17 April 1998 GST/HST Interpretation HQR0000175 - Application of the Goods and Services Tax to the Service of Accepting Payments on Behalf of the

Dear Sir:

Thank you for your facsimile transmission regarding the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the service of accepting payments on behalf of XXXXX[.]  I understand that XXXXX did not submit a bid with respect to this particular service but may provide similar services in the future.

Although no documents were submitted that describe the specific service XXXXX would provide to XXXXX, based on my telephone conversation with you on March 31, 1998, my understanding of the transaction is as follows:

•   Clients or applicants for services of XXXXX  will make payments for such services at a XXXXX outlet.

•   The client or applicant will deliver a cheque, made payable to the Receiver General for Canada, as well as any applicable XXXXX forms such as an 'XXXXX['.]

•   XXXXX will deliver the cheque to a bank for deposit to a Receiver General account and will deliver any XXXXX forms to XXXXX.

Interpretation Requested

Is the service of accepting payments, delivering the payments to the bank and delivering the applicable forms to XXXXX subject to the GST at a rate of 7% or is it considered a supply of an exempt service?

Interpretation Given

The service of accepting payments, delivering the payments to the bank and delivering the applicable forms to XXXXX is subject to the GST at a rate of 7%.

Analysis

There is no provision to exempt or zero-rate the supply of the service of accepting payments, delivering the payments to the bank and delivering the applicable forms XXXXX[.] Consequently, the supply of the service is subject to the GST at a rate of 7% pursuant to subsection 165(1) of the Excise Tax Act (the "Act"). XXXXX is providing a taxable service XXXXX and is required to collect the GST at a rate of 7% on the value of the consideration it receives from XXXXX  pursuant to subsection 221(1) of the Act.

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%.  If you supply goods that are delivered or made available in a participating province, services to be performed in a participating province or intangible personal property that may be used in a participating province, to the extent that they are taxable supplies (which are not  zero-rated), tax must be collected at the harmonized rate.

The foregoing comments represent our general views with respect to the subject matter of your letter.  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 Memoranda Series, do not bind the Department with respect to a particular situation.

Yours truly,

Tim A. Krawchuk
Rulings Officer
Financial Institutions Unit
Financial Institutions & Real Property Division
GST/HST Rulings and Interpretations Directorate