27 September 2000 GST/HST Ruling 31243 - Treatment of Assignment Agreement Provided Through the

Dear XXXXX

Thank you for your letter of May 10, 2000, with the attached contract, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the agreement between XXXXX and XXXXX[.]

Statement of Facts

Our understanding of the facts is as follows:

1. XXXXX, sole proprietor of XXXXX have entered into an agreement whereby XXXXX will be assigned to the XXXXX.

2. The agreement provides for the following:

•   The assignment will begin on XXXXX and terminate on XXXXX but may be extended or terminated upon two 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 make payments to XXXXX for XXXXX salary at a monthly rate not to exceed XXXXX. These payments include an amount in respect of benefits XXXXX. There is no mark-up on the salary and benefits paid to XXXXX.

•   The terms of the agreement also include up to four weeks leave during each year.

•   XXXXX[.]

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

•   management of activities related to XXXXX;

•   management of activities related to XXXXX; and

•   technical and program support for XXXXX in the implementation of other XXXXX initiatives including those with XXXXX[.]

4. XXXXX works under the direction and supervision XXXXX.XXXXX reviews XXXXX work on a regular basis and sets out the annual work plan which may evolve throughout the work term. Changes to the work plan will not result in changes to the terms of the original agreement entered by the parties.

5. XXXXX works from XXXXX offices using equipment supplied by XXXXX[.]

Ruling Requested

Are the payments made to XXXXX in respect of XXXXX assignment with XXXXX subject to the GST/HST?

Ruling Given

Based on the facts set out above, we rule that the payments made XXXXX in respect of XXXXX assignment with XXXXX are not subject to the GST/HST.

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 our 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
Excise and GST/HST Rulings Directorate