7 July 2000 GST/HST Interpretation 25964 - Whether Fees Paid and Reimbursement of Expenses to Panel Members Are Subject To GST/HST

Thank you for your letter of August 30, 1999 (with attachments) concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transaction described below. We apologize for the delay in responding to your enquiry.

Statement of Facts

Our understanding of the facts is as follows:

•   XXXXX[.]

•   The panel comprises of five members selected from a panel roster of eligible individuals.

•   Members of the panel, who are appointed to participate in the XXXXX, invoice the XXXXX for payment of fees (time spent for prior and subsequent preparation of a panel case) and for reimbursement of expenses incurred (photocopying, meals, travel, etc[.]) resulting from panel responsibilities.

•   Panelists are paid a per diem rate of XXXXX Canadian for their duties as a panelist, plus travelling and related expenses. Assistants are paid a per diem rate of XXXXX Canadian. XXXXX guidelines are followed in respect to expenses. Invoices are submitted on a quarterly basis for per diems, travelling and related expenses.

•   Cheques are issued by the XXXXX. There is no withholding of CPP, EI or Income Tax. T4A's are issued in all cases.

Interpretation Requested

Whether the fees and reimbursement of expenses charged by a member of the XXXXX panel are subject to GST/HST.

Interpretation Given

Every recipient of a taxable supply made in Canada is required to pay tax in respect of the supply at the rate of 7% (15% where the supply is made or deemed to be made in one of the three participating provinces of Nova Scotia, New Brunswick and Newfoundland) on the value of the consideration for the supply, except where the supply is otherwise an exempt supply or a zero-rated taxable supply (i.e. taxed at the rate of 0%).

The pertinent definitions in subsection 123(1) of the Excise Tax Act (ETA) in determining whether or not a taxable supply is being made are as follows:

"taxable supply" means a supply that is made in the course of a commercial activity;

"commercial activity" of a person means

(a) a business carried on by the person (other than a business carried on without a reasonable expectation of profit by an individual a personal trust or a partnership, all of the members of which are individuals), except to the extent to which the business involves the making of exempt supplies by the person,

(b) an adventure or concern of the person in the nature of trade ( other than an adventure or concern engaged in without a reasonable expectation of profit by an individual, a personal trust or a partnership, all of the members of which are individuals), except to the extent to which the adventure or concern involves the making of exempt supplies by the person, and

(c) the making of a supply (other than an exempt supply) by the person of real property of the person, including anything done by the person in the course or in connection with the making of the supply;

"business" includes a profession, calling , trade, manufacture or undertaking of any kind whatever, whether the activity or undertaking is engaged in for profit, and any activity engaged in on a regular or continuous basis that involves the supply of property by way of lease, licence or similar arrangement, but does not include an office or employment;

"office" has the meaning assigned by subsection 248(1) of the Income Tax Act (ITA) but does not include

(a) the position of trustee in bankruptcy,

(b) the position of receiver(including the position of a receiver within the meaning assigned by subsection 266(1), or

(c) the position of trustee of a trust or personal representative of a deceased individual where the person who acts in that capacity is entitled to an amount for doing so that is included in computing, for the purposes of that Act,, the persons income or where the person is an individual, the person's income from a business; and

"office" (subsection 248(1) of the ITA) means the position of an individual entitling the individual to a fixed or ascertainable stipend or remuneration and includes a judicial office, the office of a minister of the Crown, the office of a member of the Senate or House of Commons of Canada, a member of a legislative assembly or a member of a legislative council and any other office, the incumbent of which is elected by popular vote or is elected or appointed in a representative capacity and also includes the position of a corporation director, and "officer" means a person holding such an office.

Based on the information provided, and the above-noted legislative provisions, the XXXXX panelist occupies an "office" and therefore is not making taxable supplies when charging the XXXXX for fees and expenses incurred.

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the Excise Tax Act, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST/HST Memoranda Series, do not bind the Canada Customs and Revenue Agency with respect to a particular situation.

For your convenience, find enclosed a copy of section 1.4 of Chapter 1 of the GST/HST Memoranda Series.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at 954-7945.

Yours truly,

Susan Mills
Corporate Reorganizations Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate

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