26 March 2002 GST/HST Interpretation 34247 - Government Funding: Casino Revenues

This is further to your memorandum dated January 15, 2001 addressed to the XXXXX GST/HST Rulings Centre concerning the eligibility of certain gaming proceeds as government funding for the purposes of the Public Service Body (PSB) Rebate. Your request has been transferred from the XXXXX Region to the Charities, Non-Profit Organization and Educational Services Unit in the Public Service Bodies & Governments Division for response. We apologize for the delay in responding.

Our understanding of the situation is that in their financial statements, the XXXXX (the Council) declares as revenues a XXXXX Government - Casino Grant.

Issue

You have asked if this Casino Grant can be considered "government funding" for purposes of the PSB rebate.

Response

The authority for regulation of casino games is found under section 207 of the Criminal Code of Canada. The province of XXXXX has designated the XXXXX (the Corporation) as the authority to conduct and manage lottery schemes within XXXXX such as casino games including slot machines and table games.

Pursuant to section 207(1)(b) of the Criminal Code, it is also lawful for a charitable or religious organization, pursuant to a licence issued by the Lieutenant Governor in Council of a province or by such other person or authority in the province as may be specified by the Lieutenant Governor in Council thereof, to conduct and manage a lottery scheme in that province if the proceeds from the lottery scheme are used for a charitable or religious object or purpose.

In XXXXX, an organization is eligible to obtain a maximum of XXXXX licences from the XXXXX to conduct and manage social occasion casinos in a calendar year and each licence has to be for no more than three days.

As a source of funding, an organization can also receive a financial contribution under the XXXXX program. That program is funded, at least in part, by the casino revenues of the XXXXX Corporation.

Therefore, in order to determine whether the Casino Grant that appears in the revenues of the financial statements of the Council constitutes "government funding", the Council should demonstrate whether the grant is awarded under the XXXXX program or if the revenues are proceeds from social occasion casinos that the Council conducted itself.

Notwithstanding the fact that the Council might declare on their financial statements that the grant would be a casino grant, if the contribution is awarded to the Council under the XXXXX program, the contribution is considered "government funding" for the purposes of the PSB rebate.

However, if the Council declares Casinos Revenues proceeds from such social occasion casinos, the proceeds would not be considered "government funding" for the purposes of the PSB rebate but consideration for the supply of the right to participate in a game of chance.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-0420.