19 March 2004 General Information Letter 50325 - GENERAL INFORMATION LETTER Criteria for Determination as a Municipality

Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.

Dear XXXXX:

Thank you for your letter XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to a proposed society.

You have asked us to provide a ruling that a proposed society would be considered a para-municipal organization and that it would be entitled to the same GST rebate as the XXXXX. You state that the society would manage the operations of a XXXXX function within the XXXXX. You indicate that there are no bylaws, resolutions or society documents to forward at this time.

As set out in the enclosed copy of GST/HST Memoranda Series 1.4, Goods and Services Tax Rulings, an application ruling may only be issued where there exists a clearly defined fact situation of a particular person. Unfortunately, we are unable to provide you with a ruling as there is no documentation available for our review and specific facts have not been established.

However, we are pleased to provide you with the following information.

Municipal Determination

Paragraph (b) of the definition of "municipality" in subsection 123(1) of the Excise Tax Act (ETA) permits the Minister of National Revenue to determine an organization to be a municipality if certain conditions are met. Where an organization is determined to be a municipality, generally all of the GST/HST provisions in the ETA that relate to municipalities will apply to the organization, including eligibility for rebate.

Included among the categories that the Minister may determine to be a municipality for the purposes of the ETA are para-municipal organizations. To be eligible for this determination, an applicant organization must be a body, board, commission, corporation or other organization created by one or more municipalities or by a province at the request of one or more municipalities. In addition, the applicant must be owned or controlled by one or more municipalities.

An entity will be considered to be owned by a municipality if the municipality owns at least ninety per cent of the shares or capital of the entity, or if the municipality holds title to the assets of the entity or controls their disposition such that in the event of wind-up or liquidation, these assets are vested in the municipality. We consider an entity to be controlled by a municipality if the municipality appoints a majority of the members of the governing body of the entity and the entity is required to submit to the municipality its operating and, where applicable, capital budget for review and approval.

In applying for municipal determination, an organization should provide documentation showing its creation by a province or municipality. This could include the related resolution of the City Council or other managing body, indicating its intentions. The organization should also provide documentation showing that either the ownership or control requirements have been met. This may be demonstrated by documents such as copies of municipal by-laws, the corporate charter, subordinate legislation empowering the organization, or financial statements.

Enclosed for your further reference on this topic is our Technical Information Bulletin B-046, Administrative Guidelines for Municipalities.

If at a future date you wish to make a determination request on behalf of a particular organization, you may send the necessary documentation to the following address:

Director
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
15th Floor, Tower A, Place de Ville 320 Queen Street
Ottawa, ON K1A 0L5

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-4280.

Yours truly,

(Mrs.) S.C. Cahill
Municipalities and Health Care Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate