GST/HST Rulings and Interpretations
Place Vanier, Tower C, 9th Floor
25 McArthur Avenue
Vanier, Ontario
XXXXX K1A 0L5
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XXXXX
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October 1, 1998
XXXXX Case: HQR0001343
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Leg Ref: V/VI/6
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Attention: XXXXX
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File: 11895-1(on)
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Subject:
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Election Expenses
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Dear XXXXX
I refer to XXXXX from the recent meeting of XXXXX with Revenue Canada in Ottawa on Tuesday, September 22, 1998. The subject matter related to election expenses. In your capacity as XXXXX you requested that the Department provide you with a written response outlining the Department's position with respect to the application of the Excise Tax Act (the Act) based on the documentation included with the agenda item.
Statement of Facts
• For the purpose of fulfilling the election of school board and hospital trustees, school boards and hospital boards will enter into an arrangement with a municipality whereby the municipality will provide a service of conducting the election of the board trustees. This service consists of the enumeration process and the election process and is conducted by the municipality in conjunction with its enumeration and election process for municipal councillors.
• Both the school boards and hospital boards are separate legal entities from the municipality. Under this arrangement, the school and hospital boards will pay a proportionate share of the expenses incurred by the municipality in conducting the election. In the example provided for discussion purposes, the municipality absorbs XXXXX of the costs, the public school board XXXXX and the separate school board XXXXX[.]
• Some of the expenses incurred by the municipality in the enumeration process and the actual election process include, but are not limited to, municipal payroll costs; labour for casual employees; advertising; municipal delivery charges; inputting data; computer services; printing; rental of facilities, tables and chairs; security; stationery; telephone use and the destruction of ballots.
Interpretation Requested
The supply of the service is exempt under paragraph 20(d) of Part VI of Schedule V to the Act. In the event paragraph 20(d) does not provide for an exempt supply, the direct cost provision in section 6 of Part VI of Schedule V provides for an exempt supply in that the service is being provided at direct cost.
Interpretation Provided
Paragraph 20(d) of Part VI of Schedule V provides for an exempt supply of a service of providing information in respect of, or of any certificate or other document evidencing, the vital statistics, residency, citizenship or right to vote of any person, the registration of any person for any service provided by the government or any other status of any person. The supply of the service of establishing an enumeration list of public school board, separate school board or hospital board supporters is exempt when provided by the municipality to these boards. However, based on the facts outlined in the example, the municipality is establishing a list of enumerators for its use in carrying out the election of municipally elected officials as well as school board and hospital board trustees.
Based on the fact that the municipality is not supplying the school boards and hospital boards with a service of establishing a list of enumerators, but in fact is utilizing the list itself, does not provide for an exempt supply under paragraph 20(d) of Part VI of Schedule V.
With respect to the direct cost provision of section 6 of Part VI of Schedule V, this exempting provision will only apply where the municipality purchases tangible personal property or services for the purposes of making a supply by way of sale of the property or service at direct cost and the direct cost does not include a municipal labour element. It is our opinion that the municipality is acquiring inputs of property and services which are incorporated with its labour costs into a service of conducting an election for itself and the boards. The direct cost provision, therefore, is not applicable.
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%. Taxable supplies, other than zero-rated supplies, made in these provinces will attract HST at the rate of 15%.
The foregoing comments represent our general views with respect to the subject matter of your submission. 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 contact the undersigned or Mr. Owen Newell of the Municipalities and Health Care Services Unit at (613) 954-4280.
Yours truly,
Ms. Enikö Vermes
Manager
Municipalities and Health Care Services Unit
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate
| c.c.: |
E. Vermes
N. Minken
O. Newell |
| Legislative References: |
s. 6/VI/V & para 20(d)/VI/V; ss. 123(1) def'n of direct cost |
| NCS Subject Code(s): |
11895-1
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