17 August 1998 GST/HST Interpretation HQR0000674 - GST Status of Check-off Fees

Dear XXXXX

Thank you for your letter of April 8, 1997 and attachments sent to the XXXXX Tax Services Office regarding the GST status of the "Service Charge" (check-off fee) charged by the XXXXX pursuant to the XXXXX. The letter was forwarded to us for direct response to you. We apologize for the delay in responding.

You maintain that a ruling issued in a letter dated January 23, 1997 to XXXXX on behalf of your client, the XXXXX is incorrect. This letter XXXXX was confirming a ruling given in a previous letter XXXXX dated July 27, 1995 addressed to the XXXXX[.] The ruling was that the check-off fee collected by the XXXXX from cattle producers pursuant to the XXXXX is not consideration for a supply and therefore is not subject to GST. You are requesting that we reconsider that ruling; more specifically you want us to confirm the following.

Ruling Requested

The check-off fee charged by the XXXXX pursuant to the XXXXX and Regulations represents consideration for a taxable supply. Because the check-off fee is in respect of a taxable supply, the XXXXX is entitled to claim Input Tax Credits (ITCs) for property and services acquired in respect of services supplied.

Ruling Given

Based on the facts set out in the above-noted letters, we rule that:

The check-off fee charged by the XXXXX pursuant to the XXXXX and Regulations represents consideration for a taxable supply.

The XXXXX is entitled to claim Input Tax Credits (ITCs) for property and services acquired for the purpose of making this taxable supply.

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 transaction(s) 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) 952-9589.

Yours truly,

B. Mulinda
Governments Sectors Unit
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate