18 October 2002 GST/HST Ruling 39681 - Application of the GST/HST to the Secondment of from the to .

Dear XXXXX:

Thank you for your letter of XXXXX, with attachments, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the secondment of XXXXX from the XXXXX to XXXXX.

Statement of Facts

Our understanding of the facts, from your letter, is as follows:

XXXXX is an employee of XXXXX, an organization operating otherwise than for profit that was founded in XXXXX to XXXXX.

XXXXX and XXXXX entered into a memorandum of understanding that sets out the terms and conditions for the secondment of XXXXX from XXXXX to XXXXX. The full-time secondment is arranged under the auspices of XXXXX. The secondment period began on XXXXX, 2001 and was to terminate on XXXXX, 2002 but was extended until XXXXX, 2002 and extended again until XXXXX, 2003. It was agreed that XXXXX would not offer XXXXX continuing employment during or immediately after the termination of the secondment.

XXXXX continues to receive his salary and employee benefits from XXXXX. XXXXX reimburses XXXXX for salary, benefits and, at the conclusion of the secondment period, vacation time owed to XXXXX. A record of all leave taken by XXXXX will be supplied to XXXXX on a regular basis. In addition, XXXXX will submit to XXXXX an evaluation report on XXXXX performance upon request.

During the secondment period, XXXXX is performing specific duties under the authority of XXXXX of the XXXXX. XXXXX provides XXXXX with adequate physical and technical resources to carry out his specified duties. They are also responsible for XXXXX pre-approved job-related expenses during the secondment period.

XXXXX is required to adhere to the Conflict of Interest and Post Employment Code for the Public Service. He is subject to the ministerial policy on personnel security for persons on assignment at XXXXX that requires that a security check be conducted. He is also bound, for the duration of his secondment, by a confidentiality agreement and will honour the confidentiality provisions set out in the agreements between XXXXX and its clients in the areas on which he will be working.

Ruling Requested

You would like to know if XXXXX is required to pay the GST/HST on the reimbursement payments to XXXXX under the XXXXX.

Ruling Given

Based on the facts set out above, we rule that XXXXX is not required to pay the GST/HST on the reimbursement payments to XXXXX under the 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 transactions 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 me at (613) 952-4157.

Yours truly,

Trent MacDonald
Government Sectors Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate