6 August 1998 GST/HST Ruling HQR0000165 - Relocation Expenses Incurred by Interchange Canada Participants

                                                                        GST/HST Rulings and Interpretations
  Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Avenue
Vanier, ON K1A 0L5

Dear XXXXX

Thank you for your letter of June 29, 1994 (with attachments), concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transactions described below.

Statement of Facts

Our understanding of the facts, the transactions, and the purpose of the transactions is as follows:

1. A Transport Canada employee, participating in the Interchange Canada program, was engaged by XXXXX necessitating a relocation XXXXX to XXXXX.

2. The Interchange Canada Agreement between Transport Canada and XXXXX states that the costs of moving the participant from XXXXX to XXXXX would be borne by XXXXX[.] The costs of moving the participant from XXXXX to XXXXX would be borne by Transport Canada.

3. In fact, Transport Canada paid the costs of moving the participant from XXXXX to XXXXX Transport Canada subsequently issued invoices to XXXXX for the moving expenses plus GST at the rate of seven percent.

Ruling Requested

The Public Service Commission of Canada seeks a ruling on the applicability of the GST to the reimbursement of the relocation expenses incurred by the participant in the Interchange Canada program.

Ruling Given

Based on the facts set out above, we rule that

1. The GST does apply to the reimbursement of the relocation expenses.

Explanation

2. Pursuant to section 165(1) of the Excise Tax Act, "every recipient of a taxable supply made in Canada shall pay to Her Majesty in right of Canada tax in respect of the supply calculated at the rate of 7% on the value of the consideration for the supply."

3. Transport Canada made a supply of the service of effecting the move of the Interchange participant to XXXXX[.]

4. This supply does not come within any of the exemptions found in the Excise Tax Act. Thus, it is taxable at the rate of 7%.

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST 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 transactions 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) 952-9580.

Yours truly,

Oscar Jacobs
Governments Unit
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate

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