA, the registrant's net tax is calculated in accordance with a particular formula set out in the Streamlined Accounting Regulations. The authority for claiming input tax credits under the Special Quick Method is provided under subparagraph 21(1)C(a) of the Regulations.

Subparagraph 21(1)C(b) provides deductions from net tax only for amounts deductible "under Division V" and this does not include input tax credits. Deductions provided under Division V include, in part:

•   a refund or adjustment of an excess amount collected by a supplier - ss. 232(1);

•   a price adjustment - ss. 232(2); and

•   a credit or debit note adjustment - ss. 232(3).

On April 1, 1997, the harmonized sales tax (HST) replaced the goods and services tax (GST) and the provincial sales tax (PST) in the three participating provinces of Nova Scotia, New Brunswick and Newfoundland with a harmonized tax rate of 15%. If you supply goods that are delivered or made available in a participating province, services to be performed in a participating province or intangible personal property that may be used in a participating province, please contact the local Tax Services Office for further information regarding the application of HST to your particular situation.

The foregoing comments represent our general views with respect to the subject matter of your letter. 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/HST 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 matter, please do not hesitate to contact me at (613) 952-0420.

Yours truly,

Lorrie Grannary
Charities and Non-profit Organizations Unit
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate