25 March 2004 GST/HST Interpretation 38220 - Services Provided by Drivers and Trainers of Horses

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 facsimile, XXXXX with attachments, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the services supplied by drivers and trainers to owners of horses. We apologize for the delay in responding to your request.

Interpretation Requested

You are questioning whether the portion of the prize (the Purse) in harness racing that is awarded to the drivers and trainers of horses is subject to the GST/HST.

Interpretation Given

We are unable to issue a ruling with respect to your general enquiry as rulings can only be issued with regard to a clearly defined fact situation of a particular person. However, we are pleased to provide you with the following interpretation of the relevant provisions of the Excise Tax Act (ETA).

Pursuant to subsection 188(2) of the ETA, the giving of a prize to a competitor, by an organizer of the competitive event, is deemed not to be a supply for purposes of the GST/HST. The prize is also deemed not to be consideration for a supply made by the competitor to the organizer.

The owner of the horse is normally the person who enters the horse in the race. As the competitor, the owner is the person the organizer awards the Purse to.

Drivers and trainers are generally not regarded as competitors as they are not the entrants of the race but rather they are supplying services from which they derive income. The driver and trainer are supplying driving/training services to the owner of the horse, not to the racetrack or event organizer. It is recognized that the method of distribution of the Purse may vary depending upon arrangements with owners and individual racetracks or event organizers. However, the method of payment by the owners for the services of the driver or trainer does not change the status of the supply of the services being rendered.

Drivers and trainers registered for the GST/HST are required to collect the GST/HST on taxable supplies of property and services. As the supply of driving or training in a horse racing event is the supply of a service, the GST/HST would apply on the amount that is payable in respect of the supply of the service, provided the service is supplied by a registrant. Even if payment for these services were received from the Purse, the GST/HST would apply in the same way.

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the ETA, 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 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 & Educational Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate