20 January 2000 GST/HST Interpretation 13403 - Bets and Games of Chance

Dear XXXXX

Thank you for your letter of November 16, 1999 concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to bets made pursuant to games of chance.

Please note that as of November 1, 1999, Revenue Canada became the Canada Customs and Revenue Agency.

Interpretation Requested

Is the GST imposed on the bettor or the supplier of a service of taking a bet.

Interpretation Given

Section 187 of the Excise Tax Act sets out rules that apply where a bettor bets an amount on a game of chance, a race or other event or occurrence. Paragraph 187(a) deems the person who accepts the bet to have provided a supply of a service to the bettor. Paragraph 187(c) of the ETA essentially deems the amount bet to equal the consideration for the supply of the service plus the GST and any taxes imposed under an Act of the legislature of any province.

Subsection 165(1) of the ETA requires every recipient of a taxable supply made in Canada to pay tax at the rate of 7% on the value of consideration for the supply. With respect to a specific bet made on a game of chance that is not exempted under the ETA, it is the bettor, as recipient of the deemed supply, who is liable to pay the tax. Therefore, the GST/HST is imposed on the bettor and not the supplier of the service of taking a bet.

As you state in your letter, the requirement that the supplier account for the GST/HST does not mean that the GST/HST is imposed on the supplier. Subsection 221(1) of the ETA, requires the supplier to collect the tax payable by the recipient, in this case the bettor, in respect of the supply. This amount must then be included in the supplier's net tax calculation pursuant to section 225 of the ETA. Where the supplier is a prescribed registrant, subsection 188(5) requires the net tax to be calculated in a prescribed manner which is set out in section 6 of the Games of Chance (GST/HST) Regulations.

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 Department with respect to a particular situation.

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