29 April 1999 GST/HST Ruling HQR0001563 - Application of the GST/HST to an Assignment Agreement

Dear XXXXX

Thank you for your letter of January 20, 1999, with attachments, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the agreement between XXXXX[.]

Statement of Facts

Our understanding of the facts is as follows:

1. XXXXX and XXXXX, have entered into an agreement whereby XXXXX will be assigned to the XXXXX XXXXX[.] The assignment is arranged under the auspices of XXXXX[.]

2. The assignment agreement provides for the following:

•   The assignment will begin on XXXXX but may be extended or terminated upon 2 months notice of either party. It is agreed that no offer of continuing employment will be made by XXXXX during or immediately after the termination of the assignment.

•   XXXXX will reimburse XXXXX salary and employee benefits at a monthly rate not to exceed XXXXX - The XXXXX XXXXX shall apply to XXXXX during the period of assignment.

3. During the assignment, XXXXX will perform the following duties:

•   Manage the implementation of the XXXXX - Manage the activities related to the XXXXX - Provide other technical and program support to XXXXX in the implementation of other commercial building initiatives including those with the XXXXX XXXXX[.]

4. The position being filled by XXXXX is on the XXXXX organizational chart and could be filled through normal staffing procedures if a qualified individual was available.

5. XXXXX works under the direction and supervision of XXXXX[.]

Ruling Requested

Are the reimbursement payments made to XXXXX subject to GST/HST?

Ruling Given

Based on the facts set out above, we rule that the reimbursement payments made to XXXXX under their XXXXX[.] A 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%, to the extent that they are taxable supplies (which are not zero-rated), tax must be collected at the harmonized rate

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.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-0370.

Yours truly,

Brent Fleming
Governments Unit
Public service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate