Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
GST/HST Rulings Directorate
5th floor, Tower A, Place de Ville
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 245833
Business Number: [...]
Dear [Client]:
Subject: GST/HST RULING
GST on the supply of licences by a municipality
Thank you for your correspondence of May 19, 2023, concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to the supply of business licences and pet licences by a municipality. Sorry for the delay in this response.
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
We understand the following:
1. The Village […] was established by the Province […] (‘Province’) […] under the […][relevant provincial Act].
Municipal Government Act
2. The Province’s Municipal Government Act, R.S.A. 2000 Chapter M-26 (‘MGA’) empowers municipalities to shape their communities, and regulates how municipalities are funded and how as local governments they should govern and plan for growth. Under the MGA, “municipality” means, in part, a city, town, village, summer village, municipal district or specialized municipality.
3. The Village is a municipality according to the MGA and is therefore a municipality as defined in subsection 123(1) of the ETA and is registered for GST purposes.
4. Section [#] of the MGA gives a municipal council the broad authority to pass bylaws for municipal purposes respecting certain matters, including:
- Pursuant to section [#], bylaws respecting the safety, health and welfare of people and the protection of people and property.
- Pursuant to section [#], bylaws respecting businesses, business activities and persons engaged in business.
- Pursuant to section [#], bylaws respecting wild and domestic animals and activities in relation to them.
- Pursuant to section [#], bylaws respecting the enforcement of bylaws made under the MGA or any other enactment.
5. Pursuant to section [#] of the MGA, a council may in a bylaw:
a) regulate or prohibit;
b) deal with any development, activity, industry, business or thing in different ways, divide each of them into classes and deal with each class in different ways; and
c) provide for a system of licences, permits or approvals, including any or all of the matters listed therein;
Village Bylaws
6. Village Bylaw [#] cited as the ‘Animal Control Bylaw’, regulates and provides for the licensing of animals, and provides for the confinements of certain animals within the Village, and regulates and controls other animals.
Under the Animal Control Bylaw:
- No person shall own, keep or harbour any animal within the Village limits unless such animal is properly licensed.
- The owner of every animal over the age of six months in the Village shall obtain a licence tag and pay an Animal Licence fee as set out in Schedule A - Fees and Charges to the bylaw. Animal Licences must be renewed annually for a fee.
7. Village Bylaw [#] cited as the ‘Business Licence Bylaw’, regulates and provides for the regulating, controlling, and licensing businesses or business activity within the corporate limits of the Village.
Under the Business Licence Bylaw:
- Any businesses operating, or proposing to operate, within the Village, is required to apply for, and obtain, a Business Licence. A Business Licence authorizes the operation of the business at the location under the Business Licence Bylaw once approved.
- Business Licence applications and renewals must be accompanied by the appropriate Business Licence fee as set out in Appendix A – Fees. Business Licences must be renewed annually for a fee.
RULING REQUESTED
You would like to know whether GST applies to fees the charged by the Village for the supply of Animal Licences and Business Licences.
RULING GIVEN
Based on the facts set out above, we rule that the Animal Licence fee and the Business Licence fee are each consideration for the supply of a licence by the Village, which is exempt under paragraph 20(c) of Part VI of Schedule V to ETA. Therefore, these fees are not subject to GST.
EXPLANATION
Generally, every recipient of a taxable supply (other than a zero-rated supply) made in Canada is required to pay the GST on the value of consideration for the supply pursuant to subsection 165(1) of the ETA. An exempt supply is not subject to the GST and is included in Schedule V.
Paragraph 20(c) of Part VI of Schedule V to the ETA exempts, in part, a supply of a licence, permit, quota or similar right that is made by a government or municipality or by a board or commission or other body established by a government or municipality.
DISCLAIMER
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1-4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the ruling(s) given in this letter provided that: none of the issues discussed in the ruling(s) are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed.
If you require clarification with respect to any of the issues discussed in this letter, please call directly at (343) 571-9253.
Should you have additional questions on the interpretation and application of the GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287 or by fax to 1-418-566-0319.
Sincerely,
Marlon Latchana
Municipal Sectors Unit
Public Service Bodies and Governments Division
GST/HST Rulings Directorate
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