ET/SL 23

April 3, 1995

ATT Application to the Purchase of Charter Air Transportation by Diplomats

In response to requests from the airline industry, the Excise Duties and Taxes Directorate has clarified the Department's position on the application of the Air Transportation Tax (ATT) to purchases of charter air transportation by diplomats.

The Excise Tax Act (ETA) states that ATT does not apply in the case of any amount paid for air transportation of the foreign diplomatic personnel specified in section 2 of Part II, Schedule III, of the Act. However, in the case of charter flights paid or payable in Canada, the charterer is considered the taxpayer and ATT is incorporated in the price of the ticket as a cost element passed on to the passenger. There is no provision in the ETA to exempt ATT for charterers in these situations and air carriers are obliged to collect ATT from charterers.

Tax relief provisions of the Foreign Missions and International Organizations Act (FMIOA) take precedence over provisions in the ETA with respect to members of the diplomatic and consular staff and members of their families forming a household. However, the FMIOA makes an exception for such tax relief for indirect taxes of a kind that are normally incorporated in the price of goods or services. This exception would include ATT on charter flights sold to diplomats, an interpretation supported by the Department of Foreign Affairs and International Trade.

If you require further explanation regarding the application of the ATT in this regard, please contact your local Revenue Canada Tax Services office. For information concerning the FMIOA, please contact Jean LauziŠre, Office of Protocol, Department of Foreign Affairs and International Trade by telephone at (613) 992-6882 or by fax at (613) 943-1075.