26 June 2003 GST/HST Interpretation 6353 - Application of GST to Auctioneering Services

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 your auctioneering services. We apologize for the delay in responding to you.

Statement of Facts

1. XXXXX (the Auctioneer) operates an auction market in XXXXX, where it sells livestock on behalf of clients, such as XXXXX producers or others having livestock for sale.

2. The Auctioneer charges its clients a commission as consideration for services it performs with respect to the sale of their livestock. The Auctioneer collects the GST on these commissions but has received information advising that the commissions are not subject to tax.

3. The Auctioneer makes several deductions from the proceeds of sale forwarded to its clients, namely: the commission as mentioned above, a XXXXX deduction, a livestock inspection fee, and a XXXXX marketing deduction (i.e., check-off fee).

(a) A XXXXX deduction is imposed on the purchase of XXXXX. The deduction is payable by the dealer who purchases XXXXX and is deducted from the price paid to the vendor. The dealer is entitled to receive a commission from the Government XXXXX, for collecting and remitting the deduction to the Minister of Finance XXXXX.

(b) A livestock inspection fee is imposed on the sale of livestock XXXXX. The fee is payable by the owner and is set aside by the livestock dealer from the moneys received on account of the sale of the XXXXX. The livestock dealer is eligible for a commission from the Government XXXXX, for collecting and remitting the fee to the Minister of Finance XXXXX.

(c) A check-off fee is imposed on every XXXXX sold XXXXX. The fee is payable by the owner who sells XXXXX and is deducted by the livestock dealer from the proceeds of sale for each XXXXX sold. The livestock dealer is entitled to receive a commission from the Government XXXXX, for collecting and remitting the fee to the Minister of Finance XXXXX.

Interpretation Requested

You would like to know whether the Auctioneer is required to collect the GST on: the commissions it receives from its clients as consideration for services it performs with respect to the sale of their livestock; the various fees and deductions it collects because of provincial legislation; and the commissions it receives from the Government XXXXX for collecting and remitting the various fees and deductions.

Interpretation Given

The Canada Customs and Revenue Agency's (CCRA) position is that the Auctioneer is not required to collect GST on the following:

•   the commissions it receives from its clients as consideration for services it performs with respect to the sale of their livestock;

•   the XXXXX deduction;

•   the livestock inspection fee;

•   the check-off fee; and

•   the commissions it receives from the Government XXXXX for collecting and remitting the XXXXX deduction, the livestock inspection fee, and the check-off fee.

In most circumstances, under subsection 177(1.2) of the Excise Tax Act (ETA), when a registrant auctioneer auctions tangible personal property (such as livestock) on behalf of an owner, the auctioneer is not considered to have made a supply to the owner of services relating to the supply of the property. In other words, the Auctioneer is not required to collect GST on the commissions it receives from its clients as consideration for services it performs with respect to the sale of their livestock.

With respect to the various fees and deductions collected because of provincial legislation, the CCRA's position is that the XXXXX deduction and check-off fee are not consideration for a supply, and consequently, are not subject to the GST. The livestock inspection fee is consideration for an exempt supply of providing information in respect of the title to livestock pursuant to subparagraph 20(e)(i) of Part VI of Schedule V to the ETA, and consequently, is also not subject to the GST.

Finally, because of an agreement between the Government of Canada and the Government XXXXX, all Government XXXXX departments are not required to pay the GST. Therefore, an auctioneer does not collect the GST on the commissions it receives from the Government XXXXX for collecting and remitting the XXXXX deduction, the livestock inspection fee, and the check-off fee.

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.

For your convenience, find enclosed a copy of section 1.4 of Chapter 1 of the GST/HST Memoranda Series.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 957-8224.

Yours truly,

Christopher Lewis
Services and Intangibles Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate