8 July 2003 GST/HST Ruling 46491 - Taxi Administration Fees

Dear XXXXX:

Thank you for your email XXXXX (with attachments) concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to administration fees related to taxi chits.

Statement of Facts

On January 8, 2001, the Treasury Board Secretariat released a communiqué that amended a portion of their Taxi Policy. The release stated that taxi vendors could now charge an administration fee for the processing of taxi chits. The administration fee covers the monthly costs required to manually collect, sort, reconcile, bundle and deliver used taxi vouchers and accompanying invoice by messenger.

As a result of this amendment, XXXXX XXXXX, has instructed taxi vendors to charge the GST/HST on the administration fee. The sum of the administrative amount and its corresponding GST/HST are then invoiced together with the total value of the taxi chits being redeemed.

One of the taxi vendors is questioning whether the GST/HST applies to the administrative fee.

Ruling Requested

Does the GST/HST apply to the administration fee?

Ruling Given

The GST/HST applies to the administrative fee charged by the taxi vendors since the administrative services are performed in Canada and are not exempt or zero-rated supplies.

Explanation

Generally, every recipient of a taxable supply made in Canada is required to pay tax in respect of the supply calculated at the GST rate of 7% (or HST rate of 15% if the supply is made in the participating provinces of Nova Scotia, New Brunswick and Newfoundland and Labrador) on the value of the consideration for the supply. There is no tax payable where the supply is exempt or where it is taxable at a rate of 0% (zero-rated).

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 any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-9700.

Yours truly,

Donato Licursi
Services and Intangibles Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate