GST/HST Rulings and Interpretations
Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Road
Vanier, Ontario
XXXXX K1A 0L5
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Subject:
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GST/HST APPLICATION RULING
Permits Provided to Contractors and Inspection Services Provided Under Agreement
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Dear XXXXX
Thank you for your letter which was addressed to XXXXX and forwarded to Revenue Canada for reply concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transaction(s) described below. We apologize for the delay in this response.
Our understanding of the facts, the transaction(s), and the purpose of the transaction(s) is as follows.
Statement of Facts
1. In June of 1991, the XXXXX was passed. It replaced the provisions included in seven pieces of legislation which it repealed. Included among the repealed legislation was the XXXXX
2. The purpose of the XXXXX is to provide a framework for the development of a comprehensive safety system for the design, construction, operation and maintenance of buildings, equipment and material in a variety of settings. This purpose is reflected in section 4 and subsection 2(1) XXXXX which state:
4. The Minister shall, in accordance with the Act, co-ordinate and encourage the safe management and control of any thing, process or activity to which this Act applies.
2(1) This Act applies to ... the design, manufacture, construction, installation, operation and maintenance of ...
(b) electrical systems ..."
3. Among other things the XXXXX sets out a process for accreditation of organizations so they can assume responsibility for the implementation and administration of the XXXXX for various disciplines as well as the implementation of certification and designation processes to ensure the competency of XXXXX to administer the Act and authorize them to function within the framework of an accredited organization.
4. The designation and responsibilities of an XXXXX are set out in subsections 27(1) and 40(1) and section 28 of the XXXXX which state:
27(1) On receipt of an application, an Administrator may designate a person who holds an appropriate certificate of competency and meets the requirements of the regulations as a safety codes officer with respect to all or part of this Act and may designate the powers that a safety codes officer may exercise.
28 A safety codes officer may exercise the powers and duties of a safety codes officer only in accordance with the designation under section 27 and the safety codes officer's terms of employment.
40(1) On receipt of an application, a safety codes officer or other person designated by an Administrator may issue a permit to a person who complies with the requirements of this Act or issue a permit with respect to a thing, process or activity if it complies with the requirements of this Act.
• The General Policy Guide issued by the XXXXX regarding the XXXXX further clarifies the role of an XXXXX by stating:
Designation ensures that a certified XXXXX provides services only under the umbrella of an accredited organization or the XXXXX The designation of authority to administer provisions of the Act will cease if a XXXXX leaves the service of an accredited body or the XXXXX
5. XXXXX is designated a safety codes officer under the XXXXX for the electrical discipline. He is employed by XXXXX a corporation established pursuant to the XXXXX . The Agency is an accredited agency for the electrical profession under the XXXXX (Corporation), an accredited corporation under the XXXXX under which the Agency carries out inspection services for the Corporation. The following facts are drawn from the Agreement:
The Corporation agrees to pay the Agency for the performance of the work assigned to the Agency, according to the rates set forth in an attachment to the agreement.
• According to the attachment, the Agency charges the Corporation for compliance monitoring, examination of drawings, investigations, consulting, and the preparation of quality management programs as well as travel expenses related to these activities.
• Also included in the attachment are rates (identified as electrical permit fees) charged by the Agency to contractors who carry out electrical work on the Corporation's property. These rates are based on the value of the work to be carried out.
7. XXXXX has informed the Department that the Agency, in agreement with the Corporation, may set the fees to be charged for work carried out on the Corporation's property.
8. An accredited organization is not precluded from carrying out activities other than the ones for which it is accredited. XXXXX has informed the Department that the Agency carries out activities other than those for which it is accredited. For example, XXXXX provides seminars on the electrical discipline to interested parties.
Transaction(s)
The Agency performs services for the Corporation pursuant to the agreement and charges the Corporation the appropriate fees as set out in the attachment to the Agreement.
The Agency issues electrical permits, signed by XXXXX , to contractors who work on the Corporation's property and charges the contractor's the appropriate fee as noted in the attachment to the Agreement.
Rulings Requested
1. The permits provided by the XXXXX to contractors carrying out electrical work on XXXXX property are subject to GST.
2. The inspection services provided to XXXXX by the XXXXX under the Agreement are subject to GST.
Rulings Given
Based on the facts set out above, we rule that
1. The permits provided by the XXXXX to contractors carrying out electrical work on XXXXX property are taxable supplies, therefore, GST at the rate of 7% applies to the payment for those permits.
2. The services provided to the Corporation by The Agency under the Agreement are taxable supplies, therefore GST at a rate of 7% applies to the payment for those services.
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 transactions for which you requested a ruling.
Explanation
Paragraph 20(c) of Part VI of Schedule V to the Excise Tax Act exempts the supply of a licence, permit, quota or similar right when supplied by a government or municipality or by a board, commission or other body established by a government or a municipality. As the XXXXX was not established by a government or a municipality, its supply of permits is taxable.
Although, as you have noted, the type of permit in question is exempt when provided by a municipality and taxable when provided by the XXXXX , a municipality is not entitled to claim full relief for GST it has incurred in order to provide its licences, while the XXXXX is entitled to claim full relief for its GST costs. Further, as the Agency's clients are generally involved exclusively in commercial activities, they also will be entitled to claim full relief for all GST paid on the Agency's licences.
The services provided to XXXXX under the Services Agreement are taxable supplies as they are not specifically designated otherwise in the Excise Tax Act.
This ruling confirms the ruling issued by the XXXXX Tax Services Office on July 11, 1996.
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
| c.c.: |
D. Jones
D. Harding
XXXXX
G. Mason |
Legislative References: Paragraph 20(c) of Part VI of Schedule V
NCS Subject Code(s): R 11847-06, 11720-01
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