GST/HST Ruling

Dear Sir:

Thank you for your letter of July 28, 1999 (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 according to the information provided in your letter is as follows:

1. XXXXX[.]

2. The two products for which you have requested zero-rated status are an XXXXX[.]

3. As per the information on the XXXXX XXXXX[.]

4. The XXXXX[.]

5. Some customers buy one or both of these products with a prescription from a medical practitioner, but a prescription is not needed to buy one or both of these products.

Ruling Requested

XXXXX are GST exempt when supplied under prescription from a medical practitioner.

Ruling Given

Based on the facts set out above, we rule that the XXXXX are taxable at 7%, or 15% if supplied in a participating province.

Explanation

Only the supply of a hospital bed to a health care facility or on the written order of a medical practitioner for use by an incapacitated individual named in the order are zero-rated under section 4 of Part II of Schedule VI and section 32 of Part II of Schedule VI to the Excise Tax Act. As per the descriptions and photos of the products listed above, we do not consider them to be hospital beds or hospital bed mattresses. These beds with adjustable mattresses that can be purchased by individuals in stores open to the public and are designed primarily to provide increased comfort are not zero-rated. The mattresses are not specifically made to be a replacement mattress for hospital beds. There are no provisions in the Excise Tax Act to zero-rate these products.

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) 952-9592.

Yours truly,

Michel Guay
Municipalities and Health Care Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate

Dear XXXXX

Thank you for your facsimile message of January 22, 2000 concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the supply of the services described below.

Statement of Facts

Our understanding of the facts according to the information provided in your letter is as follows:

1. XXXXX[.]

2. XXXXX[.]

3. The proprietorship is not a small supplier for the purpose of the Excise Tax Act (the "ETA").

4. The proprietorship presently has a contract with XXXXX to offer the following services:

a) provide professional occupational therapy recommendations to the XXXXX XXXXX based on the review of special equipment applications referred to the project authority and assessment XXXXX[;]

b) refer and consult with other health professionals as warranted;

c) coordinate the work of community occupational therapists who assess XXXXX and provide assessment reports XXXXX[;]

d) brief health care team members and make recommendations with regard to XXXXX[;]

e) develop and maintain professional relationships with community health service agencies by regular contact with health professionals in the field;

f) provide information sessions on equipment/health concerns upon request of the project authority and/or their appointee to the XXXXX accessing appropriate community health professionals, if necessary;

g) provide written records of occupational therapy assessments, follow-up recommendations and reports of service for XXXXX case file;

h) follow up assessments, as required, within the geographical area of the XXXXX [t]o ensure that planned interventions are working adequately and safely;

i) ensure efficient use of XXXXX; and

j) provide input towards the establishment/revision of national and regional guidelines.

Ruling Requested

The services supplied by the proprietorship to the XXXXX Canada are exempt of GST/HST.

Ruling Given

Based on the facts set out above, we rule that the services supplied by the proprietorship to the XXXXX Canada are subject to GST/HST at the rate of 7%.

Explanation

The services of a provincially regulated practitioner of occupational therapy are exempt of GST under paragraph 7(i) of Part II of Schedule V to the ETA when the service is rendered to an individual. The services provided by the proprietorship, XXXXX are not being rendered to an individual. As a consequence of these services being rendered to the XXXXX XXXXX, these services are taxable.

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 ETA, or to the Canada Customs and Revenue Agency interpretative policy; and that you have fully described all necessary facts and transactions 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) 952-9592.

Yours truly,

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

Dear XXXXX

Thank you for your letter of August 12, 1999 (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, the transaction(s), and the purpose of the transaction(s) is as follows:

XXXXX a Canadian registrant, XXXXX are shipped to the U.S., some of the goods do remain in Canada.

XXXXX which allows the company to import the parts on a non-taxable basis. The company files a monthly Diversion Report with Customs and remits GST and any duties owing on the diverted goods.

The company collects GST on the value of the processing services for goods which are diverted to Canadian assembly plants.

Invoices for services rendered are issued for each truckload of goods leaving XXXXX Canadian plant for a particular destination. These shipments are made up entirely of goods that were sourced from Canadian customers or, alternatively, goods that were sourced from U.S. customers so that there is no co-mingling of Canadian and U.S. goods. A separate invoice for services performed on those parts sourced and exported to the U.S. exists.

Ruling Requested

That XXXXX not be required to collect GST on processing services that it performs on goods that are imported from the U.S. for its U.S. customers and then exported back to the U.S.

Ruling Given

Based on the facts set out above, we rule that the services performed by XXXXX and invoiced to XXXXX U.S. customers on those goods which are imported from the U.S. and then exported back to the U.S. may be zero-rated under section 4 of Part V of Schedule VI of the Excise Tax Act (Act).

Explanation

The fact that XXXXX cannot stipulate which goods will remain in Canada at the time of importation does not mean that zero-rating will not be available for those services, which are separately invoiced, that relate to goods which are exported back to the U.S. For those shipments that remain in Canada, GST or HST should be charged at a rate of 7 or 15% respectively on XXXXX services as zero-rating under section 4 of Part V of Schedule VI of the Act is not available.

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) 952-8812.

Yours truly,

David Liston
Border Issues Unit
General Operations and Border Issues Division
GST/HST Rulings and Interpretations Directorate

Dear XXXXX

Thank you for your letter of March 22, 2000 with attachments, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transaction described below.

Statement of Facts

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

XXXXX XXXXX[.] In addition to running a XXXXX. has invested in a number of business ventures. The investment in these businesses has put increased demands on cash flow.

XXXXX[.] The immediate collection of accounts receivable balances, less the discount will provide XXXXX with much needed cash flow to conduct business operations.

XXXXX would be responsible for all collection and legal activities associated with the accounts receivable purchased from XXXXX will have the option of refusing to acquire specific accounts receivable balances offered for sale by XXXXX to avoid assuming unnecessary risks.

There is no payment of fees for this factoring arrangement contemplated between the two corporations. Any remuneration that XXXXX will receive will come in the form of the difference between the accounts receivable balances collected and the amount paid to XXXXX for them.

All administrative collection costs such as staff, office supplies, legal, etc. with respect to the accounts receivable balances will be borne by XXXXX[.]

Ruling Given

Based on the facts set out above, we rule that GST is not payable on the purchase and sale of accounts receivable as the sale of accounts receivable is a financial service and, accordingly, an exempt supply.

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 transactions 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 Nathalie Joly, Financial Institution Officer, at (613) 941-2046.

Yours truly,

E.H. Gauthier
Director General
Excise and GST/HST Rulings Directorate
Policy and Legislation Branch

Dear XXXXX

Thank you for your letter of August 19, 1999 and your letter of January 31, 2000, with attachments, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the cost sharing agreement entered into by the Town XXXXX and XXXXX[.]

Statement of Facts

Our understanding of the facts is as follows:

1. The Corporation of the Town XXXXX entered into a cost sharing agreement XXXXX XXXXX XXXXX in order to facilitate the future connection of XXXXX two Town roads.

2. The Letter of Agreement between the Town and XXXXX includes the following conditions.

•   The Town's work, XXXXX, includes all XXXXX super-structure, sub-structure and grading work required for the Town's proposed XXXXX[.]

•   XXXXX At the cost and expense of the Town, XXXXX will tender and construct the Town's work.

•   The Town shall pay XXXXX the following surcharges in respect to the total actual cost and expense for the Town's work:

1. Construction, Administration and Supervision XXXXX

2. Administration and Overhead XXXXX

•   Upon award of the contract, XXXXX will provide the Town with the recommended bid prices for the Town's work and a summary of the submitted tenders XXXXX, and the Town shall accept its actual share in writing prior to commencement of construction.

•   Prior to commencement of construction, the Town shall obtain all federal, provincial and other necessary approvals and clearances required for the Town's work.

•   The Town shall indemnify and save harmless XXXXX from and against any claim, action, cause of action or liability for loss, damage, accident or injury in any manner arising due to, out of, from or in connection with the Town's design for the Town's work.

•   The Town shall be responsible for any increased expenses of the Town's work incurred by XXXXX, including applicable surcharges and tax, which are attributed to any request of the Town to delete or add work, delays for which XXXXX is not responsible, or errors and/or discrepancies made in the design or contract documentation prepared by the Town.

•   From time to time, XXXXX shall invoice the Town for the Town's share of the unpaid actual cost for the Town's work completed, including applicable surcharges. The Town shall pay to XXXXX the amount of each invoice within sixty days of the date of receipt.

3. Schedule C to the Letter of Agreement between the Town and XXXXX sets out the preliminary estimated cost for the Town. Under this Schedule, the work required is broken down into the following cost categories: total cost to construct the structure; grading work; and surcharges for construction management and supervision, and administration overheads. Under the categories, cost to construct the structure and grading work, there are itemized lists of the exact property and services which are required.

4. XXXXX[.]

5. XXXXX.

Ruling Requested

1. Does the GST/HST apply to the payment by the Town XXXXX XXXXX under the cost sharing agreement.

2. If GST/HST applies to the payment to XXXXX, is the Town XXXXX eligible to receive full input tax credits (ITCs) in respect of the tax paid.

Rulings Given

Based on the facts set out above,

1. The payment by the Town XXXXX to XXXXX under the cost sharing agreement is subject to the GST/HST.

2. The Town XXXXX is not eligible to receive full ITCs in respect of the GST/HST paid 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 departmental interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Explanation

XXXXX[.] Under subsection 123(1) of the Excise Tax Act (ETA), a "supply" is defined as "... the provision of property or service in any manner ...", where "property" is defined as "... any property, whether real or personal, moveable or immovable, tangible or intangible, corporeal or incorporeal ..." and "service" is defined as "... anything other than property ..." XXXXX is billing the Town based on itemized supplies associated with the grading and construction XXXXX as well as a percentage surcharge. Using policy number P-077R, Single and Multiple Supplies, it is our view that the property and services provided constitute a single supply of a construction service. As this service is a taxable supply, the consideration paid for this service would be subject to tax at a rate of 7% pursuant to subsection 165(1) of the ETA.

You have referenced TIB-067, Goods and Services Treatment of Grants and Subsidies in support of the argument that the payment from the Town to XXXXX is not consideration for a supply and is a grant or a subsidy. However, for a payment to be viewed as a grant there can be no direct link between the payment from the grantor and a supply to grantor. In this case, the payment from the Town is directly linked to a supply of a construction service to the Town. Therefore, it is our view that the payment is consideration for a supply.

Concerning the Town's eligibility for ITCs, section 169 of the ETA provides that an entitlement to ITCs is available only where property or service on which tax is paid is consumed, used or supplied in the course of commercial activities. Pursuant to subsections 141.01(2) and (3) of the ETA, a property or service is deemed to be for consumption, use or supply in the course of a commercial activity of a person if the property or service is consumed, used or supplied in the course of making a taxable supply for consideration. As the Town does not consume, use or supply the construction service in the course of making a taxable supply for consideration, it would not be eligible for ITCs. However, pursuant to section 259 of the ETA, the Town is entitled to claim the municipal rebate of 57.14% on the tax paid.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-0370.

Yours truly,

Brent Fleming
Governments Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate

Dear XXXXX:

This is further to your letter of February 14, 2000, and your subsequent telephone conversations with Patrick McKinnon, Manager, Services and Intangibles Unit, Excise and GST/HST Rulings Directorate, concerning the application of the Goods and Services Tax (GST) to the transaction described below.

Statement of Facts

Our understanding of the facts and the transaction is as follows.

1. You operate a packing service company named XXXXX, which is a registrant.

2. Your company supplies the service to registrant moving companies of packing goods (e[.]g. household items) so that the goods may subsequently be transported by the moving companies.

3. The moving companies include an amount for the packing services in their bill to their customers and pay your company an amount for the packing service that is equal to an agreed-upon percentage of the total amount billed to the moving companies' customer.

Transaction

The supply of the packing service made by your company to the moving companies.

Ruling Requested

You have requested whether the packing service that your company supplies to the moving companies qualifies as a freight transportation service and is consequently zero-rated as an interline settlement under section 11 of Part VII of Schedule VI of the Excise Tax Act (ETA).

Ruling Given

Based on the facts set out above, we rule that the packing service that your company supplies to the moving companies does not qualify as a freight transportation service and consequently does not qualify for zero-rating as an interline settlement under section 11 of Part VII of Schedule VI of the ETA. You are therefore required to collect tax on the supply of the packing services to the moving companies.

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

Subsection 123(1) of the ETA defines a "carrier" to mean a person who supplies a freight transportation service. A "freight transportation service" is defined under subsection 1(1) of Part VII of Schedule VI of the ETA to mean a service of transporting goods. It also includes a service of delivering mail, and any other property or service supplied to the recipient of the transportation service by the person who supplies the transportation service, where the other property or service is part of or incidental to the transportation service, whether there is a separate charge for the other property or service.

Section 11 of Part VII of Schedule VI of the ETA zero-rates a supply of a freight transportation service made by a carrier of the property being transported to a second carrier of the property being transported, where the service is part of a continuous freight movement and the second carrier is neither the shipper nor the consignee of the property being transported.

Based on the definition of freight transportation service, when the moving companies supply the packing service to their customer together with a freight transportation service, the supply of the packing service to the customer would be considered to be part of the supply of the freight transportation service to the customer.

The packing service that your company provides to the moving companies is not a service of transporting goods, nor is it incidental to or part of a freight transportation service that you are supplying to the moving companies. Therefore, the packing service does not qualify as a freight transportation service, nor is your company considered to be a carrier as a result of supplying the packing service. It also follows that the packing service would not be zero-rated as an interline settlement under section 11 of Part VII of Schedule VI of the ETA.

Pursuant to subsection 221(1) of the ETA, your company would be required to collect, as an agent of Her Majesty in right of Canada, tax payable on the taxable supply of the packing service to the moving companies. We would like to confirm to you that this legislative requirement to collect the tax is equally applicable to any registrant who merely supplies a packing service in the same circumstances as those of your company.

Subsection 165(1) of the ETA also imposes an obligation on every recipient of a taxable supply made in Canada, such as the moving companies purchasing your packing service, to pay tax to Her Majesty in right of Canada in respect of the supply. To the extent that the moving companies are registrants and satisfy the relevant legislative requirements, such as the documentary requirements, they would be entitled to claim input tax credits in respect of the tax payable on your packing services.

It is important to note that should a recipient of a taxable supply refuse to pay the tax, section 224 of the ETA provides that the supplier may initiate legal action against the recipient for the recovery of unpaid tax in respect of the supply as if the amount were a debt due by the recipient to the supplier. This provision applies provided that the supplier has accounted for the tax payable by the recipient in its net tax calculation and remitted any positive amount of net tax and has properly disclosed the tax to the recipient.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-8815.

Yours truly,

Raymond Labelle
A/Technical Officer
Services and Intangibles Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

XXXXX

Thank you for your letter of November 18, 1999, which was addressed to the Summerside Tax Centre and wherein you objected to the classification of XXXXX (the "Association") as a charity for purposes of Goods and Services Tax (GST)/Harmonized Sales Tax (HST) rebate. We have been asked to respond to the issue raised in that letter, as well as the issues discussed in our telephone conversation of May 25, 2000.

Statement of Facts

Our understanding of the facts is as follows:

1. The Association was incorporated under the Non-Profit Corporations Act XXXXX[.]

2. The Association is a registered charity within the meaning assigned under subsection 248(1) of the Income Tax Act (ITA).

3. The Association carries on a number of activities including the operation of a sheltered workshop, a recycling depot, a group home, and a supportive living home.

4. Under the auspices of the sheltered workshop, the Association manufactures lawn furniture and ornamental woodwork, operates a XXXXX and provides maintenance and janitorial services.

5. The Association currently charges GST on the supply of the lawn furniture and the ornamental woodwork.

6. The Association charges a fee XXXXX which exceeds one dollar; GST is added to the fee.

7. The Association charges GST on the supply of the maintenance and janitorial services.

Rulings Requested

Pursuant to our telephone conversation of May 25, 2000, you requested a ruling on the following issues:

1. Whether the Association is a charity for purposes of the Excise Tax Act (ETA).

2. Whether the Association should charge tax on the supply of property and services made through its sheltered workshop.

Ruling Given

1. Based on the facts set out above, we rule that the Association is a charity as defined in subsection 123(1) of the ETA.

2. Based on the facts set out above, we rule that the Association, since it is a GST/HST registrant, should charge GST on the supply of the lawn furniture, ornamental woodwork and XXXXX. However, the supply of the maintenance and janitorial services is exempt from tax.

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

XXXXX

1. The Association is a charity as defined in subsection 123(1) of the ETA.

For purposes of the ETA, a charity is defined as "a registered charity ... within the meaning assigned ... by subsection 248(1) of the Income Tax Act, but does not include a public institution." Accordingly, the Association is a charity for purposes of the ETA by virtue of the fact that it is a registered charity as defined under subsection 248(1) of the ITA, and it is not a public institution as defined in the ETA. For your information, a public institution is a registered charity that is a public college, school authority, university, hospital authority, or a determined municipality.

2. The Association should charge GST on its supply of lawn furniture and ornamental woodwork, but not the supply of the janitorial and maintenance service.

Generally, supplies of property and services made by a charity are exempt from tax in accordance with section 1 of Part V.1 of Schedule V to the ETA, unless such supplies are excluded under paragraphs 1(a) through (m) of Part V.1 (a transcript of this provision is attached). Pursuant to paragraph 1(d), a supply of tangible personal property that was acquired, manufactured or produced by a charity for the purpose of making a supply is excluded from the general exemption. This exclusion does not apply to tangible property that was previously used by another person or that was donated to the charity. Therefore, supplies of used or donated goods remain exempt.

In accordance with paragraph 1(d), the supply of lawn furniture and ornamental woodwork produced by the Association is excluded from the general exemption since it is neither used, nor donated, but is instead manufactured by the Association for the purpose of making a supply. As such, the supply of the products are taxable since it appears that no other exempting provision applies.

Similarly, where a charity makes a supply of admission to a place of amusement, the supply is exempt unless, pursuant to paragraph 1(e), the admission fee exceeds one dollar. Admission as defined in subsection 123(1) of the ETA, means "a right of entry, or access to, or attendance at, the place of amusement ... activity or event." A "place of amusement" which is also defined in subsection 123(1) means "any premise or place, whether or not enclosed, at or in any part of which is staged or held any ... race, game or chance, athletic contest, or other contest or game, and includes ... any place, structure, apparatus, machine or device the purpose of which is to provide any type of amusement or recreation." On this basis, the XXXXX fee charged by the Association is consideration for admission to a place of amusement. Since the XXXXX fee exceeds one dollar, the supply of the admission is excluded from the general exemption, i.e., it is a taxable supply.

With respect to the services provided by the Association through its sheltered workshops, such services are exempt in accordance with section 1 of Part V.1 of Schedule V to the ETA. As a result, the Association should not charge tax on these services, nor is it eligible for input tax credits (ITCs) with respect to the GST paid on related purchases.

If the Association has collected tax in respect of the supply of these exempt services, the tax has been collected in error. Tax collected in error must either be remitted to the Canada Customs and Revenue Agency (i.e. to the extent that it is required to be included in the Association's net tax calculation), or in accordance with subsection 232(1) of the ETA, refunded or credited to the recipient (i.e., normally the purchaser). If the latter option is chosen, the Association has up to two years from the end of the reporting period in which tax was erroneously collected to issue a credit or to refund the amount collected as tax. A credit note in the amount of the refund or credit and containing specified information (e.g. description of the items, date the note is issued, business name and Business Number) must be issued to the recipient. If the amount refunded or credited was included in the net tax of the Association, that amount may be deducted from net tax for the reporting period in which the credit note was issued to the purchaser.

Furthermore, if the Association has claimed ITCs on property or services used, consumed, or supplied in the course of its exempt activities, it has done so in error. Please contact your local Tax Services Office for assistance on adjusting your returns if such claims have been made. That office may also assist you if you require more information about tax collected in error.

Effective for reporting periods after 1996, the Association was required to calculate its net tax in accordance with the method set out in subsection 225.1 of the ETA. This is referred to as the Net Tax Calculation for Charities. Generally, under this method, a charity remits 60% of the tax collected on its taxable supplies, excluding supplies of real property and capital property. If the charity makes taxable supplies of real and capital property it must remit 100% of the tax collected. Similarly, it must account for 100% of any tax collected in error.

Further, under this method, a charity is entitled to claim ITCs only in respect of the acquisition and improvements to real property and capital property. However, it is entitled to a 50% rebate for most other purchases including those related to making taxable supplies. Please find enclosed, a copy of the information booklet "GST/HST Information Guide for Charities" which provides more information on the Net Tax Calculation for Charities.

Pursuant to proposed amendments in the 1998 Federal Budget, certain charities may apply to be designated for the purpose of having their otherwise exempt supplies of services made to GST/HST registrants treated as taxable. A charity may make an application to be designated if one of the main purposes of the charity is the provision of employment, training for employment or employment placement services for individuals with disabilities, or the provision of instructional services to assist such individuals in securing employment, and the charity supplies, on a regular basis services that are performed in whole or in part, by individuals with disabilities. Such services supplied to a public sector body or a board, commission, or other body established by a government or a municipality will remain exempt.

An application for designation may be made to the Charities, NPOs, and Educational Services Unit, Public Service Bodies and Governments Division, at the above address. We are unable to formally process applications until this legislative provision receives Royal Assent. However, we have initiated certain interim measures that we will describe upon application.

Please note that where a charity is designated for purposes of proposed section 178.7 of the ETA, it is not required to determine its net tax in accordance with the Net Tax Calculation method described above.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-4206.

Yours truly,

Dwayne Moore
Charities, NPOs, and Educational Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate

Dear XXXXX

Thank you for the letter of November 27, 1998, with attachments, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the fees and assessments charged by XXXXX[.] The annual assessments based on a predetermined formula will be dealt with under separate cover.

Please note that the rulings made in respect to the user pay charges follow the same numbering as is used in the XXXXX XXXXX[.] All underlining throughout the statement of facts is for the purpose of adding emphasis.

Statement of Facts

XXXXX

Ruling Requested

Are the fees charged pursuant XXXXX subject to the GST/HST.

Rulings Given

1. Supplies provided in respect of applications referred to in XXXXX are exempt pursuant to paragraph 20(c) of Part VI of Schedule V to the ETA and, therefore, the fees are not subject to the GST/HST.

2. The supply provided in respect of an application referred to in XXXXX is exempt pursuant to paragraph 20(b.1) of Part VI of Schedule V to the ETA.

3. Supplies provided in respect of applications referred to in XXXXX are taxable and consideration paid in respect of these supplies are subject to the GST/HST.

4. The supply provided in respect of an application referred to in XXXXX is exempt pursuant to paragraph 20(d) of Part VI of Schedule V to the ETA.

We require more information in order to provide rulings regarding XXXXX[.] In particular, we require an explanation or legislative reference in order to determine exactly what is being provided under each of these items. This information was previously requested in a fax to your office.

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 transaction(s) for which you requested a ruling.

Explanation

In accordance with section 165 of the ETA, every recipient of a taxable supply made in Canada is required to pay tax on the value of the consideration for that supply except where the supply is zero-rated (i.e. tax rate is 0%). Section 221 of the ETA requires that every person who makes a taxable supply to collect the tax payable by the recipient of the supply, and section 225 requires them to include the amount collected in their net tax calculation. A taxable supply is defined to be a supply made in the course of a commercial activity, where commercial activity is defined to include a business carried on by a person except to the extent to which the business involves the making of exempt supplies. Therefore, tax is payable on supplies unless they are determined to be either zero-rated or exempt pursuant to Schedules V and VI to the ETA, respectively.

Ruling 1

Paragraph 20(c) of Part VI of Schedule V to the ETA exempts supplies made by government where the supply is of a licence, permit, quota or similar right and the supply of any service in respect of an application for such a right. Where the approval XXXXX to undertake a particular action, it has been determined that this permission results in the provision of a "similar right" and is, therefore, exempt. This includes cases where the permission granted is in the form of an order. Accordingly, any service undertaken in respect of the application for one of these "similar rights" is also exempt.

Ruling 2

Where XXXXX has decided to amend XXXXX XXXXX, the XXXXX must, where they choose to have input, file representations regarding that order. This service is exempt pursuant to paragraph 20(b.1) of Part VI of Schedule V to the ETA as this paragraph exempts supplies made by government where the supply provided is of a service of the filing of a document in accordance with legislative requirements.

Ruling 3

The supply of written rulings and interpretations is a taxable supply as there is no provision in the ETA which would exempt this supply. Although the service is a taxable supply, it may be zero-rated depending on the facts of a particular case.

Ruling 4

Under XXXXX XXXXX charges a fee to provide copies XXXXX[.] Paragraph 20(d) of Part VI of Schedule V to the ETA exempts a supply made by government where the supply is "of a service of providing information in respect of, or any certificate or other document evidencing ... any other status of a person," where "person" is defined in subsection 123(1) of the ETA to mean "... a corporation ... or a body that is a society, ... association, ... or other organization of any kind." Since XXXXX evidence the status of the XXXXX, the provision of these documents is determined to be exempt.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-0370.

Yours truly,

Brent Fleming
Governments Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate

Dear XXXXX:

Thank you for your letters of June 16 and May 19, 2000 with attachments, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to ambulances purchased by the Province of XXXXX and subsequently supplied to municipalities.

Statement of Facts

Our understanding of the facts is as follows:

1. The province is currently downloading the responsibility for land ambulance services to municipalities. XXXXX municipality" shall XXXXX be responsible for ensuring the proper provision of land ambulance services in the municipality in accordance with the needs of persons in the municipality."

2. XXXXX every XXXXX municipality shall XXXXX, be responsible for all costs associated with the provision of land ambulance services in the municipality subject to any grant made to the municipality XXXXX[.]

3. XXXXX XXXXX municipality shall XXXXX ensure the supply of vehicles, equipment, services, information and any other thing necessary for the proper provision of land ambulance services in the municipality in accordance with this XXXXX."

4. The Ministry of XXXXX will continue to purchase vehicles in order to take advantage of better terms offered on bulk purchases. This will include paying for after market conversion required to transform vehicles into ambulances.

5. The Ministry will issue separate orders for the vehicle(chassis) and for after market conversion. These purchase orders request that the invoices be sent to the XXXXX of the Ministry.

6. Once the vehicles are converted to ambulances, they are delivered to a specific location to be picked up by the municipalities.

7. A price packing slip is provided with each vehicle and shows the combined price for the chassis and conversion and includes the provincial sales tax on the total amount. The price packing slip is not an invoice. XXXXX[.]

Rulings Requested

1. Is the GST/HST applicable on the supply of vehicles and after market conversion of these vehicles when provided to the Province of XXXXX?

2. Is the GST/HST applicable on the supply of an ambulance made by a province to a municipality?

Rulings Given

1. Based on the facts set out above, we rule that the GST/HST is not applicable on the consideration paid by the Province of XXXXX for the supply of vehicles and the after market conversion of these vehicles.

2. Based on the facts set out above, we rule that the supply of an ambulance made by the province to a municipality is subject to the GST/HST.

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 165 of the Excise Tax Act (ETA) requires every recipient of a taxable supply made in Canada to pay to Her Majesty the GST/HST on the value of the consideration for the supply except where the supply is zero-rated. A "taxable supply" is defined under subsection 123(1) of the ETA to be any supply made in the course of a commercial activity, where the definition of "commercial activity" includes a business carried on by a person except to the extent to which it involves the making of exempt supplies. Subsection 123(1) defines the "recipient" of a supply of property or service to be the person who is liable under the agreement to pay the consideration.

In this case, the purchase orders to the vehicle manufacturer and conversion company are from the province and the province is invoiced for the purchase. Therefore, the province is liable to pay the consideration and is the "recipient" of the supply. Although the province is purchasing a taxable supply which is not zero-rated, it is not required to pay the GST/HST as it receives immunity from taxation pursuant to section 125 of the Constitution Act.

Where the province supplies the converted vehicles to a municipality for consideration, it is making a taxable supply to the municipality. As the supply is not zero-rated, tax at the rate of 7% must be charged on the value of the consideration for the supply. The province is obligated to collect and remit this tax pursuant to section 122 of the ETA.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-0370.

Yours truly,

Brent Fleming
Governments Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate

Dear XXXXX

Thank you for your letter of December 2, 1999, wherein you asked us to reconsider the ruling of XXXXX issued by the XXXXX XXXXX. In that letter, the Tax Services Office concluded that the fee payable by individuals in order to be members of XXXXX (the "Fund") is subject to tax. You have asked us to reconsider this ruling on the basis that the supply of the membership may be an exempt supply in accordance with section 189 of the Excise Tax Act (ETA).

Statement of Facts

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

1. The XXXXX is a corporation established under the Canada Corporations Act.

2. The Letters Patent identify the objects of the Fund as the following:

1. To act as a non-profit organization through which funding may be provided for:

(a) actions to bring a resolution of issues between members of XXXXX and Revenue Canada or the Government of Canada;

(b) actions taken collectively or individually with respect to matters which affect the dignity or welfare of a member or members of the XXXXX Fund which are not funded under benefit programs, including any XXXXX[;]

(c) researching, investigating, exploring, analysing, examining, collecting of information or data and hiring outside counsel or organizations to do any of the foregoing in respect of issues described in (a) and (b) above.

2. Generally to do things and transact all business which any person or individual may lawfully do, not inconsistent with the foregoing purposes or with the rights and purposes of a non-profit organization.

3. The Fund operates nationally and at local levels; members of the Fund, in XXXXX, may establish and organize local boards (i.e., "XXXXX Boards") to deal with concerns or issues raised at the local level.

4. XXXXX details some of the cases for which funding may be available to members:

•   disciplinary procedure or dismissal;

•   when suspended without pay;

•   when facing suspension without pay for the loss of a basic requirement;

•   when facing a civil action;

•   when facing a criminal action;

•   when facing a duty-related public complaint;

•   when frivolous and vexatious allegations are filed against a member.

5. XXXXX details some of the specific matters that are funded by the Fund or are being considered for funding, including:

•   XXXXX[;]

•   a civil action against a newspaper which slandered a member of the Fund.

6. Pursuant to the bylaws, membership in the Fund is limited to members XXXXX who,

•   are eligible to vote for the election of Representative;

•   are interested in furthering the objects of the XXXXX Fund;

•   have received approval of the Board of their application for admission as a member;

•   have paid their annual fees to the XXXXX Fund.

7. The annual fee to be a member of the Fund is XXXXX.

8. In the bylaws, it provides that members may withdraw from the Fund upon giving 8 weeks notice. Members are liable for payment of fees and other amounts which were payable by the member prior to receipt of the withdrawal notice.

9. XXXXX[.]

10. The Fund is separate and distinct from the XXXXX, but it is administered by the XXXXX[.]

Ruling Requested

The dues payable by members of the Fund are not subject to tax as the supply of the membership is exempt in accordance with section 189 of the ETA.

Ruling Given

Based on the facts set out above, we rule that the supply of membership in the Fund is not an exempt supply in accordance with section 189 of 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 our interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Explanation

Paragraph 189(a) of the ETA provides that where an amount is paid by a person to "an association of public servants the primary purpose of which is to promote the improvement of the members' condition of employment or work," the amount is consideration in respect of an exempt supply. For purposes of meeting the condition for exemption under paragraph 189(a), the primary object of the Fund must be "to promote the improvement of the members' condition of employment or work."

It is your opinion that the Fund is an association of public servants. The focus on XXXXX[.] The fund, you submit, which assists with the legal costs of defending legal actions arising out of employment, would be considered to be improving the conditions of employment or work. Further to your letter of April 21, 2000, you submit that being subject to verbal, physical or legal harassment in the workplace or as a result of what happens at the workplace is also a condition of work or employment. You contend that of the various issues the Fund has been involved with, most have dealt with some form of harassment or some rights which the individual has as an employee XXXXX[.] It is our view that in order for an association of public servants to qualify under paragraph 189(a) the association must undertake on behalf of its members, activities normally associated with trade unions or such other employee associations. That is, the association should be working to improve the conditions of its members through negotiation and collective bargaining with employers with respect to salaries, hours of work, job security, pension and other benefits, and other items normally covered by a contract of employment.

Based on the information you have provided, it is our opinion that the primary object of the Fund is to financially assist members, either collectively or individually, with respect to legal actions against third parties including the employer. It does not engage in the activities we consider as representative of an organization whose object is to promote the improvement of the members' conditions of employment or work. Therefore, membership in the Fund does not qualify for exemption under section 189.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-4206.

Yours truly,

Dwayne Moore
Charities, NPOs, and Educational Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate

Dear XXXXX:

Thank you for your letter of October 14, 1999, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the licence fee payable by XXXXX producers to the XXXXX Board.

Statement of Facts

Our understanding of the facts is as follows:

1. The XXXXX (Commission) is given the authority under the XXXXX to make regulations for the licensing of any and all individuals engaged in the production, marketing, or processing of a regulated product, and for the fixing of licence fees.

2. The Board is delegated such powers, determined by the Commission, as is necessary to regulate the production and marketing of XXXXX.

3. The Board has the authority delegated to it by the Commission under XXXXX XXXXX XXXXX, to be the exclusive seller of XXXXX in commercial markets. This includes XXXXX sales in the export market, the XXXXX and processing market, and commercial sales of XXXXX. XXXXX[.]

4. The Board has the authority delegated to it by the Commission to "make regulations with respect to XXXXX" including regulations pertaining to licensing requirements for persons engaged in the marketing of XXXXX, the fixing of licence fees, and the suspension, revocation and refusal to renew licences.

5. XXXXX requires that persons engaged in the production of XXXXX be licensed.

XXXXX[.] No person shall commence or continue to engage in the producing of XXXXX except under the authority of a licence.

6. XXXXX of that Regulation provides that producers must pay the licence fee to the board.

XXXXX[.] Every producer shall pay to the local board the licence fees fixed by the local board.

7. The Board is authorized by the Commission to use the licence fee for "the purpose of paying the expenses of the local board, carrying out and enforcing the Act and the regulations and carrying out the purposes of the plan" XXXXX[.]

8. The Board is authorized to establish a fund for the purpose of making payments associated with the above purpose.

9. The Board is also authorized to require that buyers deduct from the amount payable for XXXXX, an amount in respect of the licence fee, and to remit that amount to the Board.

10. In a previous request, the Board inquired about the tax status of the deduction of $1/XXXXX from the consideration payable by a buyer to a producer for the supply of XXXXX which is subsequently remitted to the Board by the buyer. It was our view that the $1/XXXXX was a fee for the licence required under XXXXX. In our letter of July 7, 1999, to the Board we indicated that the $1/XXXXX was consideration for an exempt supply of a licence in accordance with paragraph 20(c) of Part VI of Schedule V to the Excise Tax Act (ETA).

11. The Agricultural Products Act provides for the marketing of agricultural products in inter-provincial and export trade. Under this Act, the Governor in Council may, by order, grant to any board the right to fix, impose and collect levies or charges for persons engaged in the production of the whole or any part of any agricultural product, and to use the levies or charges for the purposes of the board.

12. Pursuant to the XXXXX made under the XXXXX XXXXX directly to an end-user in the export and domestic market without having to deliver the XXXXX to the Board. This is referred to as "direct marketing."

13. The total volume of XXXXX for all producers that may be approved for sale through direct marketing is 150,000 XXXXX[.]

14. A producer may apply to the Board XXXXX for an Exemption Certificate which authorizes the producer to sell or offer to sell a specified amount of XXXXX through direct marketing. Approval for the exemption will be made on a first-come, first-serve basis.

15. Once approved, producers will be issued an Exemption Certificate (XXXXX by the local Board. Producers are prohibited from transferring, selling, or assigning the exemption to other parties.

16. The Exemption Certificate will set out the producer's name and licence number, and the class, variety, and XXXXX to be sold by the producer.

17. A producer cannot sell XXXXX directly to a buyer unless the producer has been issued an Exemption Certificate.

18. For inter-provincial and export sales of XXXXX, producers must remit to the Board an amount in respect of a licence required under XXXXX. The fee must be paid to the Board within 30 days of sale.

19. For sales of XXXXX, buyers are required to deduct an amount in respect of a licence required under XXXXX from the amount payable to the producer as consideration for the supply of the XXXXX and to remit that amount to the Board on account of the producer.

Ruling Requested

The licence fee payable by the producers to the Board with respect to direct marketing, or that is deducted and remitted by buyers to the Board on account of the producers, is consideration for an exempt supply and therefore not subject to tax.

Ruling Given

Based on the facts set out above, we rule that the licence fee payable by the producer with respect to direct marketing, whether remitted by the producer directly or deducted and remitted by the buyer to the Board, is not subject to tax as it is consideration for an exempt supply of a licence in accordance with paragraph 20(c) of Part VI of Schedule V 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 our interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Explanation

Based on the above information, we understand that there are two scenarios under which XXXXX may be sold by producers and for which they are required to pay a licence fee.

Under the 1st scenario, XXXXX producers are prohibited from selling XXXXX directly to buyers in the commercial markets. Since the legislation provides that the Board is exclusive supplier of XXXXX in the commercial market, the producers supply their XXXXX to the Board (in most cases, to the agent of the Board). XXXXX requires that XXXXX producers pay an amount to the Board as a licence fee for engaging in the production of XXXXX. The buyer (i.e. the agent of the Board) deducts from the consideration payable to the producer, the licence fee and remits the fee to the Board on behalf of the Producer.

Under the 2nd scenario, XXXXX producers are provided the opportunity to directly market their XXXXX in the commercial market. The producers apply to the Board for an exemption certificate on a specified amount of XXXXX to be sold directly to buyers. XXXXX still requires that the producers pay an amount to the Board as a licence fee for engaging in the production of XXXXX. As in the above scenario, buyers are required to deduct from the consideration payable to the producers in respect of the supply of the XXXXX, a licence fee. This fee is submitted by the buyer to the Board on behalf of the producer. However, where the supply of the XXXXX is made to buyers outside the province, the producers are required to remit the licence fee directly to the Board.

In our previous ruling to the Board, we concluded that the licence fee described in scenario #1 above is exempt of tax in accordance with paragraph 20(c) of Part VI of Schedule V to the ETA. While the method in which producers market XXXXX has changed in the 2nd scenario, the licensing requirements have not. Therefore, it is our ruling that the fee described in scenario #2 is in respect of a supply of a licence issued by a body established by government and is similarly exempt of tax in accordance with paragraph 20(c) of Part VI of Schedule V to the ETA.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-4206.

Yours truly,

Dwayne Moore
Charities, NPOs, and Educational Services Unit
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate