31 March 1998 GST/HST Ruling HQR0001001 - Effect of Charity Annulment on GST Rebates

                                                                        GST/HST Rulings and Interpretations
Directorate
Place Vanier, Tower C, 9th Floor
25 McArthur Avenue
Ottawa ON
XXXXX                                                                                 K1A 0L5

Dear XXXXX

This letter is in regard to your telephone conversation with Michael Place of this Directorate in which you requested written confirmation of the Goods and Services Tax (GST/HST) treatment of the XXXXX (the "Committee") as a result of the annulment of its charitable registration status by Revenue Canada, Taxation. Our understanding of the facts is as follows.

Statement of Facts

1. In a letter dated July xx, 1997 to the Charities Division of Revenue Canada, Taxation ("Charities Division"), the Committee requested that its charitable registration be voided retroactive to the date it was registered, January 1, 1992.

2. Charities Division replied in a letter dated November x, 1997, that because the Committee applied for charitable registration in error, it agreed to annul its registration, effective January 1, 1992.

3. Charities Division further stated that it will honour all official donation receipts issued by the Committee prior to the date of its letter (i.e., prior to November x, 1997).

Ruling Requested

The Committee requests confirmation that it will not be subject to a recapture of charity rebates from the date it was registered as a charity (i.e., January 1, 1992) until the date it was advised that its charity status was annulled (i.e., November x, 1997).

Ruling Given

Based on the facts set out above, we rule that the Committee is recognized as a charity for the purposes of the Excise Tax Act (the "ETA") from the date it became a registered charity for income tax purposes (January 1, 1992) until, but not beyond, the date that its registered charity status was annulled (November x, 1997). Therefore, the Department will not recapture rebates for that period.

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 for which you requested a ruling.

Explanation

Notwithstanding that, by annulment, the Committee's charity status is "deemed to never have existed", the Department's administrative policy is to recognize its status as a registered charity for purposes of the ETA from the date it was registered as such until the date its charitable status was annulled. Since the Committee did in fact have registered charity status during the period, it will be treated as charity for rebate claim periods during the period January 1, 1992 to November x, 1997 with respect to all provisions affecting the tax status of its supplies and entitlement to rebates.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-6761.

Yours truly,

Susan Eastman
Charities, Non-Profit Organizations, and Educational Services Unit
Public Service Bodies and Governments Division

Legislative References:           section 259