30 March 1999 GST/HST Ruling HQR0001497 - Application of the GST/HST to Monies Donated by Sponsors of a Charity Golf Tournament

Dear XXXXX

Thank you for your letter of November 18, 1998 (and subsequent e-mail transmissions), concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to monies provided to the XXXXX  XXXXX[.]

Statement of Facts

Our understanding of the facts is as follows:

1. XXXXX, a private for-profit organization registered for the GST, hosts an annual golf tournament. XXXXX  collects entry fees (plus GST) from the participants, and the net proceeds are donated to three charities, one of which is the XXXXX[.]

2. Sponsors donate XXXXX  to cover expenses of the tournament.

3. Sponsors do not receive the right to golf for their contributions. However, acknowledgment for all prize donors and sponsors is contained on a folded paper program placed on each dinner table. In addition, sponsors and principal prize donors are thanked with a small sign located at the tee box to a hole.

Ruling Requested

Are monies donated by sponsors to XXXXX to cover the expenses of the XXXXX  XXXXX  subject to GST/HST?

Ruling Given

Based on the facts set out above, we rule that monies donated by sponsors to XXXXX to cover the expenses of the XXXXX are not subject to GST/HST.

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, please contact the undersigned for further information regarding the application of HST to your particular situation.

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST 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.

Explanation

A gift may be defined at common law as a voluntary transfer of property without consideration. No right, privilege, material benefit or advantage may be conferred on the donor or on a person designated by the donor as a consequence of the gift. Therefore, a donation of money from a sponsor is considered a gift at law if the property is voluntary and gratuitous (i.e., the sponsor does not receive anything of value in return). If a donor receives something of nominal value that does not serve as an inducement to make the donation, the amount donated will still be recognized as a gift at law.

On the basis of the above, it is our opinion that donations to XXXXX are gifts at law, rather than consideration for a supply. For your further information, since XXXXX is making taxable supplies for consideration (i.e., entry fees), it would be entitled to claim input tax credits for the GST incurred on expenses related to hosting the golf tournament.

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 and Non-Profit Organizations Public Service Bodies and Governments Unit
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate