11 September 1998 GST/HST Interpretation HQR0000863 - Tax Status of Certain "Emergency Services" and "Ambulance Services"

This is further to our reply of November 9, 1995 concerning the tax status of the various payments made by XXXXX[.] In that reply, we offered our comments on the tax status of certain "emergency services" and "ambulance services", but we were not able to comment on the payment for damages to an overhead structure owned by XXXXX, pending a further policy review of all issues concerning damages.

The Department's recent Policy Statement P-218 is applicable to this case as it deals with the tax status on damage payments where section 182 of the Excise Tax Act does not apply.

Our understanding of the XXXXX situation is as follows:

1. An overpass structure owned by XXXXX (the "Province") is damaged by a person (the "insured") insured with XXXXX

2. The Province repaired the overpass structure using its own material and labour. It then billed the insured for its costs in repairing the structure, and charged GST on the amount.

3. The bill was passed on to XXXXX to pay on behalf of the insured.

4. XXXXX questioned the correctness of applying GST on the amount.

Our Comments:

It is our view that the amount charged by the Province is only for the compensation of the damages caused to the overpass structure. The amount is in essence compensatory in nature and is intended to put the Province back to its original position only. It is not consideration for the provision of any property or services by the Province. Accordingly, no GST should be applied on the amount charged by the Province for the repair of the damages.

I trust the above will be of assistance. Should you wish to discuss this further, please do not hesitate to contact me at (613) 954-1433.

Phil Tang
Specialty Tax Unit
Financial Institutions & Real Property Division
GST/HST Rulings & Interpretations Directorate