6 September 2000 GST/HST Ruling 32294 - Tax Status of Supplies and Entitlement to Claim Input Tax Credits (ITCs)

Dear XXXXX:

Thank you for your facsimile transmission of August 9, 2000, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to your client's operation of a refuse disposal site.

Statement of Facts

Our understanding of the facts is as follows:

1. The Rural Municipality of XXXXX passed Resolution No. XXXXX, authorizing the Public Works Committee to find a company with the expertise to properly manage the municipal disposal grounds.

2. XXXXX of the Municipal Act of XXXXX allows a Municipality to enter into agreements with a person, with an agency of the Government of XXXXX or the Government of Canada, or with another municipality, including a municipality in another province, to do with or on behalf of the municipality anything the municipality has the power to do within the municipality. Accordingly, XXXXX has entered into a public/private partnership agreement with XXXXX to manage the XXXXX Disposal Grounds.

3. The revenues from this partnership shall not be used to subsidize the normal operating budget of XXXXX. The intent is that the funds are to be used to increase reserve fund balances, retire all outstanding debts and for special projects deemed appropriate by Council.

4. XXXXX is the registered owner of the land used as the disposal grounds.

5. Pursuant to the Agreement dated September 1, 1998, between Ritchot and Mid Canada, Mid Canada wishes to manage, on behalf of XXXXX the existing waste disposal grounds, currently operating under the authority of Waste Disposal Ground Permit No. XXXXX[.]

6. XXXXX agrees to allow XXXXX, on XXXXX behalf, to manage the operation of the waste disposal grounds for a period of five years.

7. XXXXX represents and warrants that it will keep the Operating Permit in good standing throughout the term of this Agreement.

8. XXXXX shall operate the waste disposal grounds in accordance with the existing Operating Permit and the applicable laws and regulatory controls, and XXXXX hereby consents to the use of the premises for such purpose and hereby authorizes XXXXX to operate the waste disposal grounds.

9. Together the parties shall prepare an operating budget for the year.

10. Tipping fees for commercial/industrial solid waste shall be $28.00 per tonne. This revenue shall be distributed in the following manner:

11. When the Operations/Maintenance fund reaches $100,000, distribution of the amount in excess of $25,000 will be made to XXXXX and XXXXX, 37% to XXXXX and 63% to XXXXX.

12. Assets (not including the land) obtained throughout the duration of this Agreement related to landfill operations will be owned jointly by XXXXX and XXXXX, 37% to XXXXX and 63% to XXXXX.

13. XXXXX will be responsible at its own cost for providing land and access to that land, as required, and providing operations overview.

14. XXXXX will be responsible at its own cost for sales, invoicing and reporting, overall site management and daily supervision of operations, regulatory management and liaison with XXXXX Environment.

15. XXXXX will carry $2,000,000 of liability insurance, per incident, for the duration of this Agreement, showing loss payable to XXXXX XXXXX shall supply a copy of the policy to XXXXX.

16. XXXXX shall be liable for all real property taxes, if any, assessed or levied against, or payable in respect of the premises during the term of this Agreement.

17. XXXXX shall allow at all reasonable times unimpeded access to the premises for inspection purposes by representatives of XXXXX and such regulatory authority as may exist from time to time.

18. XXXXX acknowledges that XXXXX powers as a municipality under the Municipal Act are not affected by this Agreement.

19. XXXXX is registered for purposes of the GST/HST under Business Number XXXXX.

Ruling Requested

Is XXXXX required to collect and remit GST on the tipping fee charged for the dumping of commercial/industrial solid waste?

Is XXXXX entitled to claim ITCs for the GST paid on expenses incurred in managing the refuse disposal site for XXXXX?

Ruling Given

Based on the facts set out above, we rule as follows:

The ruling issued on August 5, 1999, case number XXXXX, is correct. The supply of the right to deposit refuse at the XXXXX Disposal Grounds is a supply made by XXXXX for the consideration of $28.00 per tonne. This supply, made by XXXXX, a municipality, is exempt under the paragraph 20(i) of Part VI of Schedule V to the ETA. XXXXX is not required to collect and remit the GST on the tipping fee charged to consumers.

XXXXX is supplying a taxable service to XXXXX of managing the XXXXX Disposal Grounds for consideration equal to the amount it retains under the Agreement. XXXXX as a registrant, is required to collect from XXXXX and remit the GST applicable to this amount.

XXXXX as a registrant, is entitled to claim ITCs for the GST paid or payable on the purchases it uses, consumes or supplies in the course of providing management services to XXXXX[.] 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 Mr. Owen Newell, Manager, at (613) 941-3268.

Yours truly,

Shashi Fernando
Municipalities and Health Care Services Unit
Public Service Bodies & Governments Division
Excise and GST/HST Rulings Directorate