15 January 2003 GST/HST Interpretation 6833 - Joint Venture Election

Dear XXXXX:

Thank you for your letters XXXXX (with attachments) XXXXX XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to a joint venture operation. Reference is also made to your recent telephone conversation with the undersigned. I apologize for the delay in responding to your letters.

Interpretation Requested

You requested that the activities of a joint venture that is supplying XXXXX based on talent contributed by a co-venturer be considered as prescribed for purposes of section 273 of the Excise Tax Act (ETA).

Interpretation Given

Based on the information provided, the joint venture election is not available in this case.

The responsibility for prescribing joint venture activities for purposes of section 273 of the ETA rests with the Department of Finance. Currently, only two activities have been prescribed as set out in the Joint Venture (GST) Regulations (SOR/91-36), neither of which includes XXXXX.

However, over the last few years the Department of Finance has undertaken a review of the Regulations and has identified other specified activities for which the joint venture election will be available. Upon completion of their review, we understand that the legislation and/or Regulations will be amended to include the specified activities that have been identified in their review to date.

As a result, the Canada Customs and Revenue Agency (CCRA) has been indicating to requesters that it is our understanding that these specified activities are to be prescribed. As noted in your letter, the joint venture activity of supplying XXXXX is not one of these specified activities. Therefore, the participants to this joint venture are not eligible to use the election available pursuant to section 273 of the ETA, and each of the participants is required to account for tax under the normal rules.

The Department of Finance is still reviewing the existing legislative/regulatory approach to determining eligibility for the joint venture election based on the representations it has received with respect to prescribing various activities. We can assure you that the Department of Finance is aware of and is considering your activity for prescription as part of their review.

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 CCRA 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) 952-7909.

Yours truly,

Gunar Ozols
Senior Excise and GST/HST Rulings Officer
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate