11 July 2000 GST/HST Ruling 31427 - Applicability of GST on Ambulances Supplied to Municipalities

Dear XXXXX:

Thank you for your letters of June 16 and May 19, 2000 with attachments, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to ambulances purchased by the Province of XXXXX and subsequently supplied to municipalities.

Statement of Facts

Our understanding of the facts is as follows:

1. The province is currently downloading the responsibility for land ambulance services to municipalities. XXXXX municipality" shall XXXXX be responsible for ensuring the proper provision of land ambulance services in the municipality in accordance with the needs of persons in the municipality."

2. XXXXX every XXXXX municipality shall XXXXX, be responsible for all costs associated with the provision of land ambulance services in the municipality subject to any grant made to the municipality XXXXX[.]

3. XXXXX XXXXX municipality shall XXXXX ensure the supply of vehicles, equipment, services, information and any other thing necessary for the proper provision of land ambulance services in the municipality in accordance with this XXXXX."

4. The Ministry of XXXXX will continue to purchase vehicles in order to take advantage of better terms offered on bulk purchases. This will include paying for after market conversion required to transform vehicles into ambulances.

5. The Ministry will issue separate orders for the vehicle(chassis) and for after market conversion. These purchase orders request that the invoices be sent to the XXXXX of the Ministry.

6. Once the vehicles are converted to ambulances, they are delivered to a specific location to be picked up by the municipalities.

7. A price packing slip is provided with each vehicle and shows the combined price for the chassis and conversion and includes the provincial sales tax on the total amount. The price packing slip is not an invoice. XXXXX[.]

Rulings Requested

1. Is the GST/HST applicable on the supply of vehicles and after market conversion of these vehicles when provided to the Province of XXXXX?

2. Is the GST/HST applicable on the supply of an ambulance made by a province to a municipality?

Rulings Given

1. Based on the facts set out above, we rule that the GST/HST is not applicable on the consideration paid by the Province of XXXXX for the supply of vehicles and the after market conversion of these vehicles.

2. Based on the facts set out above, we rule that the supply of an ambulance made by the province to a municipality is 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.

Explanation

Section 165 of the Excise Tax Act (ETA) requires every recipient of a taxable supply made in Canada to pay to Her Majesty the GST/HST on the value of the consideration for the supply except where the supply is zero-rated. A "taxable supply" is defined under subsection 123(1) of the ETA to be any supply made in the course of a commercial activity, where the definition of "commercial activity" includes a business carried on by a person except to the extent to which it involves the making of exempt supplies. Subsection 123(1) defines the "recipient" of a supply of property or service to be the person who is liable under the agreement to pay the consideration.

In this case, the purchase orders to the vehicle manufacturer and conversion company are from the province and the province is invoiced for the purchase. Therefore, the province is liable to pay the consideration and is the "recipient" of the supply. Although the province is purchasing a taxable supply which is not zero-rated, it is not required to pay the GST/HST as it receives immunity from taxation pursuant to section 125 of the Constitution Act.

Where the province supplies the converted vehicles to a municipality for consideration, it is making a taxable supply to the municipality. As the supply is not zero-rated, tax at the rate of 7% must be charged on the value of the consideration for the supply. The province is obligated to collect and remit this tax pursuant to section 122 of the ETA.

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