Please note that the following documents, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ces documents, bien qu'exacts au moment émis, peuvent ne pas représenter la position actuelle de l'Agence.
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Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
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XXXXX
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Case Number: 40164File: 11860-1
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XXXXX XXXXX
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December 17, 2003
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Subject:
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GST/HST INTERPRETATION and APPLICATION RULING
Rebate in respect of the purchase of qualifying motor vehicles
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Dear XXXXX
Thank you for your letter XXXXX, with attachments, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the operations of your client who is a purchaser of motor vehicles that qualify for rebate under the provisions of section 258.1 of the Excise Tax Act. I apologize for the delay in responding to your query. Note that all legislative references are to the Excise Tax Act.
The attachments provided include XXXXX a response to a proposal request issued by XXXXX a contract for sale of buses between the XXXXX and the supplier, XXXXX., and photographs of the buses in question.
XXXXX
We understand that the XXXXX has entered into an agreement, XXXXX to purchase a number of XXXXX buses each year for four years XXXXX with an option to purchase low floor ramp equipped buses the following year XXXXX. These buses are described as low floor buses that meet the needs of both ambulatory and non-ambulatory disabled persons. Each vehicle is ramp equipped and accommodates XXXXX wheelchair positions, at least XXXXX seats and additional seating. None of these vehicles is equipped with an auxiliary driving control to facilitate the operation of the vehicle by an individual with a disability.
In your letter, you put forth the position that the amount eligible for rebate should include the full consideration price paid less the value of the engine. To support this position, you have set out general statements and explanations as they relate to the issue of transporting persons with physical disabilities.
In addition, you have asked the following two questions (reproduced from your letter).
• XXXXX
• XXXXX
XXXXX
In your submission, you refer to rebate eligibility based on 'individuals or passengers with physical disabilities'. However, the term 'physical disabilities' is a general term that is beyond the scope of section 258.1 as the provisions relate to motor vehicles purchased by your client; that is, motor vehicles equipped with a device designed exclusively to assist in placing a wheelchair in the vehicles without having to collapse the wheelchair. The rebate provisions then refer to special features incorporated into or special adaptations to the motor vehicle for the purpose of its use by or in transporting an individual using a wheelchair. In addition, your request for a ruling encompasses valuation issues that would result in the determination of the "certified amount". Valuation issues are within the scope of the Compliance Programs Branch and are subject to verification when the rebate amount is claimed.
However, in order to respond to the issues raised in your letter, we will provide an interpretation of the provisions of section 258.1. We will limit our comments to circumstances where the purchaser/recipient claims the rebate by filing an application for rebate.
In addition, we will provide a ruling concerning special features that have been incorporated into, or adaptations made to, the vehicle XXXXX for the purpose of its use by or in transporting an individual using a wheelchair. This ruling will address those special features you list in your letter. We will also provide comments concerning which portion of the consideration for the supply that we consider can reasonably be attributed to these special features or adaptations.
Interpretation
In order that there be eligibility for rebate, there must first be the supply of a qualifying motor vehicle.
Subsection 258.1(1) defines a "qualifying motor vehicle" as:
A motor vehicle that is equipped with a device designed exclusively to assist in placing a wheelchair in the vehicle without having to collapse the wheelchair and, that, for as long as the motor vehicle has been so equipped has never been used as capital property or been held otherwise than for supply in the ordinary course of business.
Subsection 258.1(2) then sets out the circumstances that apply when a qualifying motor vehicle is purchased in Canada. These events include:
• a registrant makes a taxable sale of a qualifying motor vehicle
• the recipient has paid all tax payable in respect of the supply
• the supplier identifies in writing to the recipient a portion of the consideration for the supply that can reasonably be attributed to special features that have been incorporated into, or adaptations made to, the vehicle for the purpose of its use by or in transporting an individual using a wheelchair. The legislation refers to this information as "certified amount of the purchase price."
A concern expressed in your letter is the determination of the certified amount of the purchase price. It is important to note that it is the supplier who must determine that part of the consideration that can reasonably be attributed to special features that have been incorporated into, or adaptations made to, the vehicle for the purpose of its use by or in transporting an individual using a wheelchair.
The legislation provides for both 'special features incorporated into' and 'adaptations made to'. The common meaning of the term 'special features incorporated' would be that of an integrated or built in distinctive element. 'Adaptation' would have the common meaning of change, alter or make suitable. In addition, the special feature incorporated into or adaptation made to the vehicle must be for the purpose of its use by or in transporting an individual using a wheelchair.
In your letter, you describe alterations such as changes to minimum ground clearance as well as larger wheels and rims to allow the buses to operate in ten inches of snow. In our opinion, these are common operating characteristics that apply to the vehicle. They are not considered to be special features incorporated into or adaptations made to the vehicle for the purpose of its use by or in transporting an individual using a wheelchair.
Special features or adaptations could include door access ramps and operating controls, removable/folding seats, systems to anchor the wheelchair, etc. In addition, the determination of special features into or adaptations to a vehicle for the purpose of its use by or in transporting an individual using a wheelchair must be evaluated for each qualifying motor vehicle.
Once the 'special features' or 'adaptations' have been identified, the supplier is then in a position to determine that part of the consideration that can reasonably be attributed to the special features or adaptations. The word 'reasonably' would have the common meaning of logically or realistically.
In the case of certain special features incorporated into or adaptations made to the vehicle that are for the purpose of its use by or in transporting an individual using a wheelchair, the consideration that can reasonably be attributed to the special features or adaptations may include the entire cost of the special feature or adaptation as well as the cost of installation. For example, we would consider the front and rear door ramps as well as the system for deploying the ramps to fall within this category.
However, in other circumstances where there is a special feature or adaptation to a 'common-use' component, the consideration that can reasonably be attributed to the special feature or adaptation may be limited to the incremental amount that relates to the special feature or adaptation to the extent that it is for the purpose of its use by or in transporting an individual using a wheelchair.
Using the example of a door that is made wider to accommodate a wheelchair, we are of the view that this 'widening' could represent either a special feature incorporated into or adaptation made to the vehicle. However, the consideration that should be included in the certified amount of the purchase price is the consideration that can reasonably be attributed to the special feature or the adaptation. In this case, the amount that can reasonably be attributed to the special feature or the adaptation is limited to the consideration for the increase in door dimensions.
After those events described above have taken place, the recipient may then file an application for rebate. It is our position that the recipient is in a position to file an application for rebate only when all the requirements of subsections 258.1(1) and 258.1(2) have been met.
An additional condition is that the recipient must file an application for rebate within four years after the first day on which any tax in respect of the supply became payable. This provision is of special interest where supplies of qualifying motor vehicles are subject to payment arrangements where liability for tax occurs before the total tax is paid or the supply is made.
Subsection 258.1(2) provides, in part, that the Minister shall pay to the recipient a rebate equal to the tax calculated on that portion of the consideration for the supply that can reasonably be attributed to special features that have been incorporated into, or adaptations made to, the vehicle for the purpose of its use by or in transporting an individual using a wheelchair.
After the application for rebate has been filed as required, an auditor (Verification and Enforcement Division of the local Tax Services Office, CCRA) will determine the amount of the rebate as described in the legislation. This could be evidenced by a copy of the certified amount of the purchase price. In addition, the auditor may confirm with the supplier that the certified amount meets the requirements of the legislation; that is, that it is that portion of the consideration for the supply that can reasonably be attributed to special features that have been incorporated into, or adaptations made to, the vehicle for the purpose of its use by or in transporting an individual using a wheelchair.
As noted above, where the purchaser/recipient claims the rebate by filing an application for rebate, the responsibility of the supplier is to provide information as set out in the legislation.
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 Canada Customs and Revenue Agency with respect to a particular situation.
Ruling Given
We are of the understanding that the XXXXX bus, as purchased by the XXXXX, is a "qualifying motor vehicle" for purposes of section 258.1. We are therefore providing a ruling concerning special features that have been incorporated into, or adaptations made to, the XXXXX bus for the purpose of its use by or in transporting an individual using a wheelchair. These special features are as listed in your letter with reference to the contract and proposal.
1. Entrance Door Ramp and Rear Door Ramp - manual ramps with non-slip surfaces for the purpose of loading and unloading passengers in wheelchairs.
We rule that the Entrance Door Ramp and the Rear Door Ramp, as described above, constitute special features that have been incorporated into, or adaptations made to, the XXXXX bus for the purpose of its use by or in transporting an individual using a wheelchair.
The portion of the consideration for the supply that can reasonably be attributed to these special features or adaptations includes the cost of the manufactured product(s) as well as its installation.
2. Interlock Systems (front and rear doors)
(a) the ramp system, tied in with the door, shall incorporate an interlock system which will prevent acceleration of the vehicle engine while the ramp is extended, and
(b) the ramp system, tied in with the door, shall be interlocked with the vehicle brake system so as to prevent deployment of the door until the parking brake has been applied.
We rule that the Interlock Systems (front and rear doors), as described above, constitute special features that have been incorporated into, or adaptations made to, the XXXXX bus for the purpose of its use by or in transporting an individual using a wheelchair.
The portion of the consideration for the supply that can reasonably be attributed to these special features or adaptations includes the cost of the manufactured product(s) as well as its installation.
3. Kneeling Features - allows the operator to lower the vehicle to less than XXXXX inches at the front door. The kneeling feature includes a throttle and brake interlock that is operative when the kneeling function is in operation. The controls for the kneeling function are located on the right side of the driver's front control panel.
We rule that the Kneeling Features (throttle/brake interlock, controls), as described above, constitute special features that have been incorporated into, or adaptations made to, the XXXXX bus for the purpose of its use by or in transporting an individual using a wheelchair.
The portion of the consideration for the supply that can reasonably be attributed to these special features or adaptations includes the cost of the manufactured product(s) as well as its installation.
4. Wheelchair Positions - XXXXX Each wheelchair position shall be equipped with XXXXX floor attachment pockets. In addition, the wheelchair positions shall be equipped with an approved anchoring system, including tie down belts.
We rule that the Wheelchair Positions (floor attachment pockets and approved anchoring system, including tie down belts), as described above, constitute special features that have been incorporated into, or adaptations made to, the XXXXX bus for the purpose of its use by or in transporting an individual using a wheelchair.
The portion of the consideration for the supply that can reasonably be attributed to these special features or adaptations includes the cost of the manufactured product(s) as well as its installation.
5. Entrance and rear entryways and doors - these have been widened to accommodate the ramps and wheelchair access.
We rule that the widening of the front and rear entryways and widening of the front and rear doors as described above, constitute special features that have been incorporated into, or adaptations made to, the XXXXX bus for the purpose of its use by or in transporting an individual using a wheelchair. The amount that can reasonably be attributed to these special features or adaptations is limited to the incremental amount that relates to the widening of the entryways and doors.
6. We rule that the following characteristics are not 'special features incorporated into' or 'adaptations made to' a vehicle for the purpose of its use by or in transporting an individual using a wheelchair. Therefore, no part of the cost for these characteristics is eligible for rebate under the provisions of section 258.1.
• A suspension system that accommodates the low floor design of the bus.
• Design parameters that provide a minimum ground clearance of XXXXX inches with a minimum perimeter frame clearance of XXXXX inches. The use of XXXXX-inch wheels and rims that will raise the minimum clearance to XXXXX inches. These design parameters allow the buses to operate in XXXXX inches of show.
• A larger fuel tank so that buses can operate a full day before refuelling.
• Heating systems at different locations in the bus for the comfort of the driver and passengers.
• An air conditioning system for the comfort of the driver and passengers.
• XXXXX[.]
• A fire suppression system that works to suppress or extinguish fires in the engine compartment.
• Emergency door releases that allow the front and rear doors to be opened if the power-operated system fails.
• A storage rack that has been incorporated in the driver's barrier to store wheelchair restraints and safety belts[.]
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.
Should you have further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-4390.
Yours truly,
Suzanne Leclaire
Municipalities and Health Care Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
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