31 July 2001 GST/HST Interpretation 36822 - Organizer/Sponsor of a Convention

As discussed with Patrick McKinnon, please find attached a rebate application filed by XXXXX and related documentation. The application is in respect of a convention XXXXX (the convention) that was held by XXXXX in XXXXX in collaboration with the XXXXX[.] We would like to provide several comments for your consideration regarding the attached documentation.

XXXXX has indicated on the application form that they are the organizer of the convention rather than the sponsor. However, in a letter dated July 2, 2001, XXXXX states that it was also the sponsor of the convention. The attached documentation indicates that XXXXX convened the convention and supplied admissions to it. As a result, it would appear that XXXXX was a "sponsor" of the convention under subsection 123(1) of the Excise Tax Act (ETA). We note that admissions to the convention were payable to XXXXX and that XXXXX holds its XXXXX.

We note that the rebate application indicates that the number of non-resident delegates who actually attended the convention represented XXXXX of total delegates. XXXXX has since provided additional information with respect to how it determined, for purposes of the definition of a "foreign convention" under subsection 123(1) of the ETA, that it was reasonable to expect, at the time XXXXX determined the amount to be charged for admissions, that at least 75% of the admissions would be supplied to non-residents. As you know, sponsors may use any reasonable method to make this determination, including the percentage of non-resident delegates who attended previous conventions, who are usually invited to attend the event, or who are listed as members of the association.

XXXXX has indicated that it fully financed the convention and delegated to XXXXX the task of on-site organization of the convention. Both XXXXX have indicated that XXXXX assumed responsibility for all costs related to the convention and that XXXXX acted as an intermediary of XXXXX in organizing the convention and incurring those costs. XXXXX has indicated that it paid the convention organization costs for XXXXX as a matter of convenience and that it was subsequently fully reimbursed by XXXXX for those costs. As the costs were incurred, XXXXX would apparently request reimbursement from XXXXX who would then transfer the funds to a XXXXX bank account XXXXX.

We note that all of the invoices submitted with the application are in the name of XXXXX. The amounts shown on the attached photocopies of fund transfers from XXXXX to XXXXX leading up to the convention do not correspond to the amounts shown on the attached invoices. The extent to which there is a link between the funds transferred to XXXXX and the invoice amounts is unclear as is the extent, if any, to which XXXXX was remunerated in excess of the invoice amounts.

Given the claims made by the parties in this case with respect to how they conducted their affairs, you may want to consider the possibility of whether XXXXX incurred the expenses in question as an agent on behalf of XXXXX. If the expenses were incurred by XXXXX as an agent on behalf of XXXXX, then it could be XXXXX that would be considered to have paid that tax for purposes of the rebate. XXXXX would also not be entitled to a rebate of amounts that it paid as agent on behalf of XXXXX. We note that if XXXXX had paid the tax otherwise than as an agent of XXXXX, the timeXXXXX limit for XXXXX to apply for any rebate of that tax would have expired.

Although there is a possibility that XXXXX incurred the expenses in question as an agent of XXXXX, XXXXX has not provided sufficient evidence at this time to establish that this was the case. We would recommend that additional evidence be obtained from XXXXX prior to the payment of any rebate. We would be pleased to discuss this issue further with you.

Should you have any questions regarding this matter, please do not hesitate to call me at (613) 952-8815.

Raymond Labelle
Senior Technical Analyst
Services and Intangibles Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

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