16 April 2003 GST/HST Interpretation 35773 - Supplies to the Government of [Under the Terms of Reciprocal Taxation Agreement]

Dear XXXXX:

As discussed during our telephone conversation XXXXX, the following information is provided concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to sales of goods and services to your client XXXXX.

Interpretation Requested

Is the XXXXX entitled to purchase goods and services without paying the GST/HST?

Interpretation Given

Many provincial and territorial governments and their entities are entitled to purchase goods and services without paying the GST/HST. The Canada Customs and Revenue Agency (CCRA) maintains a listing of provincial government departments, Crown corporations, boards, commissions and agencies entitled to make purchases without paying the GST/HST. Suppliers are required to retain any certification clauses ("Crown funds") issued by provincial and territorial government entities to support the claim that the sales are not subject to the GST/HST.

As I explained, some provinces have entered into agreements with the federal government, to pay the GST/HST on their purchases of taxable goods and services. The Provinces of XXXXX entered into such agreements effective April 1, 1997. The Government of XXXXX entered into an agreement effective October 1, 2000 and the Government ofXXXXX on November 1, 2000. Suppliers should therefore charge and collect the applicable GST/HST on all taxable supplies made to these specified provincial and territorial governments on or after the dates indicated.

Under the terms of the Government of XXXXX Reciprocal Taxation Agreement (RTA) covering the period November 1, 2000 to December 31, 2003, the XXXXX must pay the GST/HST on purchases of taxable goods and services. However, section 9 of the RTA provides that entities listed in Schedule A, such as the XXXXX may apply to CCRA for a rebate in respect of the GST/HST paid.

For the period XXXXX to XXXXX, the XXXXX " (as a Schedule "A" entity under the terms of the RTA covering that period) was entitled to purchase taxable goods and services without payment of GST/HST.

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.

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

Yours truly,

Debra Murphy
Charities, Non-Profit Organizations and Educational Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate