GST/HST Ruling

Dear XXXXX:

Thank you for your letter of XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the supply of training services and to the supply of memberships made to Aboriginal Canadians and organizations.

On XXXXX, the XXXXX Tax Services Office issued a GST/HST Interpretation addressing your question regarding training services. As indicated therein, your query about memberships was forwarded to this office for response. I apologize for the delay in this reply.

Statement of Facts

Based on the information contained in your letter of XXXXX, and provided during our telephone conversation of XXXXX, as well as that found on the Internet sites of the XXXXX and the XXXXX, our understanding of the facts, the transaction, and the purpose of the transaction are as follows:

1. The XXXXX is a non-profit organization funded only by its membership dues and course fees. XXXXX is a provincial/regional affiliate of the XXXXX.

2. XXXXX has XXXXX objectives XXXXX[.] With respect to training, XXXXX provides XXXXX courses at a reduced rate to its members. For example, the XXXXX is supplied to its members at a cost of XXXXX, including GST. This course is provided to non-members at a cost of XXXXX, including GST.

3. XXXXX. An XXXXX membership entitles its holder to all rights, privileges and services that pertain to the XXXXX such as:

a. newsletters

b. information on XXXXX

c. participation in XXXXX activities

d. reduced fees for seminars

e. referral services (for those who have completed sufficient training)

f. such other benefits as XXXXX procure for their members

g. voting privileges

h. hold office.

With the exception to the right to voting privileges and the right to hold office, a XXXXX are entitled to all rights, privileges and services of the XXXXX.

Members of XXXXX come from a wide variety of business and community backgrounds and experiences. While many have taken formal training in XXXXX in order to become practitioners, others who belong do not intend to actively practice XXXXX. They join XXXXX to gain a general knowledge of the XXXXX for their personal or business use.

XXXXX

4. The annual fee for XXXXX membership in XXXXX is XXXXX, including GST. The membership fee of XXXXX is composed of:

XXXXX - one-time administrative fee

XXXXX - for membership in XXXXX - for membership in XXXXX - GST

XXXXX collects XXXXX from each of its new XXXXX members and notifies XXXXX accordingly. XXXXX subsequently invoices XXXXX an amount for its new XXXXX members (i.e., XXXXX plus GST multiplied by the number of new members). XXXXX remits the amount owing to the XXXXX.

5. Members of XXXXX are automatically members of the XXXXX and are eligible for its services and benefits, some of which include:

XXXXX

6. XXXXX obtained recognition under the XXXXX for the designation:

XXXXX

All other groups and individuals are prohibited from adopting or using any of these marks without the consent of XXXXX.

7. These designations by XXXXX are to recognize the combined experience and formal training of senior XXXXX.

To be designated as XXXXX, an individual must be a member of the provincial/regional affiliate XXXXX and the XXXXX.

Each designation has eligibility criteria requiring applicants to have a specified level of XXXXX training, and experience gained through having participated in a designated number of XXXXX. To practice as a XXXXX, XXXXX member of XXXXX must make an application to XXXXX. Once the application has been reviewed and approved at various levels within XXXXX, it is then forwarded to XXXXX for review and approval. Once approved, XXXXX grants the designation. Holders of a XXXXX must pay, to XXXXX, an annual accreditation due of XXXXX plus GST. A holder of both designations XXXXX must pay an annual accreditation due of XXXXX plus GST. The holder of a XXXXX designation identifies the holder as a XXXXX XXXXX.

8. Two individuals who are members of the XXXXX each have XXXXX membership in XXXXX. These individuals have taken the XXXXX XXXXX offered by XXXXX. This course was provided off reserve. XXXXX paid XXXXX in full plus GST for the course taken by these two individuals. XXXXX has invoiced, or will be invoicing, the XXXXX for the XXXXX membership dues owing for its two members. The XXXXX is located in XXXXX.

Ruling Requested

Is XXXXX required to charge GST on the supply of the XXXXX memberships to the two individuals who are members of the XXXXX?

Ruling Given

Based on the facts set out above, we rule that XXXXX is required to charge GST on the supply of the XXXXX memberships to the two individuals who are members of the XXXXX[.] This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act, or to our interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Explanation

Technical Information Bulleting B-039R "GST Administrative Policy - Application of GST to Indians" (TIB-039R) summarizes the Canada Customs and Revenue Agency's administrative policy concerning the application of GST/HST to purchases by Indians, Indian bands and band-empowered entities. The treatment of purchases by Indians and Indian bands for GST/HST purposes is consistent with the Indian Act.

Paragraph 87(b) of the Indian Act states:

"87. Notwithstanding any other Act of the Parliament of Canada or any Act of the legislature of a province, but subject to section 83, the following property is exempt from taxation, namely ...

(b) the personal property of an Indian or a band situated on a reserve;"

Property on a reserve or delivered to a reserve may be acquired by an Indian, an Indian band or a band-empowered entity without the payment of GST/HST provided that the conditions described under TIB-039R are met. For ease of reference, TIB-039R is enclosed.

A membership is comprised of various rights to property or services. As a membership confers rights, it is intangible personal property. Because a membership is intangible personal property and not a physical object that can be delivered to a reserve, it must be situated on a reserve for tax relief to apply.

It is the Canada Customs and Revenue Agency's position that where the rights to property or services in respect of a membership can be used or exercised exclusively on a reserve, that membership will be situated on a reserve. An Indian, an Indian band or a band-empowered entity may acquire an otherwise taxable membership on a tax-relieved basis where the membership rights can be used or exercised exclusively on a reserve and all other conditions set out under TIB-039R are met.

While some of the rights in respect of a membership in XXXXX may be used or exercised on reserve, others may be used or exercised off reserve. For example, as a benefit of membership in XXXXX, members are given the opportunity to use their experience through the provision of XXXXX services to the public. Further, members of XXXXX are entitled to receive the services and benefits of XXXXX (e.g., the right to attend XXXXX conferences; the right to receive a XXXXX designation and practice as a XXXXX XXXXX). Since the rights in respect of a membership in XXXXX are not exercisable exclusively on a reserve, an Indian, an Indian band or a band-empowered entity cannot acquire an Individual membership in XXXXX without the payment of GST.

As requested in your letter of XXXXX a copy of this letter has been sent to:

XXXXX

Should you have any further questions or require clarification on the above matter, please call me at (613) 954-7952.

Yours truly,

Lynn Fournier Renner
Technical Officer
Aboriginal Affairs Unit
Excise and GST/HST Rulings Directorate

Dear XXXXX:

Thank you for your letter of March 19, 2001 (with attachments), concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transaction(s) described below.

Statement of Facts

Our understanding of the facts is as follows:

1. The XXXXX (the charity) pays a per diem allowance to XXXXX who provide care to XXXXX children.

2. The purpose of XXXXX is to provide temporary care in a family setting pending achievement of a permanent plan such as returning home, placement with relatives or adoption.

3. The per diem allowance is higher for some children with special needs, as they consume more resources of the XXXXX.

4. According to the XXXXX, the regular XXXXX care rate (the per diem) is comprised of the following elements:

•   Food - groceries and meals away from home with XXXXX[.]

•   Lodging - including furniture, bedding, towels, etc.

•   Clothing - a small portion only as most clothing costs will be reimbursed by the charity.

•   Personal care - includes shampoo, soap, tissues ...

•   Household Operation

•   Normal Transportation costs associated with health care, education, recreation etc.

5. "Expensible" items as defined in the above-noted report include extraordinary costs for a child that are not predictable and are normally reimbursed by the charity after submission of expense forms by parents.

Ruling Requested

Is the XXXXX regular rate per diem allowance all, or substantially all, a taxable supply allowance, thereby being fully subject to rebate?

If not, and knowing that this taxpayer is in the XXXXX, what percentage would qualify for rebate (i) across the board, (ii) in each age category?

Does the special needs premium qualify for the same percentage rebate as the regular rate?

Ruling Given

Based on the facts set out above, we rule that the charity is not entitled to claim a Public Service Body (PSB) rebate of GST in respect of the per diem paid to XXXXX XXXXX.

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act, or to our interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Explanation

Section 174 of the ETA provides (in part) that where a volunteer who gives services to a charity acquires property or a service for consumption or use in relation to the activities of the charity and the charity pays an allowance to the volunteer, (a) the charity is deemed to have received a supply, (b) the consumption or use of the property or service by the volunteer in relation to the activities of the charity is deemed to be consumed or used by the charity and not the volunteer, and (c) the charity is deemed to have paid tax in respect of the purchase. The charity would be entitled to a Public Service Body (PSB) rebate in respect of the allowance if the allowance was used for supplies all or substantially all of which are taxable (other than zero-rated) and acquired in Canada for use in the activities of the charity.

Based on the nature of expenses to be dispensed by the per diem (e.g. food, housing, etc), it does not appear that in the normal course the per diem would be spent to acquire supplies all or substantially all of which are taxable other than zero-rated. Accordingly, as the charity will not be deemed under section 174 to have received the supplies and to have paid the tax, it will not be eligible to claim a PSB rebate (whether full or partial) in respect of the per diem.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-7936.

Yours truly,

Danielle Laflèche, c.a.
Manager
Charities, NPO's and Educational Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate

Dear XXXXX:

Thank you for your letter of May 4, 2001 (with attachments) and telephone conversation of September 18, 2001, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to supplies made by your client XXXXX[.]

Facts Given

You describe the product XXXXX sold by your client as follows:

•   The product is primarily the dung of horses mixed with the bedding (straw) thereto. It is obtained in bulk from the horse barns in the area and can contain cattle manure as well.

•   The product is sold in its natural state primarily to XXXXX.

•   The product is delivered by the truckload in quantities exceeding 500 KG.

•   The product is not labelled or formally marketed by XXXXX.

•   Invoices for the product designate it as XXXXX.

•   No laboratory analysis is done to verify the plant nutrient content of the product. However the product is monitored to ensure it does not contain any elements detrimental to health or the environment.

•   In the past, the client also sold a product named XXXXX.

•   This product contained some horse and cattle manure and other components (e.g. sedge peat).

•   Although similar to XXXXX is a separate and distinct product. The client had hoped to use labelling and formal marketing effort to differentiate the product and expand sales. This failed to occur and the making of supplies of XXXXX was abandoned.

•   A laboratory analysis was submitted to the CCRA XXXXX for a product called XXXXX

Ruling Requested

Clarify the tax status of XXXXX and XXXXX pursuant to section 5 of Part IV of Schedule VI to the Excise Tax Act (ETA).

Ruling Given

XXXXX sold in bulk is a zero-rated supply pursuant to section 5 of Part IV of Schedule VI to the ETA when supplied in quantities of at least 500 kg at that time.

XXXXX is not a zero-rated supply pursuant to section 5 of Part IV of Schedule VI to the ETA.

Explanation

Pursuant to subsection 3(1) of the Fertilizers Regulations made under the Fertilizers Act, animal and vegetable manures that are sold in their natural condition are exempt from that Act and Regulations, if they are:

•   not detrimental, harmful, or poisonous (including lesser plant nutrients),

•   are efficacious for every purpose for which it is represented or sold (including lesser plant nutrients),

•   if the product contains a pesticide, it is approved for use.

According to the Canadian Food Inspection Agency (CFIA), manure in its natural condition means that the product is not processed (other than handled and stored), packaged or bagged in any manner.

Animal and vegetable manures in their natural condition are commonly understood to be a fertilizer (i.e. efficacious) even though they are not subject to the requirements of the Fertilizers Act. Therefore, manure in its natural condition is zero-rated under section 5 of Part IV of Schedule VI to the ETA.

To be considered a fertilizer for purposes of section 5 of Part IV of Schedule VI to the ETA, XXXXX must meet specific compositional requirements set out in the attached P-235; Meaning of "Fertilizer" and pursuant to the Fertilizer Act and Regulations.

XXXXX is not the dried and ground excreta of animals or birds with or without litter, containing not less than 50% organic matter, designated as to kind and condition as required pursuant to Schedule II under the Fertilizer Act and Regulations.

Furthermore, based on the laboratory analysis for XXXXX, lesser plant nutrients are present below the minimum required level and major plant nutrients are present in insignificant levels. Therefore, supplies of XXXXX are subject to the GST at 7%.

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act, or to our interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-9218.

Yours truly,

Kevin W. Smith
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
Canada Customs and Revenue Agency
Agence des douanes et du revenu du Canada T2001

Dear XXXXX:

Thank you for your letter of XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to services provided by a condominium corporation. In late August, we also received a package of documents from XXXXX of your office.

Since the subject property is located in a non-participating province, we will restrict our comments to the application of the GST.

All legislative references are to the Excise Tax Act (ETA) unless otherwise noted.

Statement of Facts

1. Our understanding of the facts and transactions is as follows. Our understanding is based on your letter, our telephone conversations with XXXXX of your office and a review of the following documents, forwarded to our office by XXXXX: (We have treated the unsigned and undated documents as sample documents provided for our general information. Several documents make reference to "XXXXX Condominium Corporation No. ______", however no corporation number is inserted. In those cases we understand from XXXXX that the phrase is meant to represent the XXXXX Condominium Corporation Number XXXXX referred to in your letter. This is consistent with the Agreement of Purchase and Sale which defines "Corporation" as being XXXXX Condominium Corporation No. XXXXX.)

Sample Agreement of Purchase and Sale with Schedules "XXXXX" (Owner's Services Agreement) and Appendix "XXXXX" (Basic Services Package);

-    Disclosure Statement XXXXX dated XXXXX;

-    Declaration by XXXXX. and Schedules XXXXX through XXXXX (unsigned/undated);

-    XXXXX Condominium Corporation No. ____ by-laws (unsigned/undated);

-    XXXXX Rules and Schedules XXXXX;

-    Insurance Trust Agreement between ________ Condominium Corporation No. _____ and the XXXXX and Schedule "XXXXX" and "XXXXX "- (unsigned/undated);

-    Condominium Management Agreement between XXXXX Condominium Corporation No. ___ and XXXXX - (unsigned/undated);

-    Diagrams of plot plan and lay-out of condominiums; and

-    Condominium Services Agreement between XXXXX Condominium Corporation No.____ and XXXXX - (unsigned/undated).

2. XXXXX will construct a condominium at municipal address XXXXX (the Condominium). The Condominium will include XXXXX residential units, which we understand to be residential condominium units (Subsection 123(1) of the ETA defines a "residential condominium unit" as "... a residential complex that is, or is intended to be, a bounded space in a building designated or described as a separate unit on a registered condominium or strata lot plan or description, or a similar plan or description registered under the laws of a province, and includes any interest in land pertaining to ownership of the unit".) for purposes of the ETA. Title to and ownership of a particular residential condominium unit passes under an agreement of purchase and sale. Life-lease arrangements are not involved.

3. According to Part XXXXX Disclosure Statement, the Condominium is designed to provide facilities, amenities and services geared to serve the needs of seniors who might periodically require some degree of support services (as indicated at Part XXXXX XXXXX Disclosure Statement). The Condominium is intended to be a place of long-term residence.

XXXXX

4. XXXXX will create the XXXXX, which will be one or more condominium units contained within the legal description of the Condominium.

5. The XXXXX includes a dining room, a health and wellness centre, library, lounge, swimming pool, equipped fitness facility, commercial kitchen, staff room, multi-purpose activity rooms, administrative offices and a social centre. The XXXXX is not an entity in its own right, but rather is the name of the physical facility.

XXXXX Condominium Corporation Number XXXXX

6. The XXXXX Condominium Corporation Number XXXXX (the Corporation) was created pursuant to the provisions of the Condominium Act, XXXXX and the Regulations made thereunder. The Corporation was established upon the registration of the Condominium under the laws of XXXXX. The shareholders of the Corporation are the owners of the units and their appurtenant common interests in respect of the Condominium.

7. The Corporation will enter into a Condominium Management Agreement with XXXXX for XXXXX to be the exclusive manager of the property and assets of the Corporation.

8. XXXXX is not a corporation established upon the registration of a condominium or strata lot plan or description or similar plan or description under the laws of a province.

Basic Services Package

9. Article XXXXX of the Declaration by XXXXX requires the Corporation to enter into a Condominium Services Agreement immediately following registration of the Declaration. The article also states that the Corporation is to maintain the Condominium Services Agreement "... to ensure that a Basic Services Package is provided to the Condominium and its residents on an uninterrupted basis." Paragraph XXXXX of the Condominium Services Agreement refers to a Basic Services Package "... to be provided by XXXXX to the Corporation and its unit owners and residents ...".

10. The Condominium Services Agreement is between the Corporation and XXXXX Under the Condominium Services Agreement, the Corporation retains the services of XXXXX to be the exclusive provider of the Basic Services Package.

11. Only owners and residents ("Resident" is defined at paragraph XXXXX of the Disclosure Statement. Within this letter, "owner" is understood to refer to the owners of the residential condominium units described by the condominium plan registered in connection with the subject condominium.) of the Condominium have the use of the XXXXX and are entitled to the Basic Services Package.

12. XXXXX will bill the Corporation directly for the cost of the Basic Services Package which shall comprise part of the common expenses of the Condominium.

13. The Basic Services Package will include:

•   on-site management and service personnel, whose duties include monitoring and responding to security, health and emergency calls as well as reception and concierge services;

•   use of the XXXXX facilities, including the social centre;

•   nutritional and medication counselling, education and consultation on health matters, co-ordination and scheduling of in-suite personal assistance and care services;

•   provision of cultural, educational, recreational and social programs;

•   transportation to shopping;

•   in-suite (one hour/month) housekeeping, plus emergency repairs; and a credit towards daily lunch and dinner services.

14. XXXXX has subcontracted with XXXXX to provide management, staff, maintenance and administrative services for the XXXXX. XXXXX has subcontracted with XXXXX to provide the Basic Services Package and Additional Services (as described below).

Characterization of Payments toward the Basic Services Package

15. The definition of "common expenses" at Schedule "XXXXX" of XXXXX Disclosure Statement includes items such as payments towards water and sewage and electricity respecting common elements, waste disposal and garbage collection, and snow removal and landscaping. Also included in the definition are "... the costs of the Basic Services Package as determined from time to time pursuant to the Condominium Services Agreement with XXXXX."

16. Further to the above, the Corporation will charge and collect from unit owners, as a mandatory element of the "common expenses", a monthly lump sum amount relating to fees for the Basic Services Package. A separate monthly lump sum will be charged to unit owners for common expenses, such as water, gas, and waste disposal.

17. Sub-paragraph XXXXX of XXXXX Disclosure Statement states that each owner of a unit shall have an undivided interest in the common elements as a tenant in common with all other owners ...". In its Disclosure Statement, XXXXX declares that it is not providing any recreational or other amenities which will be part of the common elements. Article XXXXX of the Disclosure Statement defines "common elements" as excluding residential units and the XXXXX. We have also received confirmation from XXXXX that the property comprising the XXXXX will not form part of the common elements in which the unit owners have an undivided interest as tenants in common.

We note that describing the costs of the Basic Services Package as "common expenses" may appear contradictory. One would normally expect the concept of common expenses or condominium fees to relate to the owners' undivided interests in the common elements of the condominium. However, the subject package does not appear to relate to any such interest.

Ownership of the XXXXX Between the various documents provided, there appears to be some discrepancy as to who owns the property comprising the XXXXX.

18. Paragraph XXXXX of the Disclosure Statement states that the XXXXX is intended to be owned by XXXXX and leased to XXXXX. We understood from XXXXX that no rental fee would be charged to XXXXX for the XXXXX. The Owner's Services Agreement indicates that XXXXX is the lessee of the XXXXX. The Condominium Services Agreement makes reference to a particular arrangement terminating "... upon the earlier of XXXXX ceasing to be the lessee of the XXXXX. ...".

19. The preceding conflicts with paragraph XXXXX of Article XXXXX of the Declaration by XXXXX, which indicates that the XXXXX is to be owned, managed and controlled by XXXXX. As well, in discussing the term of the Condominium Services Agreement between the Corporation and XXXXX, item XXXXX of the Notes to the Budget makes reference to "... the date upon which XXXXX is no longer the Owner of the XXXXX." (all italics ours)

20. XXXXX has stated that the intention of the relevant parties is that the property comprising the XXXXX will be owned, managed and controlled by XXXXX, as set out in the definition of 'XXXXX' in XXXXX Declaration.

Owner's Services Agreement

21. Under paragraph XXXXX of the proposed Declaration, each resident shall enter into an Owner's Services Agreement which contains substantially the same terms and provisions as the Condominium Services Agreement. Paragraph XXXXX of the Agreement of Purchase and Sale also requires the purchaser to enter into the Owner's Services Agreement.

22. The Owner's Services Agreement is between the owner of the residential condominium unit and XXXXX.

23. The Owner's Services Agreement is in effect until the Corporation is registered, and then is suspended as long as the Condominium Services Agreement remains in effect. If the Condominium Services Agreement ceases to exist for any reason other than XXXXX ceasing to be the lessee of the XXXXX See our comments earlier regarding the relationship of XXXXX to XXXXX, then the Owner's Services Agreement would again come into effect.

24. Under the Owner's Services Agreement, the residential condominium owner retains XXXXX to provide exclusively the Basic Services Package to the Owner.

25. No payment for Basic Services Package is due under the Owner's Services Agreement as long as the fees are included as part of the common expenses and paid to XXXXX by the Corporation.

Additional Services

26. The Condominium Services Agreement and the Owner's Services Agreement each provide that XXXXX may make available to unit owners optional, additional levels of support beyond the scope of the Basic Services Package. Such Additional Services will be contracted for directly between XXXXX and the individual unit owner and will not form part of the common expenses of the Condominium.

27. The Additional Services include the following:

•   direct nursing care and medication assistance provided by a Registered Nurse or a Registered Practical Nurse;

•   foot care provided by a Registered Nurse;

•   assisted living (HSW/PSW - terms not defined);

•   hydro therapy assistance; and

•   housekeeping and handyman services, catered events, shuttle transportation arrangements.

Status of the Entities

28. We understand from XXXXX that none of the entities referred to in the preceding Statement of Facts are public service bodies (Subsection 123(1) of ETA defines "public service body" as "... a non-profit organization, a charity, a municipality, a school authority, a hospital authority, a public college or a university".) for purposes of the Excise Tax Act (ETA).

29. We further understand from XXXXX that XXXXX, the Corporation, XXXXX and XXXXX are all currently registered for purposes of the GST/HST. However to date we have not been able to obtain any of the relevant Business Numbers from XXXXX, which would enable us to search our records for possibly relevant material.

30. Your office has forwarded to us a third party authorization dated XXXXX. The authorization is on behalf of XXXXX and is on XXXXX letterhead. We have also received from your office a copy of a XXXXX third party authorization, which we understand was sent by facsimile transmission to your office. The authorization is on behalf of the XXXXX Condominium Corporation No. XXXXX. The heading at the top of the facsimile sheet reads XXXXX.

31. We understand that none of the above-noted entities are closely related corporations under section 128. Accordingly, we have not examined the impact of such a relationship (such as the effect of an election under section 156 to treat certain supplies as having been made for nil consideration). We understand that no agency, partnership, joint venture, or trust relationship exists between any of the entities, and accordingly have not examined the impact of any such relationships.

The following response is based on our understanding that the Basic Services Package will be provided pursuant to the Condominium Services Agreement. If the Basic Services Package has been or will be provided pursuant to the Owner's Services Agreement, then our response may differ and we suggest that you contact our office for further discussion.

Rulings Requested

1. The charge for Additional Services from XXXXX to the condominium owners will not be exempt pursuant to section 13 of Part I of Schedule V.

2. The charges by the Corporation to the owners of a condominium unit in respect of the Basic Service Package are exempt for GST purposes pursuant to section 13 of Part I of Schedule V.

3. XXXXX will be required to charge GST on the service provided to the Corporation with respect to the Basic Services Package.

4. Certain components of the above-mentioned Additional Services, if billed separately, may be exempt pursuant to either section 6 or section 9 of Part II of Schedule V[.]

Ruling Given (Ruling Request 1)

Based on the facts set out above, we rule that the charge for Additional Services from XXXXX to the condominium owners will not be exempt pursuant to section 13 of Part I of Schedule V.

This ruling is subject to the general limitations and qualifications outlined in section 1.4 (enclosed) of Chapter 1 of the GST/HST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection or appeal; that there are no relevant changes in the future to the Excise Tax Act, or to our interpretative policy; and that you have fully described all necessary facts and transactions for which you requested a ruling.

Explanation - Ruling 1

The Additional Services are provided under separate contract between XXXXX and individual owners. Since XXXXX is not a corporation described at section 13 of Part I of Schedule V, its supplies cannot be exempt under that provision.

Explanation - Ruling Requests 2 and 3

We regret that we are unable to provide rulings on requests 2 or 3, due to insufficient facts and contradictory documentation as referred to above XXXXX XXXXX. In order to provide rulings, it is essential to be able to identify the supplier, the recipient, their relationship, and the nature of the supply for the transaction covered by the ruling.

As XXXXX and I have discussed, if sufficient facts are established to allow this office to issue a ruling or to provide further comments on either matter at a future date, we will be pleased to do so, under cover of a separate case number. At that time, this office will conduct further research and analysis in connection with your queries, including the appropriate treatment of the bundle of services contained within the Basic Services Package.

Regarding ruling request 2, section 13 of Part I of Schedule V exempts the supply of property or a service by a corporation established upon the registration of a condominium or strata lot plan. The supply is exempt when made to the owner or lessee of a residential condominium unit described by that plan. The property or service supplied must be related to the occupancy or use of the unit.

Regarding ruling request 3, it is not clear that in fact XXXXX is providing services to the Corporation XXXXX.

We can confirm, however, that section 13 of Part I of Schedule V cannot apply to exempt a service provided by XXXXX if that entity is not a corporation or syndicate established upon the registration, under the laws of a province, of a condominium or strata lot plan or description or similar plan or description.

Additional Information Provided

With respect to ruling request 4, it will be a question of fact whether the supply of a particular good or service qualifies for exemption under a provision of the ETA, including either section 6 or 9 of Part II of Schedule V. Since your ruling request encompasses many different possible fact situations, we are unable to provide a ruling.

You did not indicate that any of the services included in the "Additional Services" package are insured services for purposes of the provincial health insurance plan. Our understanding is that it is unlikely that such services would be insured services covered by the provincial health insurance plan, and that XXXXX would not be considered a "provider" for purposes of the provincial health insurance plan legislation. Therefore, it is a question of fact as to whether section 9 of Part II of Schedule V will apply to the supply of any of these additional services.

Please note that paragraph 6(b) of Part II of Schedule V exempts the supply of a private-duty nursing service, if the service is rendered by a registered nurse, a registered psychiatric nurse, a registered nursing assistant or a licensed practical nurse.

A private duty nurse is a nurse who is hired directly by an individual, and the nurse provides nursing care in the individual's home. Note that for purposes of the ETA, a nursing service is that of a traditional nursing service involving the diagnosis and treatment of an individual's health problems. Nursing services are patient care services that pertain to the curative, restorative, and preventative aspects of nursing. They may also include personal nursing care, administration of drugs and other medications and treatments (usually on the orders of a medical practitioner), assessment of patient's nursing needs and requirements, and the preparation of nursing care plans for the individual patient.

None of the other services listed, i.e., assisted living (HSW/PSW - terms not defined); hydro therapy assistance; housekeeping and handyman services, catered events, shuttle transportation arrangements, are generally exempt under any of the provisions of Part II of Schedule V.

However, housekeeping services rendered in an individual's home is an example of a homemaker service. Note that while there is no general exemption for homemaker services, publicly-funded homemaker services are exempt under section 13 of Part II of Schedule V. Accordingly, if an individual receives government assistance specifically for the acquisition of homemaker services, the homemaker services may be exempt to that particular individual, pursuant to section 13 of Part II of Schedule V. If a supplier receives government funding to provide homemaker services, the supply of these subsidized services would also be exempt under section 13. Where neither the supplier nor the individual recipient receive government funding for the supply or receipt of a homemaker service, the homemaker service is subject to the GST/HST at the rate of 7% or 15%.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-3413.

Yours truly,

(Mrs.) S.C. Cahill
Real Property Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate

Dear Sir:

This is in reply to your letter of July 19, 1999, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the supply of a kit consisting of a saliva testing strips product called XXXXX[.]

Statement of Facts

Our understanding of the facts is as follows:

1. XXXXX.

2. XXXXX[.]

3. XXXXX.

4. XXXXX.

Ruling Requested

The supply of XXXXX is zero-rated pursuant to section 29 of Part II of Schedule VI to the Excise Tax Act ("ETA").

Ruling Given

Based on the facts set out above, we rule that the supply of XXXXX XXXXX is not zero-rated for GST/HST purposes pursuant to [s]ection 29 of Part II of Schedule VI to the ETA. The supply of the strips is taxable for GST/HST purposes at the rate of 7%, or where the supply occurs in a participating province, 15%.

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act, or to departmental interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Explanation XXXXX

Section 29 of Part II of Schedule VI to the ETA provides zero-rated status to the supply of blood-sugar testing strips, blood-ketone testing strips, urinary-sugar testing strips, reagents or tablets, or urinary-ketone testing strips, reagents or tablets. According to the information that you have provided, XXXXX XXXXX. Consequently, [s]ection 29 of Part II of Schedule VI is not applicable to the supply of XXXXX[.] Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-3158.

Yours truly,

Michel Guay
Municipalities and Health Care Services Unit
Public Service Bodies and Governments Division

Encl.:

Dear XXXXX

Thank you for your enquiry of August 4, 1999 (with attachments), concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transaction described below. Your request was forwarded to us by the XXXXX[.] Please note that as of November 1, 1999, Revenue Canada became the Canada Customs and Revenue Agency (CCRA).

Statement of Facts

Our understanding of the facts is as follows:

According to the product literature you provided, XXXXX is described as follows:

1. XXXXX markets a dietary supplement known as XXXXX XXXXX[.]

2. The product comes in tablet form.

3. The product also comes in packets of granules ("tabs") that can be mixed with water or juice.

4. The product includes recommendations on intake, including the intake of children.

5. The product literature cautions, "AS WITH ANY DIETARY SUPPLEMENT, YOU MAY WISH TO CONSULT YOUR DOCTOR PRIOR TO TAKING THIS PRODUCT".

6. Shipments of XXXXX tablets and tabs are shipped to you by XXXXX[.]

Ruling Requested

Whether the supply of XXXXX tablets and tabs is taxable at 7%/15% or is it considered a zero-rated supply of basic groceries.

Ruling Given

Based on the facts set out above, we rule that XXXXX tablets and tabs are taxable at 7% or 15% as applicable.

On April 1, 1997, the harmonized sales tax (HST) replaced the goods and services tax (GST) and the provincial sales tax (PST) in the three participating provinces of Nova Scotia, New Brunswick and Newfoundland with a harmonized tax rate of 15%. Goods that are delivered or made available in a participating province are subject to the HST[.] Example: Goods that are delivered or made available in a participating province are subject to the HST, to the extent that they are taxable supplies (not zero-rated).

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act, or to CCRA interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Explanation

All supplies made in Canada are taxable pursuant to section 165 of the Excise Tax Act (ETA) unless they are considered zero-rated supplies or exempt supplies. Certain supplies of food, beverages and ingredients are zero-rated as basic groceries under the ETA.

Although edible, dietary supplements are not consumed to alleviate hunger as are foods traditionally considered basic groceries. They are consumed to supplement a person's diet.

When supplied in tablet, pill, capsule or similar format, dietary supplements are not considered basic groceries, and are therefore excluded from zero-rating. The supply of these goods is taxable at 7% or 15% as applicable.

Similarly, when mixed with juice or water, XXXXX granules are taken to supplement nutritional intake, not drunk for enjoyment or to quench thirst. The fact that there is a suggested daily dosage also suggests that XXXXX is not an ingredient into a beverage.

Consequently, the supply of XXXXX is not considered the supply of an ingredient for beverages under the ETA and therefore, is taxable at the rate of 7% GST, and 15% HST (where applicable).

Where dietary supplements are imported into Canada, the ETA requires the importer to pay the GST, or the HST, if applicable, on the imported goods.

For your convenience, please find enclosed a copy of section 1.4 of Chapter 1 of the GST/HST Memoranda Series. I have also enclosed a copy of GST/HST Memoranda Series 4.3 entitled "Basic Groceries" which provides information on the tax status of various food or beverages for human consumption.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-9218.

Yours truly,

Kevin W. Smith
Goods Unit
General Operations and Border Issues (GOBI) Division
Excise and GST/HST Rulings Directorate

XXXXX

Dear Mr. Davey:

Thank you for your letter of October 18, 1997¸ with attachments, concerning whether or not the XXXXX [i]s eligible to claim input tax credits in connection with the XXXXX[.] Your letter was addressed to the XXXXX XXXXX XXXXX. The Technical Interpretations Services unit forwarded your letter to our unit for reply.

Please accept our apology for the delay in responding to your query.

All legislative references are to the Excise Tax Act (ETA) unless otherwise noted.

Statement of Facts

Our understanding of the facts is as follows:

1. Your client is the "XXXXX[".]

2. The XXXXX is a registered charity under the XXXXX XXXXX[.]

3. The XXXXX operates an athletic centre out of premises that are owned by the XXXXX[.] The building is known as the XXXXX[.]

4. The XXXXX unsigned agreement that you have provided is between the XXXXX (which is the same person as XXXXX identified above). The agreement includes the following provisions:

•   title to the centre is and remains with XXXXX;

•   equipment purchased by the XXXXX with its own funds remains the property of the XXXXX;

•   the facilities constitute a "community recreation centre" within the meaning of the XXXXX will continue to exercise such power and authority as is required to maintain this designation;

•   XXXXX is to provide all annual operating grants, though the XXXXX is ultimately responsible for all operation costs; and

•   XXXXX is responsible for all capital maintenance costs.

This XXXXX agreement is the most recent between the XXXXX[.] In your facsimile cover sheet, you referred to the above agreement as a "lease agreement". The word "lease" does not appear anywhere in either the agreement submitted or the accompanying Schedule "A", Memorandum of Understanding.

We understand that the XXXXX are currently negotiating a new operating agreement.

5. XXXXX the XXXXX revenues were derived approximately XXXXX from GST/HST-exempt activities and XXXXX from GST/HST-taxable activities. The XXXXX exempt activities include day care services and athletic or recreational programs for children 14 years of age or under. Its taxable supplies include membership fees, recreational or athletic program fees, locker rental fees and rental fees. The XXXXX makes all of the foregoing supplies from the premises that it obtains from XXXXX.

6. In XXXXX the XXXXX approved a project to expand the current facilities. The expansion was financed from reserve funds and from a fund-raising campaign conducted by the XXXXX. The cost of the expansion project was several hundred thousand dollars.

7. In July XXXXX the XXXXX passed a resolution approving the expansion of the XXXXX XXXXX, subject to conformity with the relevant regulations. The resolution also approved a request for XXXXX to act as guarantor for bridge financing.

XXXXX did not participate in the actual design of the expansion of the facilities, rather this was handled by the XXXXX board of directors. XXXXX was not involved regarding the specifications of the project.

8. The expansion project has been completed and included the following:

•   adding a total of XXXXX square feet of new space to the existing building;

•   adding a personal conditioning area with weights, rowers, climbers and other equipment;

•   adding meeting rooms for seminars on health and fitness;

•   expansion of locker room facilities;

•   upgrades to the heating and cooling system;

•   improving accessibility to and throughout the building by installing elevators and lifts; and

•   expansion of public lobby and viewing areas.

9. XXXXX sets aside XXXXX annually in a reserve account as part of its budget for any major repairs or renovations that may be required for the XXXXX. In XXXXX, XXXXX provided a capital grant of XXXXX from this fund towards the XXXXX expansion project.

10. The only costs incurred by the XXXXX prior to the beginning of construction were the architect's fees.

11. At the time of your letter in 1997, the XXXXX was reporting and remitting GST using the Special Quick Method of Accounting system. The requirement to use the net tax calculation for charities took effect for reporting periods beginning after 1996 and is pursuant to section 225.1 of the ETA. The XXXXX has not filed an election to opt out of the net tax calculation for charities.

12. The XXXXX has claimed full input tax credits for their inputs into the subject construction.

13. If the XXXXX defaulted on any of the payments due to contractors/suppliers in relation to the expansion project, as owner of the property XXXXX would be liable to pay any liens placed on the property by the contractors/suppliers.

[14]. The XXXXX arranged a line of credit with the XXXXX[.] Since the XXXXX had no assets to support this loan, XXXXX signed a guarantee. The XXXXX borrowed XXXXX on this line of credit for a short period of time. This amount has been paid down by the XXXXX to a current debt of XXXXX[.]

15. The XXXXX has exclusive use of the recreational centre. As operator and manager, the XXXXX arranges dates and times of use of the centre.

16. The XXXXX has not filed an election under section 211 of the Excise Tax Act in connection with the centre.

17. To the best of your knowledge, you have provided all relevant documentation.

Rulings Requested

1. Is the XXXXX entitled to claim full input tax credits with respect to the GST paid or payable in connection with the subject expansion project?

2. If the answer to the question 1 is yes, can full input tax credits also be claimed for GST incurred for architectural drawings associated with the expansion project?

Rulings Given

Based on the facts set out above, we rule that

1. The XXXXX is not eligible for input tax credits in respect of the construction costs.

2. The XXXXX is not eligible for input tax credits respect of architectural drawings costs associated with the expansion project.

On April 1, 1997, the harmonized sales tax (HST) replaced the goods and services tax (GST) and the provincial sales tax (PST) in the three participating provinces of Nova Scotia, New Brunswick and Newfoundland with a harmonized tax rate of 15%. Example: Goods that are delivered or made available in a participating province are subject to the HST[.]

As the transactions described above occur in a non-participating province, the HST has not been addressed.

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act, or to departmental interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Explanation

The XXXXX has acquired construction services in connection with the expansion project that it undertook. Under the net tax calculation for charities, charities can only claim input tax credits for purchases of real property, capital personal property and improvements to real or capital property of the charity (pursuant to section 225.1). In this case, there is not sufficient evidence that the XXXXX had an interest in the real property which was improved by the construction services acquired. Therefore no input tax credits would be allowed to the XXXXX in respect of the subject construction costs. Preliminary costs such as architectural fees form part of the cost of the construction services and accordingly are denied input tax credits.

In conjunction with the restrictions on input tax credits under the net tax calculation for charities, generally charities will remit less tax. Under section 225.1, charities will only remit 60% XXXXX of the GST/HST collectible or collected on their taxable supplies (other than sales of real and capital property). Charities must remit 100% of the GST/HST collectible by them on their sales of real and capital property.

As a charity, the XXXXX is generally entitled to a rebate of 50% of the GST/HST paid or payable by it for which no input tax credits may be claimed, pursuant to section 259. However, effective for reporting periods beginning after 1996, charities that are subject to the net tax calculation are not eligible for a GST/HST rebate on deemed tax payable for the use of seized or repossessed personal property pursuant to subsections 183(5) and 183(6).

For more detailed information on the net tax calculation for charities, including rebate calculation, please refer to the information sent to you on this topic in January 1998 by the Technical Interpretation Services unit XXXXX[.] You have indicated that the XXXXX has claimed full input tax credits for its costs regarding the subject expansion project. We recommend that you contact your local Canada Customs and Revenue Agency Tax Services Office for information on amending the XXXXX GST/HST returns for reporting periods in which the XXXXX claimed input tax credits for which it was not eligible. The Tax Services Office will be able to advise you on the application of possible interest and penalty and requests for waiver of such.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-9212.

Yours truly,

(Mrs.) S.C. Cahill
Real Property Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate

Dear Sir:

Thank you for your letter of November 8, 1999, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the supply of a XXXXX[.] As of November 1, 1999, Revenue Canada became the Canada Customs and Revenue Agency.

Statement of Facts

Our understanding of the facts is as follows:

XXXXX XXXXX XXXXX[.]

Ruling Requested

The supply of XXXXX is zero-rated pursuant to section 25 of Part II of Schedule VI to the Excise Tax Act (the "ETA").

Ruling Given

Based on the facts set out above, we rule that the supply of XXXXX is zero-rated for GST/HST purposes pursuant to section 25 of Part II of Schedule VI to the ETA.

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act, or to departmental interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-3158.

Yours truly,

Michel Guay
Municipalities and Health Care Services Unit
Public Service Bodies and Governments Division

Dear XXXXX

Thank you for your letter of November 26, 1999, with attachments, concerning the time the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) is payable in respect of the transactions described below.

SITUATION #1

Statement of Facts

Our understanding of the facts, the transactions, and the purpose of the transactions is as follows:

1. XXXXX (hereafter referred to as "Co. A") sends to customers, willing to accept a 30-day free trial, a manual entitled "XXXXX["] other materials, a letter and a document which is clearly identified as an invoice for the manual and a one year subscription to the update service (hereafter referred to as "the document").

2. The letter specifies that the manual is provided on a free 30 day trial basis and the document stipulates that there is a 30 day review.

3. The letter instructs the customer to pay the enclosed invoice if, at the end of the 30 day period, the customer chooses to keep the manual and receive the updates. Alternatively, the customer may return the manual by ordinary post. Certain materials may be kept by the customer free of charge regardless of whether the customer accepts the offer to purchase the manual and become a subscriber.

4. The document contains the date that the manual was sent to the customer, identifies both the supplier, Co. A, and the customer, indicates an invoice number, an amount for the GST and the total amount payable in respect of the taxable supply of the manual which includes a one year subscription to receive updates to the manual.

5. There is no evidence of an underlying obligation for the customer to pay to Co. A any amount for the manual and the one year subscription in either the letter or the document at the time that they are sent, with the manual, to the customer.

6. The amount payable indicated on the document is not carried into Co. A's financial records unless and until payment is received.

7. The customer may pay for the manual by sending a cheque payable to Co. A or provide information for credit card payment. In the latter case, the customer signs the area on the document that authorizes the credit card payment and returns the document to Co. A.

8. There is no requirement for the customer to sign the document or the letter to indicate that the customer is accepting the offer to purchase the manual and become a subscriber.

9. The letter and the document do not constitute agreements in writing that are entered into by the customer and Co. A.

10. With respect to manuals that are returned, no credit notes are issued pursuant to section 232 of the Excise Tax Act (the ETA) and no bad debt adjustments are taken pursuant to section 231 of the ETA as the revenue and the GST/HST are never recognized in Co. A's records.

Rulings Requested

Is GST/HST payable in respect of an offer made by Co. A that is not accepted by the customer and, consequently, no payment received by Co. A?

When does the GST/HST become payable and, consequently, when is Co. A required to include the tax in its net tax calculation?

Rulings Given

Based on the facts set out above, we rule that there are no GST/HST consequences when the offer is not accepted by the customer and no payment is received by Co. A (i.e., the manual is returned by the customer to Co. A).

Based on the facts set out above, we also rule that the GST/HST becomes payable on the day that the consideration is paid by the customer to Co. A and that Co. A is required to include the GST/HST paid in its net tax calculation for the reporting period during which the GST/HST was paid.

TRANSACTION #2

Statement of Facts

Our understanding of the facts, the transaction, and the purpose of the transaction is as follows:

1. XXXXX hereafter referred to as "Co. A") sends annual subscription renewal offers automatically to customers upon the expiry of their subscriptions for the updates to the manual entitled "XXXXX XXXXX[".]

2. The offer to renew the subscription is sent in the format of a letter which invites the customer to renew the subscription and indicates that the accompanying document is an invoice for the renewal of the subscription. The document is clearly identified as a renewal invoice (hereafter referred to as "the renewal document").

3. The renewal document contains the date that the offer to renew the subscription was sent to the customer, identifies both the supplier, Co. A, and the customer, indicates an invoice number, an amount for the GST and the total amount payable in respect of the taxable supply of a one year subscription to receive updates to the manual.

4. There is no evidence of an underlying obligation for the customer to pay to Co. A any amount for the renewal of the subscription in either the letter or the renewal document at the time that they are sent to the customer.

5. The amount payable indicated on the renewal document is not carried into Co. A's financial records unless and until payment is received.

6. The customer may pay for the subscription renewal by sending a cheque payable to Co. A or provide information for credit card payment. In the latter case, the customer signs the area on the renewal document that authorizes the credit card payment and returns the renewal document to Co. A.

7. There is no requirement for the customer to sign the renewal document or the letter to indicate that the customer is accepting the offer the renew the subscription.

8. The letter and the renewal document do not constitute agreements in writing entered into by the customer and Co. A.

9. With respect to subscriptions that are not renewed (i.e., no payments are received in respect of the renewal document), no credit notes are issued pursuant to section 232 of the ETA and no bad debt adjustments are taken pursuant to section 231 of the ETA as the revenue and the GST/HST are never recognized in Co. A's records.

Rulings Requested

Is GST/HST payable in respect of an offer made by Co. A to renew a subscription to the update service that is not accepted by the customer and, consequently, no payment received by Co. A?

When does the GST/HST become payable and, consequently, when is Co. A required to include the tax in its net tax calculation?

Rulings Given

Based on the facts set out above, we rule that there are no GST/HST consequences when the offer to renew a subscription to the update service is not accepted by the customer and no payment is received by Co. A.

Based on the facts set out above, we also rule that the GST/HST becomes payable in respect of the renewal of the subscription to the update service on the day that the consideration is paid by the customer to Co. A and that Co. A is required to include the GST/HST paid in its net tax calculation for the reporting period during which the GST/HST was paid.

These rulings are subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by these rulings provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act, or to departmental interpretative policy; and that you have fully described all necessary facts and transactions for which you requested rulings.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-2488.

Marcel R. Boivin
General Operations Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

Dear XXXXX

Thank you for your facsimile transmission of March 1, 1999, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transaction described below. We apologize for the delay in this response.

Please note that as of November 1, 1999, Revenue Canada became the Canada Customs and Revenue Agency.

Statement of Facts

Our understanding of the facts, the transaction, and the purpose of the transaction is as follows:

1. Pursuant to XXXXX[.]

2. The P.O. is issued under the name of XXXXX[.]

3. Using a certification clause, the "XXXXX"[.]

Ruling Requested

Is XXXXX required to charge the XXXXX GST/HST in respect of the supplies made to it under the P.O.?

Ruling Given

Based on the facts set out above, we rule that XXXXX is required to charge the XXXXX XXXXX GST/HST in respect of the supplies made to it under the P.O.

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act, or to departmental interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

EXPLANATION

Schedule "A" to the Reciprocal Taxation Agreement (RTA) between Canada and the XXXXX lists provincial government entities that are relieved of GST/HST at point-of-purchase. Suppliers to these entities are required to maintain sufficient evidence (e.g. a certification clause) to support the tax relieved sales to listed entities.

As neither the XXXXX are listed in Schedule "A" to the RTA, they are not entitled to GST/HST relief on their purchases.

As the XXXXX are currently negotiating the renewal of the RTA, we have taken the liberty of forwarding a copy of your letter and our response to the Department of Finance.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-7952.

Yours truly,

Lynn Renner
Technical Officer
Government Sectors
Excise and GST/HST Rulings Directorate

Dear XXXXX

Thank you for your letter of October 12, 1999, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to supplies made by XXXXX[.] Our ruling is set out below.

Please note that as of November 1, 1999, Revenue Canada became the Canada Customs and Revenue Agency.

On April 1, 1997, the HST replaced the GST and the provincial sales tax in the three participating provinces of Nova Scotia, New Brunswick and Newfoundland with a harmonized rate of 15%. Supplies of goods and services made in a participating province are subject to tax at the harmonized rate, unless a relieving provision applies. As the supplies about which you are inquiring are being made only in XXXXX, we will address only the GST implications in this ruling.

Statement of Facts

A statement of the facts of this case, as we understand them, is set out below.

1. The XXXXX[.] The XXXXX is incorporated as a non-profit organization in XXXXX XXXXX and is a member of the XXXXX XXXXX, which consists of XXXXX, including XXXXX[.]

2. The XXXXX ("the course") for people working in the industry. The course was originally a program offered at XXXXX. In XXXXX, following a major reorganization at the XXXXX decided to take the course out of the XXXXX and sponsor the course itself.

3. The course takes XXXXX to complete. XXXXX[.] On successful completion of the course, students are awarded a diploma which attests to the holder's competence to practise a trade or vocation in the field XXXXX[.] Occasionally, there are individuals who work in the XXXXX XXXXX who attend only some of the lectures since they just wish to improve their knowledge in a specific area. These individuals do not write an exam or obtain a diploma. However, the vast majority of students (98%) attend to obtain a diploma.

4. As indicated above, the XXXXX decided to sponsor the course after it was taken out of XXXXX. The XXXXX arranged for a private corporation, XXXXX, to run the course. XXXXX[.]

5. XXXXX provides all administrative services required to run the course. It deals with the students, accepts registration fees, sets and supervises examinations, arranges for lecturers and pays the lecturers. XXXXX also produces three textbooks for the course. These have been written by the various lecturers. The material in each of the textbooks is arranged such that each chapter corresponds to a lecture.

6. With respect to the course, XXXXX bills the XXXXX for administrative services, lecturers' fees and textbooks. The administrative fee is a minimum of XXXXX (This is based on a class size of 15 students. XXXXX XXXXX have an understanding whereby XXXXX will charge an additional administrative fee of XXXXX per student if there are over 15 students. The typical class size is 20 students per semester, so the typical billing for administrative services per semester is XXXXX[.] For lecturers' fees, XXXXX bills the XXXXX XXXXX XXXXX per lecture. Finally, the XXXXX is billed XXXXX XXXXX[.]

7. Other supplies made by XXXXX in 1999 include:

•   Canadian sales of textbooks (to persons not taking the course)

•   XXXXX

•   U.S. sales of textbooks (to persons not taking the course) XXXXX

•   XXXXX XXXXX total revenue for all supplies made in the 1999 calendar year is XXXXX[.]

8. XXXXX has registered for GST (GST registration number XXXXX. In 1999, XXXXX charged the XXXXX GST on the administration fee and the textbooks.

Rulings Requested

Is the supply of textbooks for the course and the supply of administrative services to run the course made by XXXXX to the XXXXX subject to GST?

Rulings Given

Because XXXXX is a registered small supplier, it is required to charge GST on all taxable supplies it makes in Canada. The supplies described in facts 5 and 7 above are taxable supplies since, on the basis of the information provided, there is no exemption for them in the provisions of the Excise Tax Act (the "Act").

Thus, based on information you submitted regarding XXXXX 1999 sales, XXXXX must charge GST on its billings to the XXXXX (i.e. fees for administrative services, lecturers and textbooks), as well as fees for textbooks sold in Canada and fees charged to the XXXXX XXXXX is not required to charge GST on its U.S. sales of the textbooks, as only taxable supplies made in Canada are subject to GST. That is, pursuant to subsection 142(2) of the Act, tangible personal property that is delivered or made available to the recipient of the supply outside Canada is deemed to be a supply made outside Canada and is thus not subject to GST.

Additional Information

Since XXXXX is a "small supplier", we will provide the following additional information concerning this area for your assistance.

Pursuant to subsection 148(1) of the Act, a person qualifies as a small supplier throughout any calendar quarter and the following month if the total consideration paid (in this case, consideration is money) for taxable supplies made inside or outside Canada by the person in the preceding 12 month period did not exceed $30,000.

A small supplier is not required to register for GST and, if it remains unregistered, is not required to collect GST on any taxable supplies made. An unregistered small supplier is also not required to file any GST returns. However, an unregistered small supplier cannot claim input tax credits for GST paid on taxable inputs.

It is important to note that a person who makes taxable supplies and who qualifies as a small supplier may choose to become a GST registrant, pursuant to subsection 240(3) of the Act. A small supplier who registers voluntarily is required to collect GST on any taxable supplies made in Canada and to file GST returns. The voluntary registration option might be of interest to small suppliers who wish to claim input tax credits on their purchases. Since XXXXX voluntarily registered, it is required to collect and remit the GST and file returns, and is entitled to claim input tax credits.

Pursuant to subsections 148(1) and 148(2) of the Act, a person ceases to qualify as a small supplier at any time in a calendar quarter when the total consideration for taxable supplies made inside or outside Canada of that person in that quarter or in the four preceding quarters exceeds $30,000. (For the purposes of this rule, proceeds from supplies of financial services or from the sale of capital property are excluded.)

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act, or to our interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-9215.

Yours truly,

Pauline Greenblatt
Technical Analyst
Charities, NPO's and Educational Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate

Dear XXXXX

Thank you for your facsimile received in this office on September 2, 1999, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the facts described below.

Please note that as of November 1, 1999, Revenue Canada became the Canada Customs and Revenue Agency ("CCRA").

Statement of Facts

Our understanding of the facts is as follows:

1) Your client, XXXXX completed construction of a XXXXX unit non-profit housing complex in XXXXX[.]

2) XXXXX requested municipal designation for XXXXX on May 18, 1999, with respect to its supply of subsidized residential accommodation.

3) XXXXX was granted municipal designation in our letter dated July 5, 1999, with an effective date of May 1, 1995, four years retroactive from the date of its application.

XXXXX

Ruling Requested

You have requested that the effective date of designation of May 1, 1995, granted to XXXXX be changed to March 31, 1993. It is your view that CCRA's administrative policy outlined in policy statement P-204 dated January 19, 1996, effective April 1, 1996, provides for retroactivity in exceptional cases.

Ruling Given

Pursuant to subsection 259(1) of the Excise Tax Act ("Act"), the Minister of National Revenue may designate organizations as municipalities but only in respect of their activities specified in the designation that involve the making of supplies (other than taxable supplies) of municipal services. Because there are no provisions in the Act concerning the effective date of these designations, policy statement P-204 concerning the effective date of municipal designations and determinations was issued. Policy statement P-204 states, in part, that where the tax status of supplies does not change as a result of a designation, the effective date of the designation will be the first day of the fiscal year of the applicant in which it made the application. Previous to this, our policy with respect to non-profit organizations providing housing on a rent-geared-to-income basis was to allow designation retroactively for a maximum of four years where the non-profit organization met all the conditions.

Based on policy statement P-204, XXXXX was entitled to be designated as a municipality effective January 1, 1999, which is the first day of XXXXX fiscal year in which the application for municipal designation was made. However, in light of numerous requests for designation received from non-profit organizations making supplies of housing on a rent-geared-to-income basis who were unaware of this change in administrative policy as outlined above, internal discretion was used to retroactively allow an effective date of designation that is prior to the fiscal year of these organizations in which they made their application. We have, therefore, been designating these organizations retroactively for a maximum of four years (unless they requested a later date) to coincide with the four year time period permitted for the payment of rebates pursuant to subsection 259(5) of the Act. As a result of this, XXXXX was designated as a municipality retroactive to May 1, 1995, rather than January 1, 1999. We cannot, therefore, designate XXXXX earlier than May 1, 1995, which date was four years retroactive from the first day of the month in which their application for designation was made as there is no basis to do so.

On April 1, 1997, the harmonized sales tax (HST) replaced the goods and services tax (GST) and the provincial sales tax (PST) in the three participating provinces of Nova Scotia, New Brunswick and Newfoundland with a harmonized tax rate of 15%, to the extent that they are taxable supplies (which are not zero-rated), tax must be collected at the harmonized rate

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act, or to departmental interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact Mr. Owen Newell, Manager, Municipalities and Health Care Services Unit at (613) 941-3268 or the undersigned at (613) 954-4395.

Yours truly,

Neil Minken
Municipalities and Health Care Services Unit
Excise and GST/HST Rulings Directorate