12 May 1998 GST/HST Interpretation HQR0001179 - Bingo Association Entitlement To Rebate

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

Dear XXXXX

Thank you for your letter of March 17, 1998, requesting that we elaborate on our response (HQR0000535) of November 19, 1998, to XXXXX stating that a bingo association is not entitled to a GST/HST rebate related to expenses incurred in operating a super jackpot bingo game. It is your view that since the association was formed by its members (non-profit organizations or charities) for convenience of records and accounting purposes and since profits are distributed to association members, the previously mentioned response should be reversed. You have also requested information on the Department's formal appeal process.

Interpretation Requested

Is an unincorporated bingo association that is comprised of charitable and non-profit organizations entitled to a GST/HST rebate with respect to expenses incurred to operate a super-jackpot bingo?

Interpretation Given

Unless it is a charity or "qualifying" non-profit organization, an unincorporated association made up of charitable and non-profit organizations is not entitled to a GST/HST rebate with respect to GST/HST paid on expenses related to a super jackpot bingo game. However, it should be noted that if it is a GST registrant, it will be entitled to input tax credits, which means it will be able to recover the tax paid on purchases used in making taxable supplies.

Explanation

An unincorporated bingo association that is comprised of charitable and non-profit organizations is generally regarded as a separate legal entity or separate "person" from its members for GST/HST purposes. This determination is made as a result of reviewing criteria such as whether the association or its members are separately incorporated, the autonomy of the organization, the existence of separate incorporating documents or separate books and records, the right to contract in one's own name, etc.

As a separate "person", the association, itself, must meet the requirements set out in the legislation for entitlement to a rebate of GST/HST for non-creditable tax paid on expenses it incurs regardless of whether its members are entitled to apply for a rebate for expenses they incur. The restriction on rebates referred to in our previous correspondence refers to expenses incurred by the Association itself, and not those incurred by its member clubs.

It should be noted that only certain types of public service bodies qualify for rebates (e.g. non-profit organizations that receive substantial government funding and charities). As such, bingo associations do not generally qualify.

It is important to note that a bingo association must register for GST purposes if its revenue from taxable supplies (i.e. property or services) at any time in a particular quarter or for the previous four quarters exceeds $30,000 ($50,000 if the association is a non-profit organization or charity). It may choose to register if its revenue from taxable supplies is less than those amounts. As a GST registrant, the bingo association must collect GST on its taxable supplies including taxable supplies made to members. The bingo association is entitled to an input tax credit to the extent (expressed as a percentage) to which an expense is for consumption, use or supply in the course of its commercial activities (i.e., for use in making taxable supplies). Where substantially all (generally 90% of more) of the consumption or use of the expense is in the course of commercial activities, all of the consumption or use is deemed to be in the course of those activities.

The first step in our formal appeal process is to file with the Department a Notice of Objection with respect to an assessment issued, for example, as a result of a rebate application. A Notice of Objection is available at your local Tax Services Office.

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.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-0420.

Yours truly,

Lorrie Grannary
Charities, Non-profit Organizations and Educational Services Unit
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate