16 July 1998 GST/HST Ruling HQR0000930 - Application of the GST/HST to the Reimbursement of Salaries and Benefits Paid by Canada to an Officer Temporarily Assigned to Natural Resources Canada

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

Dear XXXXX

Thank you for your letter of October 23, 1997 (with attachments) concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transactions described below.

Our understanding of the facts is as follows.

Statement of Facts

XXXXX

1. Natural Resources Canada, XXXXX entered into an XXXXX dated XXXXX under which XXXXX was assigned by XXXXX to Natural Resources Canada. The following facts are taken from that agreement.

2. The assignment took effect XXXXX for a period of XXXXX years with provision for extension subject to the agreement of all parties or to early termination with XXXXX notice in writing from any of the parties.

3.  XXXXX is performing the duties of XXXXX[.]

4.  XXXXX will continue to receive his salary and benefits from XXXXX Natural Resources Canada will reimburse XXXXX the sum of XXXXX per annum for XXXXX salary, plus XXXXX for benefits. Other job-related costs such as training and travel will be borne by Natural Resources Canada. Arrangements for effecting this reimbursement are made between XXXXX and Natural Resources Canada.

5. A representative of XXXXX may call on XXXXX or his superiors at Natural Resources Canada to discuss progress on the assignment and the specific objectives that have been established.

6. Natural Resources Canada will provide XXXXX with a written evaluation report on the performance of XXXXX once a year.

7. If XXXXX is injured in the performance of his duties, he shall be compensated by the appropriate provincial health insurance plan and by XXXXX[.] If XXXXX is liable to third parties as a result of an action in the performance of assigned duties, he shall be treated in the same way as employees of the Public Service of Canada and the acts applicable to the said employees shall apply to him. XXXXX shall also receive the same protection under the same conditions as employees of the Public Service of Canada when travelling on duty.

8. The assignment is considered to be employment for purposes of the Official Secrets Act of the Government of Canada and XXXXX is bound by Section 4 of that Act regarding wrongful communication of information, etc. It is also agreed that Articles 49 and 50 of the Conflict of Interest and Post-Employment Code for the Public Service, Government of Canada, shall apply to XXXXX and that declaration of actual or potential conflict of interest shall be made prior to the commencement of the assignment. It is further agreed that while on assignment, XXXXX will perform his duties so to respect the principles and intent of the Conflict of Interest and Post-Employment Code for the Public Service.

9. All material supplied to XXXXX for the production of documents, whether classified or unclassified, will be returned to Natural Resources Canada at the conclusion of this assignment.

10. All documents, reports and other productions made by XXXXX or anyone on his behalf, for the purpose of fulfilling or carrying out any duty related to the assignment, are the property of Her Majesty in right of Canada and shall not be released to any persons other than representatives of Natural Resources Canada, unless written permission is obtained from the Deputy Head or her delegate.

11. At the end of the assignment, XXXXX will return to a position equivalent to his current one.

XXXXX

12. Natural Resources Canada, and XXXXX entered into an XXXXX dated XXXXX under which XXXXX was assigned by XXXXX to Natural Resources Canada. The following facts are taken from that agreement and a telephone conversation of XXXXX with Nancy Fecteau of Natural Resources Canada.

13. The assignment began XXXXX and will terminate on XXXXX and may be extended or terminated upon xx months notice by either party. No offer of continuing employment will be made to XXXXX by Natural Resources Canada during or immediately after the termination of the assignment. At the conclusion of the assignment, XXXXX will return to xxx[.]

14.  XXXXX will perform the duties outlined in the agreement under the direction and supervision of XXXXX[.] These duties are essentially those of an officer employed by Natural Resources Canada.

15.  XXXXX will continue to receive his salary and benefits from XXXXX. Natural Resources Canada will reimburse XXXXX the sum of XXXXX which includes a XXXXX benefits allowance (rate is based on the top increment level of an XXXXX salary) plus any applicable taxes and will increase this amount by any increase due under the departmental salary system during the period of the assignment.

16. Natural Resources Canada agrees to supply XXXXX upon request, with an evaluation report of XXXXX performance. As well, a record of all leave taken by XXXXX will be supplied on a monthly basis.

17. The Conflict of Interest and Post-Employment Code for the Public Service, Government of Canada, shall apply during the period of the assignment.

Rulings Requested

1. Is the reimbursement of salaries and benefits paid by Canada to XXXXX under the XXXXX subject to GST/HST?

2. Is the reimbursement of salaries and benefits paid by Canada to XXXXX under the XXXXX of XXXXX subject to GST/HST?

Rulings Given

Based on the facts set out above, we rule that

1. The reimbursement of salaries and benefits paid by Canada to XXXXX under the XXXXX is not subject to GST/HST.

2. The reimbursement of salaries and benefits paid by Canada to XXXXX under the XXXXX 7 is not subject to GST/HST.

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST 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) 954-7947.

Yours truly,

Darlene Wladyka
Senior Rulings Officer
Governments Unit
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate