GST/HST Ruling

Dear Sirs:

Thank you for your letter of March 22, 2000, (with attachments) addressed to our XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to a new product that you are selling called XXXXX. This request has been forwarded to Headquarters for reply.

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

Statement of Facts

The following information was obtained from your letter of March 22, 2000, a copy of the product label, and from our telephone conversations:

•   XXXXX is a highly oxygenated dietary supplement.

•   The ingredients in XXXXX are pure water and oxygen; and this oxygen-rich water is designed to XXXXX.

•   XXXXX is not carbonated.

•   The suggested use, as detailed on the product label, is to put XXXXX in a XXXXX glass of pure water or juice XXXXX a day; and to XXXXX increase up to XXXXX a day thereafter.

•   XXXXX is packaged and sold in XXXXX bottles.

•   XXXXX the product is not recommended or intended for undiluted use.

•   XXXXX if users of the product are pregnant, nursing or have a medical condition, they are advised to consult a medical physician before consumption.

Ruling Requested

Whether the supply of XXXXX is zero-rated under section 1 of Part III 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 is taxable at the GST rate of 7% (or HST rate of 15%, as applicable).

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

Generally, every recipient of a taxable supply made in Canada shall pay to Her Majesty in right of Canada tax in respect of the supply calculated at the GST rate of 7% (or HST rate of 15%, as applicable) on the value of the consideration for the supply. Where, however, a supply is a zero-rated supply, the tax rate in respect of that supply is 0%. ^[vi]1

Section 1 of Part III of Schedule VI to the ETA provides zero-rated status to food or beverages supplied for human consumption, including sweetening agents, seasonings and other ingredients to be mixed with or used in the preparation of such food or beverages unless the food or beverages are specifically excluded from zero-rating under the provisions of paragraphs 1(a) to 1(r).

It is the CCRA's position that dietary supplements are not consumed to alleviate hunger or thirst as are foods traditionally considered basic groceries. The facts indicate that XXXXX is being sold as a dietary supplement which needs to be diluted prior to consumption. Although XXXXX is a liquid, the fact that there is a suggested daily dosage indicates that XXXXX is not a beverage and is not drunk for enjoyment or to quench thirst. As such, the product is not within the scope of section 1 of Part III of Schedule VI to the ETA.

Consequently, supplies of XXXXX are not zero-rated supplies for GST purposes; they are taxable at the GST rate of 7% (or the HST rate of 15%, as applicable).

Enclosed for your information and guidance is a copy of Chapter 4.3 of the GST/HST Memorandum Series, Basic Groceries.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-2560.

Yours truly,

Richard Aronoff
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

Dear Madam,

This is in reference to your facsimile transmission of February 21, 2000 to the XXXXX. You requested a ruling on behalf of your client, XXXXX, regarding the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) on the importation of XXXXX powdered cellulose. Your request has been transferred to our office for reply.

Statement of Facts

Our understanding of the facts is as follows:

1. XXXXX is importing powdered cellulose from XXXXX[.]

2. XXXXX has engaged XXXXX as its customs broker for the importation of the powdered cellulose.

3. The powdered cellulose is sold under the registered trademark XXXXX and is used as a bulking agent, a water structuring agent, and an anticaking agent in the production of food, pharmaceutical tablets, and pet food.

4. XXXXX powdered cellulose is available in several grades. XXXXX is used in the manufacturing of food, such as baked goods, batters and mixes, diet drinks and mixes, sauces, grated and shredded cheese, frozen novelties and fruit yogurt.

5. XXXXX is importing XXXXX for use as an anticaking agent in shredded cheese.

6. Cellulose is a food additive under the Food and Drugs Act. It is a permitted additive when used as an anticaking agent in grated or shredded cheese, as listed in Table I of Division 16 of the Food and Drugs Regulations to the Food and Drugs Act.

7. XXXXX powdered cellulose is classified under Customs tariff classification number 4704.21.00.00 (Chemical wood pulp) when imported.

Ruling Requested

What is the GST/HST status of XXXXX powdered cellulose on importation?

Ruling Given

Based on the facts set out above, we rule that XXXXX powdered cellulose is zero-rated under section 1 of Part III of Schedule VI to the Excise Tax Act (ETA). As such, XXXXX powdered cellulose is a non-taxable importation under Schedule VII 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

Division III of the ETA outlines the application of GST/HST to goods imported into Canada. Pursuant to section 212 of Division III, "every person who is liable under the Customs Act to pay duty on imported goods, or who would be so liable if the goods were subject to duty, shall pay to Her Majesty in right of Canada tax on the goods calculated at the rate of 7% on the value of the goods." Section 213 of Division III outlines an exception to this provision: "No tax under this Division is payable in respect of goods included in Schedule VII." Under section 6 of Schedule VII, "Goods the supply of which is included in any of Part I to IV and VIII of Schedule VI" are non-taxable for Division III purposes.

Schedule VI to the ETA outlines supplies that are zero-rated for GST/HST purposes. Supplies of basic groceries are zero-rated under Part III of Schedule VI. Pursuant to section 1 of Part III, supplies of food or beverages for human consumption (including sweetening agents, seasonings and other ingredients to be mixed with or used in the preparation of such food or beverages) are zero-rated for GST/HST purposes, other than supplies excluded under paragraphs (a) through (r) of that section.

XXXXX powdered cellulose is a food additive to be mixed with or used in the preparation of food or beverages for human consumption, and is not listed as an exclusion in paragraphs (a) through (r) of section 1 of Part III of Schedule VI to the ETA. Therefore, the supply of XXXXX powdered cellulose is zero-rated under section 1 of Part III of Schedule VI to the ETA. If XXXXX in other grades is packaged and promoted for non-food uses only, such as for the production of pharmaceutical tablets or pet food, the supply would be taxable at 7% or 15%.

Since XXXXX is included in Part III of Schedule VI, the importation of XXXXX powdered cellulose is non-taxable under Schedule VII 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) 957-8253.

Yours truly,

Jacqueline Russell
Technical Officer
Goods Unit
General Operations & Border Issues Division
Excise and GST/HST Rulings Directorate

Donna Harding

XXXXX

XXXXX

Thank you for your letter of April 11, 1997, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transactions described below. We apologize for the delay in responding.

Statement of Facts

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

•   The predecessor to the XXXXX. For GST purposes, the Board operated as a XXXXX[.]

•   Through the XXXXX the functions of the Board were transferred to the non-profit Association XXXXX[.]

•   The mandate of the Board and now the Association is to support the development of a XXXXX. As such, the Board (and now the Association) is empowered by regulations under the XXXXX regulations to collect a fee of XXXXX[.]

•   XXXXX[.]

•   The fees collected form part XXXXX, "are used to provide or pay for any or all of the following:

a) establishing and administering a XXXXX;

b) education programs for the purpose of the XXXXX[;]

c) expenditures incurred in the XXXXX[;]

•   In accordance with these objectives, the Association makes various payments XXXXX[.]

•   There are essentially two kinds of payments made by the Association:

4. The Association reimburses XXXXX incurred for business development, research and development and technology upgrading. In this case the recipient must provide documentation of the costs before the Association makes payment.

5. Alternatively, when XXXXX, the Association will pay amounts to XXXXX. In this case the recipient must document the number XXXXX before the Association makes payment.

•   XXXXX[.]

Ruling Requested

You have requested confirmation that the payments made by the Association do not constitute consideration for a supply.

Ruling Given

Based on the facts set out above, we rule as follows with respect to the two types of payments:

1. The payments made by the Association which reimburses XXXXX of certain costs incurred for business development, research and development and technology upgrading do not constitute consideration for a supply.

2. The payments made by the Association to XXXXX do constitute consideration for a taxable supply and are subject to the GST.

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 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) 952-9577 or Duncan Jones at (613) 952-9210.

Yours truly,

Marilena Guerra Rulings Officer
Financial Institutions and Real Property Division
GST/HST Rulings and Interpretations Directorate
Policy and Legislation Branch

Dear Sir:

Thank you for your letter of October 8, 1998, (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:

1. The University XXXXX grants degrees at the bachelor's, master's and doctor's levels. It has been licensed by the XXXXX Board for Private Postsecondary Education to grant these degrees. A copy of this license was attached to the materials that you forwarded to us. The University of XXXXX is a for-profit institution.

2. The University of XXXXX has decided to expand its activities into Canada and for this purpose it has incorporated a subsidiary, the University XXXXX, a XXXXX[.]

3. The University of XXXXX has registered with the XXXXX[.] The registration certificate, dated XXXXX XXXXX, states that the XXXXX degrees that are earned in XXXXX XXXXX must be conferred in XXXXX[.] A copy of this certificate was attached to the materials that you sent to us.

4. The XXXXX will offer programs in Bachelor of Science in Business/Administration, Bachelor of Science in Business/Management, Bachelor of Science in Business/Information Systems, Master of Business Administration, and Master of Arts in Organizational Management. The degrees will be granted by the XXXXX.

5. The XXXXX may at a future date decide to offer courses of study leading to academic certificates in areas such as Human Resource Management, Call Center Management, and Project Management. These courses are created and approved using the same process as degree programs. The certificate programs are comprised of three to four university-level courses bundled together and taught using the same format and the same faculty as the degree programs.

Ruling Requested

The XXXXX qualifies as a university under section 123 of the Excise Tax Act ("ETA").

The tuition fees charged by the XXXXX for degree courses will be exempt of GST/HST under section 7 of Part III of Schedule V to the ETA.

The tuition fees charged by the XXXXX for certificate programs will be exempt of GST/HST under section 16 of Part III of Schedule V to the ETA.

Ruling Given

Based on the facts set out above, we rule that the XXXXX University XXXXX qualifies as a university for purposes of the ETA since the organization meets the criteria outlined in Policy Statement P-214 - Foreign-Based Entities which Qualify as a "University" in the Excise Tax Act.

The tuition fees charged by the University XXXXX will be exempt of GST/HST under section 7 of Part III of Schedule V to the ETA. Further, tuition fees for certificate programs will be exempt of GST/HST under section 16 of Part III 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 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) 954-7957.

Yours truly,

Paule Labbé
A/Manager, Educational Services and Indians Unit
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate

Legislative References:

This is in reply to your telephone inquiry of August 10, 1998, on the above-noted subject. Our comments are set out below.

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%. It is our understanding that, in this case, no supplies are made in the participating provinces and for this reason our response will address only the GST.

Statement of Facts

Our understanding of the facts of your case, based on the documentation submitted and information provided in several telephone conversations between you and I are set out below.

1. XXXXX is an organization which teaches English as a second language in XXXXX[.]

2. There are two types of programs offered. The XXXXX is a one month immersion course with 20 hours of formal English instruction per week, accommodation, meals, up to 25 hours of activities, tours, and informal English instruction per week and transportation. (The transportation would involve airport pick-ups and drop-offs and transportation to go on the field trips, such as to the XXXXX[).] The cost of this program is $XXXXX plus an optional fee of $XXXXX for health insurance.

3. XXXXX is for students who wish to stay for longer periods of time and offers 25 hours of formal English classes per week and optional XXXXX preparation. The cost of this program is as follows: one month is $XXXXX three months is $XXXXX; six months is $XXXXX; one year is $XXXXX[.] Accommodation, optional activities and excursions can be arranged for an extra fee.

Rulings Requested

1. That the supply of instruction in English as a second language through the XXXXX[.] XXXXX is exempt of GST pursuant to section 11 of Part III of Schedule V of the Excise Tax Act ("section 11" and "the Act").

2. That the supply of instruction in English as a second language through the XXXXX is exempt of GST pursuant to section 11.

Rulings Given

1. Based on the facts above, we rule that the XXXXX is a single supply of instruction in English as a second language and this supply is exempt pursuant to section 11.

2. We rule that only the portion of the XXXXX consisting of the supply of instruction in English as a second language is exempt of GST pursuant to section 11. Further, we rule that other supplies that are provided under this Program for additional fees are separate supplies and that the tax status of each of these additional supplies must be determined on a case by case basis.

We do not have sufficient information to conclusively determine the tax status of other additional supplies provided under the XXXXX[.] We can advise only that the tax treatment of each supply must be determined on a case by case basis. For example, there is an exemption for residential rental accommodation and meals in sections 6 and 6.2 of Part I of Schedule V of the Act and this may apply depending on the particulars of the supply. Similarly, supplies of transportation and admissions to activities should be examined to ascertain their tax status.

Should you have any further questions or require clarification of the above matter, please do not hesitate to contact me at 954-5125.

XXXXX

This is further to your letter of January 30, 1998, and previous facsimile transmissions sent to the Revenue Canada XXXXX. The case was transferred to this office for our direct response to you. Your letter concerns the application of the GST/HST to a contract which the City has entered into with XXXXX where XXXXX will operate the XXXXX a city-owned property. You supplied us with a copy of the contract.

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

Statement of Facts

1. XXXXX[.]

2. Pursuant to a bylaw made under section XXXXX, the City has entered into an agreement with XXXXX who will lease and operate the XXXXX on behalf of the City for the duration of the Agreement.

3. The City's purposes in entering into the Agreement include:

a) to transfer the management, operation and development of the XXXXX to a private sector operator which it believes will contribute positively to the economic development of the City,

b) to transfer the operation and risk of the ongoing XXXXX operation, including all legal liability and the risk of operating losses,

c) to earn a financial return from the XXXXX,

d) to ensure a responsible and progressive management of the XXXXX consistent with best industry practices,

e) to recover an asset of enhanced value at the end of the term of the agreement.

4. Notwithstanding 3(b) above, the Agreement is intended to be mutually beneficial. Where the results do not reflect this intention the disadvantaged party has recourse via recalibration or remedial measures under the Agreement. The Agreement may also be terminated by the City where XXXXX does not satisfy its due diligence obligations.

Payments Pursuant to the Agreement

5. The Operator will pay the City an amount of XXXXX in respect of XXXXX as defined under the agreement.

6. The City has agreed to pay XXXXX pursuant to the Agreement the following "Fixed Firm Price" for all XXXXX operations and maintenance services:

1998: $XXXXX

1999: $XXXXX

2000: $XXXXX

2001: $XXXXX

2002: $XXXXX

2003: $XXXXX to be payable by the City upon invoice from XXXXX in equal monthly installments, with an adjustment for 1998 to exclude that part of the year prior to the transfer date.

7. XXXXX shall transfer to the City, throughout the term of the contract, the Gross Revenue from the operation of the XXXXX[.]

8. Gross Revenue means the entire amount of all rents, fees, charges, amounts, sales, service fees, concession fees and any other revenues generated through business conducted XXXXX whether wholesale or retail, direct or indirect, by the Operator in the management, operation and development of the XXXXX, and from all departments or divisions with respect to the Operator's business or activities XXXXX whether or not such rents, fees, charges, amounts, sales, service fees, concession fees, and any other revenues are generated through activities performed or services provided XXXXX XXXXX or elsewhere in respect of the management, operation and development of the XXXXX including without limitation of the foregoing:

(a) all XXXXX revenue;

(b) all XXXXX revenue;

(c) all XXXXX revenue XXXXX and

(d) all other XXXXX[.] Excluded from gross revenue are:

(i) all amounts, fees, profits and revenues received by the Operator with respect to contracting and/or construction activities and services provided by the Operator to occupants for the construction of new facilities or for renovations and/or construction of improvements to existing facilities; and

(ii) recoveries received by the Operator from occupants and other persons using the XXXXX on account of common area maintenance charges which may be charged in respect of or in relation to the XXXXX building.

XXXXX revenue is defined to mean the entire amount of all rents, fees, charges, maintenance fees, administrative fees, sales, service fees and charges relating directly or indirectly to the use or XXXXX or services provided by the operator or, subject to the provisions of article 24.01.01, by any affiliated or related corporation as that term is defined in the XXXXX by any other person not dealing at arms length with the operator. Article 24.01.01 allows occupants to XXXXX through contracting with persons other than the operator subject to meeting certain requirements.

XXXXX Revenue means all licence fees, rents, percentage rents, participation fees, fees, charges, maintenance fees, administration fees, sales, service fees and charges, relating directly to or indirectly to the use or provision of XXXXX and services including without limitation, all XXXXX generated through or related to XXXXX XXXXX and services provided by the Operator or, subject to the provisions of article 24.01.01, by any affiliated or related corporation within the meaning of the XXXXX or by any person not dealing at arm's length with the operator.

XXXXX revenue means all rents, licence fees, percentage rents, participation fees and rates, charges, maintenance fees, administration fees, sales, service fees and charges, concession fees, XXXXX XXXXX other XXXXX fee and service charges and other revenue arising from, directly or indirectly, any business, activities or services XXXXX building at the XXXXX by the operator or, subject to the provisions of article 24.01.01, by any affiliated or related corporation as that term is defined in the XXXXX XXXXX or by any other person not dealing at arms length with the operator.

Other revenue means any and all other revenue generated, directly or indirectly, or otherwise, from any occupant agreement, any existing revenue agreement or any other revenue agreement relating to any services, products, merchandise, goods, deliverables, rights, concessions, privileges, franchises, entitlements or benefits provided by the operator, in relation to the XXXXX or, subject to the provisions of article 24.01.01, by an affiliated or related corporation within the meaning of the XXXXX XXXXX or by any person not dealing at arm's length with the operator and the value in kind of any services provided to XXXXX by any third party in return for or arising from the use of XXXXX[.]

9. The amounts collected are not treated as revenues of XXXXX[.] They are treated as revenues of the City. The GST/HST collected by XXXXX and transferred to the City with the principal amounts is then remitted to the Receiver General by the City.

10. The City agrees to pay XXXXX of any profit or surplus by which the Gross Revenue exceeds the Fixed Firm Price as it relates to XXXXX[.]

11. XXXXX agrees that there shall be no operational deficit.

23. Under the agreement, a XXXXX is to be maintained by XXXXX[.] The XXXXX is intended to establish a new business to provide services in property management, heavy duty equipment maintenance, electrical maintenance and business planning to other entities. As per our telephone conversation of November 23, 1998, under the contract it was intended that the XXXXX be comprised of four employees of the XXXXX deemed to be surplus by XXXXX[.] The City agrees to pay for the XXXXX[.]

1998: $XXXXX

1999: $XXXXX (with an adjustment for 1998 to exclude that part of the year prior to the Date of Transfer). Provision has been made that the XXXXX payment will also be reduced by the amount of labour or salary costs by which the XXXXX labour or salary expenses of fewer than employees dedicated to the XXXXX under the contract.

13. As per our telephone discussion of November 23, 1998, no payments have yet been made to XXXXX in respect of the XXXXX[.] This is because two of the surplus employees who would have worked in the XXXXX resigned shortly after the agreement went into effect. Further, the XXXXX is not being operated as a separate division of the Operator which is the desire of the City.

11. All revenues generated by the XXXXX and the GST collected on the revenues are to be forwarded by the Operator to the City. These amounts remain separately identified by the City on its financial records. The City then remits the GST to the Department in the appropriate reporting period.

25. As per the contract, where the operation of the XXXXX realizes any profits, the profits are to be shared between the Operator and Owner as follows:

16. The division of the profit due XXXXX from the XXXXX operations would be effected by a payment of the amount being made by the City.

10. XXXXX agrees to pay an amount in respect of the GST where imposed by the appropriate taxing authority in respect of gross revenues, profit sharing and rent payable by XXXXX to the City under the agreement or in respect of any supply made by the City to the XXXXX[.]

16. As per our telephone conversation of June 23, 1998, no election under section 211 of the Excise Tax Act has been filed with Revenue Canada by the City. Notwithstanding the lack of an election under section 211, the XXXXX by XXXXX has been treated as a GST/HST taxable supply. This information was confirmed during our telephone conversation of November 2, 1998 and your subsequent letter of November 5, 1998.

19. Under the Agreement, the City is not responsible for any costs, charges etc. including those arising from the XXXXX the contents thereof; the use or occupancy thereof; any alterations, repairs etc. performed, the ongoing management, operation or maintenance of the premises or the provision of municipal services or utilities to the site. XXXXX shall pay all such costs whether foreseen or unforeseen.

20. XXXXX assumes any obligation of the City as landlord, tenant or owner of the premises which arises on or after the date of commencement. XXXXX assumes the same obligations of the City as XXXXX Operator which may arise on or after the date of commencement.

21. At such time as the owner concludes its acquisition of the XXXXX from XXXXX the City grants XXXXX for the term of the Agreement, the use of all its rights, title and interest in the property and assets comprising the XXXXX on the same terms as they were granted by XXXXX to the City.

22. XXXXX agrees to assume, recognize and comply with any covenant to perform any obligation of the City accruing on or after the Date of Commencement under any such Existing Revenue Agreement and to hold the City harmless with respect thereto. The City remains entitled to all revenues from all existing revenue agreements prior to the commencement date.

23. Under the Agreement, XXXXX shall have all the rights of the City, the XXXXX XXXXX and any other person representing the City under any existing agreement and that XXXXX shall assume, recognize and comply with any covenant to perform and any obligation of the City accruing on or after the date of commencement.

24. XXXXX agrees to consent to, upon written advice of the City, to easements, leases, rights of way or the sale of surplus lands, releases, waivers or privileges on, over, through or across the XXXXX provides that in no event will the exercise unduly interfere with the business or property of any Occupant or with the business or property of XXXXX[.]

25. It is agreed that any improvements to the premises performed by XXXXX are and shall become the absolute property of the City upon expiry or termination of the agreement.

26. The City maintains separate accounts for the revenue received from the operation of the XXXXX[.]

27. Under section 18.02 of the Agreement XXXXX may enter, with the consent of the City, into an occupant agreement in respect of a part of the XXXXX provided that:

(a) the land or space which is the subject matter of the Occupant Agreement is not:

(i) all or substantially all of XXXXX[;]

(ii) any part of XXXXX except if such part is used only for the purpose of XXXXX XXXXX[;]

(iii) the whole or any part of the XXXXX infrastructure;

(iv) all or substantially all of the concession area of any XXXXX building;

(v) all or substantially all of the XXXXX building[;]

(vi) all or substantially all XXXXX[;]

(b) the Occupant agreement contains a covenant whereby the parties hereto covenant that the XXXXX which is the subject matter of the Occupant Agreement shall not be used or occupied for the purpose of constructing or operating any XXXXX building unless such XXXXX building shall be used solely for XXXXX[;]

(c) the Occupant Agreement contains a covenant whereby the parties thereto covenant that the XXXXX which is the select matter of the Occupant Agreement is not used or occupied for any purpose other than a permitted use as set out in the approved land use plan or for a use that is inconsistent with the use clause.

(d) the term of the occupant agreement including any renewal terms is for less than the total remainder of the term;

(e) the occupant agreement does not create any privity of estate or privity of contract between the occupant and the owner or XXXXX means that part of the XXXXX XXXXX[.]

23. XXXXX obliged to pay all other taxes in respect of real property imposed by whichever relevant authority. XXXXX is obliged to pay any taxes characterized under the agreement as business taxes in respect of the XXXXX[.]

24. The City in its capacity as a municipal corporation and to the extent permitted under the XXXXX agrees that for the duration of the agreement, the XXXXX shall be operated as a XXXXX and that no real property taxes and business taxes will be imposed upon XXXXX with respect to the XXXXX Building which is not subject to an Occupant agreement.

25. In your letter dated June 25, 1998, you stated your intent to amend Article 3.02.03 of the agreement to clarify that all rents collected under Existing Revenue Agreements are the property of the City. Existing Revenue Agreements as defined in the Agreement include all occupant agreements, ground lease, agreement for lease, license, concession, franchise, permit, authorization, or any other agreement between the owner and any other person existing at the date of commencement of the agreement. This ruling is based upon that amendment to the agreement being concluded.

Ruling Requested

You would like to confirm the application of the GST in respect of the transactions under the agreement as follows:

1. The City is the operator of the XXXXX where XXXXX on behalf of the City is making taxable supplies of real property by way of licence to the tenants.

2. XXXXX is making a taxable supply of management services to the City. The GST incurred by the City is eligible as an ITC.

Ruling Given

1. Rents Collected by XXXXX From Third Parties

The City is making a taxable supply of real property by way of licence to its tenants through XXXXX who collects rents from third party tenants and subsequently transfers to the City the amounts collected including the GST. The payments from XXXXX to the City are considered to be merely a transfer of funds. The payment is not consideration for a supply made by the City to XXXXX[.] The City includes these amounts on its GST return. XXXXX does not remit any of the GST/HST collected. The procedure as described is acceptable and the GST is properly accounted for.

2. (a) Supply of Real Property by the City

The City is making a taxable supply of real property by way of lease to XXXXX[.] Although a supply of real property by way of lease is exempt when made by a public sector body i.e, the City, one of the exclusions to the exempting provision allows for a taxable supply where a section 211 election has been filed. As stated above (statement of facts - item #18) the City has not filed the section 211 election but has charged GST on the consideration for the supply of real property by way of lease. The Department is prepared to accept, on an administrative basis, that in those situations where the election has not been filed but the supplier has been charging GST, the election will be considered to be in effect from the date that the amounts on or account of tax became payable or were paid.

Attached is a copy of form GST 26 "Election by a Public Service Body to Have an Exempt Supply of Real Property Treated as a Taxable Supply" for your completion and submission to the Department.

In the circumstances described above where the City has elected to make the supply of real property by way of lease a taxable supply, the city is entitled to claim input tax credits on GST/HST incurred on inputs acquired to make the taxable supply of real property.

(b) Operation and Maintenance Services Supplied by XXXXX[.] The amount paid to XXXXX by the City in respect of the supply of XXXXX operation and maintenance services known as the "Fixed Firm Price" as discussed in the statement of facts (item #6) is consideration in respect of taxable services. The amounts paid or payable are subject to the GST/HST.

In addition, where the City recognizes a profit from the operation of the XXXXX the XXXXX portion of the profit payable to XXXXX as per Statement of Facts - item #8) is consideration for the supply of the taxable operation and maintenance services. The amounts when paid by the City will attract GST.

(c) XXXXX[.] The payments to be made in respect of the XXXXX are consideration in respect of a taxable supply of operational and management services in respect of the XXXXX GST at the rate of 7% will apply to the consideration paid by the City to XXXXX once the XXXXX becomes operational.

Where a profit is realized on the operation of the XXXXX and the City pays the agreed portion of the profits to XXXXX (as per Statement of Facts - item #12) this amount is considered to be further consideration in respect of the taxable supply of operational and management services in respect of the XXXXX and will attract GST at 7%.

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST 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 interpretive policy; and that you have fully described all necessary facts and transaction(s) for which you have requested a ruling.

Should you have any further questions or require clarification on the above matter, please contact the undersigned at (613) 954-4280.

Yours truly,

Owen W. Newell, CGA
A/Manager
Municipalities and Health Care Unit
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate

Attach.

Dear XXXXX

Thank you for your letter of February 3, 1999, with attachments and video, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to supplies of the XXXXX[.]

Statement of Facts

Our understanding of the facts is as follows:

1. XXXXX are medical devices developed to establish and maintain vascular access in individuals undergoing dialysis treatments. These devices are surgically implanted, and are used by the patient instead of a catheter.

2. The XXXXX consists of a valve connected to a cannula. The valve is implanted under the skin, usually in the right side chest area. The cannula is typically implanted in the internal jugular vein. The valve is accessed using standard fistula needles. Testing has found that the device could last the equivalent of 40 years of hemodialysis needle insertions.

3. The XXXXX consists of a valve and cannula. This device is implanted under the skin surface and the cannula passes through the peritoneal membrane.

Ruling Requested

Are supplies of the XXXXX considered supplies of zero-rated medical devices pursuant to section 25 of Part II of Schedule VI to the Excise Tax Act?

Ruling Given

Based on the facts set out above, we rule that supplies of the XXXXX XXXXX are not zero-rated medical devices as described in section 25 of Part II of Schedule VI and are therefore taxable at the rate of 7%.

On April 1, 1997, the harmonized sales tax replaced the goods and services tax and the provincial sales tax 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, and services performed in a participating province, 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 transactions for which you requested a ruling.

Explanation

The Department considers a surgical prosthesis, in the context of section 25 of Part II of Schedule VI, to be a device that is a permanent artificial substitute for a missing part of the body. Items which assist or accompany a body part are not prosthetic devices.

Although the XXXXX are surgically implanted, these devices do not replace a missing body part; rather they are designed to provide an access port for individuals undergoing dialysis treatments. Consequently, as these devices are not prosthetics, they are not zero-rated under section 25 of Part II of Schedule VI. As there is no other zero-rating provision that applies, these supplies are subject to tax at the rate of 7% or if applicable, 15%. Hospitals that purchase these devices are entitled to a rebate of 83% of 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) 952-6761.

Yours truly,

Susan Eastman
Municipalities and Health Care Services Unit
Public Service Bodies and Governments Division

Dear XXXXX

This is in response to your letter of February 19, 1997, sent to the XXXXX XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the activities of XXXXX has asked us to respond to your query.

Statement of Facts

Our understanding of the facts is as follows:

•   The XXXXX is a "for-profit" corporation that is incorporated under the XXXXX XXXXX and is not registered for GST/HST purposes. XXXXX is a wholly owned subsidiary of the XXXXX[.]

•   The XXXXX sources of revenue include a long term no-interest loan from the XXXXX which the XXXXX will be required to repay if it realizes returns from granting research funds to other persons. In addition XXXXX expects to receive a tax rebate ($XXXXX through XXXXX[.]

•   The XXXXX main activity is the funding of persons to conduct research projects. The XXXXX acquires ownership in the development of intellectual property in accordance with its contribution to a research project. In the event that XXXXX I realizes returns, it will repay the long term no interest loan to XXXXX[.]

•   XXXXX owns farm equipment valued at approximately $XXXXX which it leases to the XXXXX[.]

Ruling Requested

1. Is the XXXXX required to register for GST/HST purposes?

2. Is the XXXXX entitled to voluntarily register for GST/HST purposes?

3. Is the XXXXX required to collect GST/HST on its revenue sources?

4. Is the XXXXX entitled to claim input tax credits for GST/HST paid on its operational expenses?

Ruling Given

Based on the facts set out above, we rule that

1. The XXXXX is not required to register for GST/HST purposes.

2. The XXXXX is entitled to voluntarily register for GST/HST purposes.

3. If XXXXX were to register for the GST/HST, it would be required to collect GST/HST on its supply of farm equipment. It is not required to collect GST on the loan from XXXXX nor on the tax rebate received through XXXXX[.]

4. The XXXXX is not entitled to claim input tax credits for GST/HST paid on its operational expenses.

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 tax rate of 15%. If you require additional information regarding the application of the HST to your activities please contact the Department.

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 (ETA), 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 subsection 240(1) of the ETA, XXXXX is not required to register since it is a small supplier (i.e., its annual revenues from taxable supplies are less than $30,000). The long term loan from XXXXX and the tax rebate from Revenue or from the XXXXX are not consideration for taxable supplies and therefore these amounts are not included in determining whether it exceeds the $30,000 small supplier's threshold. However, since XXXXX is making a taxable supply of farm equipment, pursuant to subsection 240(3), it may voluntarily register for GST/HST purposes.

In accordance with subsection 169(1) of the ETA, a registrant is entitled to an input tax credit for any expense that is for use or supply equal to the extent to which the property or service is for use or supply in the course of the registrant's commercial activities. Further, subsection 141.01(2) and 141.01(3) provide that a GST/HST registrant is entitled to claim input tax credits only to the extent that a purchase was acquired or used for the purpose of making taxable supplies for consideration and not for the purpose of making supplies that are not taxable supplies, nor for a purpose other than the making of supplies. However, subsection 141.01(1.1) states that for the purposes of subsections 141.01(2) and 141.01(3) the term "consideration" does not include nominal consideration.

Since XXXXX is making a taxable supply of farm equipment for nominal consideration (i.e., four dollars per year), it is not entitled to input tax credits for the tax paid on expenses acquired or used in relation to the supply of farm equipment. Nor is XXXXX entitled to input tax credits for the tax paid on expenses acquired or used for a purpose other than the making of supplies. In conclusion, even if XXXXX became a GST/HST registrant, based on its present activities, it would not be entitled to input tax credits in relation to any of its operational expenses.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-0420.

Yours truly,

Lorrie Grannary
Charities and Non-profit Organizations Unit
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate

Analysis:

In accordance with subsection 240(1) of the ETA XXXXX is not required to register as it's annual revenues from taxable supplies are not more than $30,000. Monies from the long term loan from XXXXX or from the XXXXX are not regarded as consideration for taxable supplies. However, since XXXXX is making a taxable supply of farm equipment, pursuant to subsection 240(3), it may apply to register for GST/HST purposes

In accordance with subsection 169(1) of the ETA, a registrant is entitled to an input tax credit for any expense that is for use or supply equal to the extent (expressed as a percentage) to which the property or service is for use or supply in the course of the registrant's commercial activities. More specifically, subsection 141.01(2) and 141.01(3) provide that a GST/HST registrant is entitled to claim input tax credits in respect of its purchases only to the extent that the property or service was acquired or used for the purpose of making taxable supplies for consideration and not for the purpose of making supplies that are not taxable supplies, nor for a purpose other than the making of supplies. However, subsection 141.01(1.1) states that for the purposes of subsections 141.01(2) and 141.01(3) the term "consideration" does not include nominal consideration.

Since XXXXX is making a taxable supply of farm equipment for nominal consideration (i.e., four dollars per year), it is not entitled to input tax credits for the tax paid on expenses acquired or used in relation to the supply of farm equipment. Nor is XXXXX entitled to input tax credits for the tax paid on expenses acquired or used for a purpose other than the making of supplies. In conclusion XXXXX  is not entitled to input tax credits in relation to any of its operational expenses.

Conclusion

1. The XXXXX is not required to register for GST/HST purposes.

2. The XXXXX is entitled to voluntarily register for GST/HST purposes.

3. As a GST/HST registrant, the XXXXX is required to collect GST/HST on its supply of farm equipment. It is not required to collect GST on the loan from XXXXX, nor on the tax rebate received through XXXXX[.]

4. The XXXXX is not entitled to claim input tax credits for GST/HST paid on its operational expenses.

Dear Sirs:

Thank you for your letter of December 24, 1998, addressed to the attention of the undersigned, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to your XXXXX which you offer to non-resident persons, other than individuals, where you request that Revenue Canada review and reconsider its previous GST/HST Application Ruling to you being Case # HQR0001049. We also acknowledge receipt of the letter from your financial advisors XXXXX where they make the same request for reconsideration. This matter has been referred to the undersigned for review and response.

On October 22, 1998, you requested a confirmation of the application of the GST/HST to a transaction under audit. In particular, whether the XXXXX supplied to non-residents, qualifies for zero-rating pursuant to section 18 of Part V of Schedule VI to the Excise Tax Act (the "Act"). Revenue Canada provided its GST/HST Application Ruling to you by letter dated November 5, 1998, signed by Ms. Cheryl R. Leyton, again, this being case number XXXXX[.] There is no need to repeat the facts. They remain as outlined in the Revenue Canada November 5, 1998, application ruling, for the purposes of this letter.

Your facsimile message of October 22, 1998, and letter of December 24, 1998, as well as the October 23, 1997, January 28, 1998, and November 20, 1998, letters from your accountants XXXXX have all been reviewed in detail. In addition, Revenue Canada's November 5, 1998, letter by Ms. Cheryl R. Leyton together with all references and supporting material have been reviewed.

Additional Facts

In addition to the facts as outlined in the Revenue Canada Application Ruling letter of November 5, 1998, which remain for the purposes of this letter, you have now provided the following additional information:

•   XXXXX was founded as a not-for-profit corporation in 1984. Its mission is to promote high standards of professional practice in the areas of training, performance and instruction for the benefit of individuals and organizational consumers through research, definition and measurement of competencies.

•   XXXXX has developed and disseminated a comprehensive list of core competencies referred to as the XXXXX for the profession of adult instructors. The XXXXX were designed for trainers and instructors in order to provide an authoritative listing of competencies considered to be essential for effective training delivery. These standards provide a strong and credible base for developing certification assessments.

•   The XXXXX as been designed to model all 14 of the objective competencies required by the XXXXX Standards.

•   The XXXXX demonstrates, teaches and tests the fundamentals of knowledge and classroom performance as defined by the XXXXX to enable participants to perform a professional career in the field of Adult Instruction. The learning model for all XXXXX workshops is the Presentation, Application, and Feedback process (PAF). XXXXX presents the knowledge and skills, has the learners apply this knowledge and skills, and gives the learners feedback on their performance.

•   The XXXXX includes the content described on pages 6 and 7 in the 1998 XXXXX which schedule has been provided to Revenue Canada.

•   [C]orporation for their XXXXX[.] Specifically, the XXXXX is one of four options by which an individual is able to demonstrate his/her instructional skills for the XXXXX[.]

•   The most important application of the XXXXX is the performance test where participants practice the concepts and skills XXXXX learned in the workshop by delivering three instructional presentations related to training programs given in their own environment. The presentations are observed by XXXXX highly skilled workshop leaders who give constructive oral and written feedback using the XXXXX performance-based checklist.

•   A formal feedback form is provided which summarizes the evaluation of each participant's performance and attests to their skill level and competence against the XXXXX. Participants are evaluated and ranked according to the following scale:

•   Ready to become an excellent instructor, complete certification;

•   Shows Potential to become an excellent instructor;

•   Not recommended for certification at this time.

•   Those participants that have successfully completed the requirements of the XXXXX are awarded a certificate at the end of the XXXXX[.] Those who have not been successful are not awarded a certificate.

•   Your request for zero-rating of the XXXXX pursuant to section 18 of Part V of Schedule VI to the Act is limited to the situations when the supply of this workshop is to non-resident persons, other than individuals, who are not registered under Subdivision d of Division V of Part IX to the Act, although it is individuals who enroll in the workshop and to whom the service is rendered.

Ruling Requested

Whether the XXXXX supplied to non-residents, qualifies for zero-rating pursuant to section 18 of Part V of Schedule VI to the Act.

Ruling Given

Upon careful reconsideration, and subject to all of the facts and information contained both in its November 5, 1998, GST/HST Application Ruling to you, this being case number HQR0001049, and as further outlined above, Revenue Canada does hereby amend and revise its Application Ruling of November 5, 1998, as follows:

The supply of the XXXXX to non-resident persons, other than individuals, who are not registered under Subdivision d of Division V of Part IX to the Act, is zero-rated pursuant to section 18 of Part V of Schedule VI to the Act.

The balance of the November 5, 1998, Ruling remains as provided in the November 5, 1998, letter.

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 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 Richard Aronoff at (613) 954-2560.

Yours truly,

Randy Nanner
Manager
Border Issues Unit
General Operations and Border Issues Division
GST/HST Rulings and Interpretations Directorate

Dear XXXXX

This is in reply to your facsimile of February 18, 1999, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the import of geriatric seating. Our understanding of the facts is as follows.

Statement of Facts

Your client, XXXXX imports the following products to sell to homes for seniors, hospitals, and nursing homes. These products are designed to be used by patients and residents.

Pedal Chair by XXXXX[.] The features of this chair include adjustable seat and arm rests and an integrated seat tilt. Although this chair is supported on casters and is therefore mobile, control of mobility does not rest with the occupant of the chair. Control of mobility rests with the person pushing it from behind. However, this chair can be ordered as a wheelchair that provides self-propelled mobility for the user. Available options for this chair are:

•   wheelchair wheels with anti-tip casters, and footplates;

•   positioning cushions;

•   tray table; and

•   user-operated brakes and seat tilt control.

XXXXX Gliders and Straight Chairs

Both the gliders XXXXX and the straight chair XXXXX XXXXX have a fixed base, i.e., they do not have casters for movement. The gliders are equipped with a care-giver operated brake.

XXXXX - Accessories

XXXXX - Neckrest Pillow

XXXXX - Shoulder Bolsters

XXXXX - Short Wing Covers for removable wing

XXXXX - Long Wing Covers for removable wing

XXXXX - Neckrest Pillow with two lateral support bolsters

XXXXX - Upper Slide Pads for Elite Chairs

XXXXX - Lower Side Pads for Elite Chairs

XXXXX - Upper Side Pads for Basic and Pedal Chairs

XXXXX - Lower Side Pads for Basic and Pedal Chairs

XXXXX - Side Pads for Glider and Straight Chairs

XXXXX - Fleece Back Pad

XXXXX - Fleece Armrest covers

XXXXX - Fleece Seat Pad

XXXXX - Back Pad with cover

XXXXX - Seat Pad with cover

XXXXX - Round Bolster

XXXXX - Side Reduction Pads

XXXXX - Wedged Bolster

XXXXX - Clear Tray

XXXXX - Supper Tray

XXXXX - Strap-on Wood Laminate Tray

XXXXX - Slide-on Wood Laminate Tray

Anti-tip bars

XXXXX - Pole and Holder

XXXXX - Padded Seat Belt

XXXXX - Unpadded Seat Belt

XXXXX - Unpadded Seat Belt (Centre Buckle)

XXXXX - Padded Thigh Belt

XXXXX - Short Fixed Footrest

XXXXX - Standard Fixed Footrest

XXXXX - Extended Fixed Footrest

XXXXX - Footpad for F1, F2, F3 footrests

XXXXX - Extended Footpad

XXXXX - Full Extended Footpad

XXXXX - Flipdown Footrest - single footplate

XXXXX - Sole Pad for Single Flipdown Footrest

XXXXX - Flipdown Footrest with Split Footplate

XXXXX - Calf Pad for Flipdown Footrest

XXXXX - Sole Pad for Split Flipdown Footrest

XXXXX - Contracture Sling

Mag Wheels - 20" and 23"

Multi-Directional Locking Caster

Cable and Trigger Release Gas Cylinder

Instructional Video

XXXXX Padding Upgrade

Fully Padded Pedal Chair with optional XXXXX

Tray and optional XXXXX

Swing Away Footrests

The Basic Chair Line by XXXXX[.] There are three models available:

•   Basic Tilt Chair

•   Basic Recliner

•   Basic Tilt Recliner

Although these chairs are supported on casters and are therefore mobile, control of mobility does not rest with the occupant of the chair. Control of mobility rests with the person pushing it from behind. However, each of these chairs can be ordered as a wheelchair that provides self-propelled mobility for the user. A complete line of accessories such as tray tables, positioning cushions, and protective padding is available.

XXXXX Alzheimer's Chair

This chair, XXXXX tilts and reclines. This chair is designed for people with severe agitation and involuntary movement. Although the chair is supported on casters and is therefore mobile, control of mobility does not rest with the occupant of the chair. Control of mobility rests with the person pushing it from behind.

XXXXX Re-Positioning Chairs

There are two models: the XXXXX. They assist individuals with poor upper torso muscle tone, may be used for individuals with severe agitation and involuntary movement, and are designed to ease the burden on caregivers. Although these chairs are supported on casters and are therefore mobile, control of mobility does not rest with the occupant of the chair. Control of mobility rests with the person pushing it from behind.

XXXXX hairs by XXXXX[.] There are three models: the Tilt Chair, the Semi-Recliner, and the Full-Recliner. These have different positioning capabilities allowing caregivers to select the appropriate chair for their patients and residents. Although these chairs are supported on casters and are therefore mobile, control of mobility does not rest with the occupant of the chair. Control of mobility rests with the person pushing it from behind. However, each of these chairs can be ordered as a wheelchair that provides self-propelled mobility for the user. Other items that can be ordered are:

•   contracture sling for use on the tilt and semi-recliner, this non-corrective footrest allows people with knee contractures to correctly position their hips and pelvis;

•   wheelchair wheels - all three models can be ordered with full size, mag style wheelchair wheels, hand rims, brakes, anti-tip bars, and two attachment positions;

•   tray table; and

•   gliders for dementia and Alzheimer's patients which have a fixed base.

Hospital Bed Caster XXXXX[.] These casters are for use with hospital beds, patient transfer systems, and medical equipment and come with locks, and are the XXXXX Models, XXXXX Models.

XXXXX Seating Accessories - Wheels

Step Pedal - used on the seat tilt of the Tilt Chairs and on the back recline of the Full XXXXX and Semi Recliner Chairs.

Front Casters - These are standard 5" locking front casters for XXXXX wheeled chairs, and non-locking 8" front casters for wheelchair models.

Multi-Directional Locking Caster - these are available on the Tilt Chairs and Semi and XXXXX Full Recliner Chairs XXXXX Stepping on the butterfly pedal coverts the 8" rear wheels into casters, step again to brake both wheels.

Wheelchair Wheels - these 24" wheels with hand rims and locks are available for XXXXX Tilt XXXXX Chairs and Full and Semi Recliner Chairs.

8" Rear Wheels - these are locking rear wheels available on the XXXXX Tilt Chairs and Semi XXXXX and Full Recliner Chairs.

XXXXX Chair Accessories

XXXXX - Wing Frame 17" High

XXXXX Wing Frame 6" High

XXXXX Standard Footrest

XXXXX Sort Wing Pillow XXXXX Short Wing Pillow XXXXX - Seat Side Pillow (Pair)

XXXXX Contracture Sling

XXXXX Padded Contracture Sling

XXXXX - Standard Sling

XXXXX - Sling c/w Padded Sides

XXXXX - Foot Pad Cushion

XXXXX Seat Pad c/w Cover

XXXXX - Extra Cover

Ruling Requested

You would like a ruling on whether any of the items listed above are zero-rated for GST/HST purposes, pursuant to Part II of Schedule VI to the Excise Tax Act (the "ETA").

Ruling Given

Wheelchairs

The following items are zero-rated pursuant to section 14 of Part II of Schedule VI to the ETA when they are imported as a fully assembled wheelchair that provides self-propelled mobility for the user:

•   Pedal Chair XXXXX[.]

•   The Basic Chair Line XXXXX Elite Chairs XXXXX[.] The accompanying parts, accessories, and attachments will have the same zero-rated status as the wheelchair, provided that they are included as part of a single supply of a wheelchair product that is supplied for a single consideration:

•   tray table;

•   anti-tip casters and footplates;

•   user-operated brakes

•   seat tilt control,

•   positioning cushions; and

•   protective padding.

Wheelchair accessories

The following items are zero-rated pursuant to section 32 of Part II of Schedule VI to the ETA as a specially designed part, accessory, or attachment for wheelchairs described in section 14 of that Part:

•   Pedal Chair XXXXX

-    wheelchair wheels with anti-tip casters and footplates

-    user-operated brakes

•   XXXXX Seating Accessories

-    Mag Wheels 20" and 23"

•   Elite Chairs XXXXX

-    wheelchair wheels with hand rims, brakes, and anti-tip bars

•   XXXXX Seating Accessories

-    Wheels

-    Non-locking 8" front casters for wheelchairs

-    Wheelchair wheels 24" with hand rims and locks

Hospital Bed Casters

Hospital bed casters XXXXX are zero-rated pursuant to section 32 of Part II of Schedule VI to the ETA as a specially designed part, accessory, or attachment for hospital beds described in section 4 of that Part.

There are no zero-rating provisions that apply to the other items listed under the Statement of Facts and therefore these items are taxable at 7% or 15%, depending on the place of supply as explained below.

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, 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 transactions for which you requested a ruling.

Explanation

Section 14 of Part II of Schedule VI to the ETA provides a zero-rated status for the following:

"A supply of a chair, commode chair, walker, wheelchair lift or similar aid to locomotion with or without wheels, including motive power and wheel assemblies therefor, that is specially designed for use by an individual with a disability."

It is the Department's position that the control of the locomotion must rest with the occupant of the chair, and the sole purpose of the chair is to provide self-propelled mobility to the user. Standard wheelchairs are designed with large wheels which can be gripped by the occupant. Control of the wheels provides the occupant with control of the direction and velocity of the movement of the chair. A chair with casters that allow the chair to be rolled but which do not give the occupant control of the movement is not considered to be an aid to locomotion for the purposes of section 14 quoted above.

When the chairs listed in the ruling given above, i.e., Pedal Chair, Basic Chairs, and Elite Chairs, are equipped with casters at the foot of all four legs instead of the large wheels which are standard features in a traditional wheelchair design, this decreases the value of the chair as an aid to mobility for disabled persons. The chair mobility in this case is controlled by an attendant pushing the chair from behind. Therefore, these chairs would not qualify as an "aid to locomotion" for the purpose of section 14 of Part II of Schedule VI to the ETA. Similarly, the Alzheimer's Chair and Re-Positioning Chairs which are supplied only with casters, and the Gliders and Straight Chairs XXXXX which have a fixed base, are not zero-rated devices as described in section 14.

Section 32 of Part II of Schedule VI to the ETA provides a zero-rated status for the supply of a part, accessory or an attachment that is specially designed for zero-rated medical devices (which includes wheelchairs and hospital beds). Therefore, when the wheelchair wheels and user-operated brakes and the hospital bed casters are imported as individual items, since they are specially designed parts, accessories or attachments for wheelchairs and hospital beds, the supply of these items is zero-rated under section 32.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-6761.

Yours truly,

Susan Eastman
Municipalities and Health Care Services Unit
Public Service Bodies and Governments Division

Dear Sirs:

This letter is in response to your various discussions and exchanges of facsimiles with XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transaction concerning your sales of XXXXX  with delivery made to XXXXX XXXXX, which is more particularly described below. We have decided to issue an application ruling in this matter based on the following facts, rather than a more general interpretation of the law.

Statement of Facts and Transaction

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

1. XXXXX are registered for GST/HST purposes;

2. XXXXX is a corporation resident in the XXXXX[;]

3. XXXXX is a XXXXX resident in XXXXX[;]

4. XXXXX supplies XXXXX XXXXX which fuel is delivered to a location at or near XXXXX[;]

5. These supplies are XXXXX[;]

6. The procedures for the storage of a XXXXX are, generally, the following:

g) The fuel tanks for the storage of XXXXX are owned by a XXXXX incorporated specifically for that purpose;

h) This XXXXX is delivered to and loaded into the XXXXX storage tanks at the XXXXX[;]

i) Each major XXXXX[;]

j) The XXXXX do not have their own separate XXXXX, rather, the fuel purchased by the various XXXXX[;]

k) The XXXXX maintains inventory records of how much of the fuel in the storage tanks belongs to each XXXXX and these records are updated each time fuel is added to the XXXXX or removed when fuel is be loaded XXXXX[;]

l) Operating costs each month associated with the maintenance of these records and the fueling of XXXXX are shared by the XXXXX based upon the volume of fuel consumed in the given month by the XXXXX[;]

m) When fuel is purchased by an XXXXX  from its supplier and this XXXXX provides both domestic XXXXX it is not known at the time of purchase exactly how much of the quantity of this fuel will be used by the XXXXX[;]

n) Separate storage tanks are not maintained for fuel to be used for XXXXX[;]

7. XXXXX has advised that a significant percentage of its XXXXX this XXXXX on average in a given month, XXXXX with the balance being XXXXX[.]  However, this percentage varies among the various XXXXX XXXXX which XXXXX XXXXX[.]

Ruling Requested

Whether the supplies of XXXXX which are delivered to a location at or near XXXXX are zero-rated pursuant to section 2.1 of Part V of Schedule VI to the Excise Tax Act (the "ETA").

Ruling Given

Based on the facts set out above, we rule that the supplies of XXXXX by XXXXX XXXXX which are delivered to a location at or near XXXXX XXXXX are not zero-rated pursuant to section 2.1 of Part V of Schedule VI to the ETA. XXXXX is therefore required to collect and remit to Her Majesty in right of Canada tax at the rate of 7% on the value of the entire consideration (subsection 165(1)).

Explanation

Taxable supplies of tangible personal property made by a registrant in Canada pursuant to paragraph 142(1)(a) of the ETA are subject to GST/HST at the rate of 7% on the value of the consideration if this property is delivered in a non-participating province (subsection 165(1)). XXXXX is a non-participating province. Where, however, a supply is a zero-rated supply, the tax rate in respect of that supply is 0% (subsection 165(3)).

Section 2.1 of Part V of Schedule VI to the ETA zero-rates a supply of fuel to a person who is registered under the ETA at the time the supply is made, where

(a) XXXXX

(b) the fuel is acquired by the person for use in the course of so XXXXX

The condition in subsection 2.1(a) is met where the recipient, who is registered under the ETA, carries on a business of XXXXX XXXXX XXXXX meets this condition. However, because of the manner in which the fuel is stored by the XXXXX the condition in subsection 2.1(b) is not met by XXXXX[.]  This zero-rating provision does not allow for any situation other than the complete use of the fuel supplied for XXXXX XXXXX[.]  At the time the supply of the fuel by XXXXX to XXXXX is made and filled into the XXXXX, it is known that some portion of that fuel will be used by XXXXX for XXXXX XXXXX[.] 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 such as a XXXXX which are delivered or made available in a participating province, to the extent that they are taxable supplies (which are not zero-rated), are subject to the HST, and tax must be collected on the consideration for these supplies 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 Richard Aronoff, Border Issues Officer, at (613) 954-2560.

Yours truly,

Randy Nanner
Manager
Border Issues Unit
General Operations and Border Issues Division
GST/HST Rulings and Interpretations Directorate

Dear XXXXX

This is in response to your letter of May 11, 1998 to the XXXXX  XXXXX regarding the tax status of levies paid to the XXXXX  XXXXX[.]  The XXXXX  has asked us to respond to your query. We regret the delay in our reply.

Statement of Facts

Our understanding of the facts is as follows:

1. The XXXXX[.]

2. Pursuant to the XXXXX  once the producers of a commodity have the support of other producers of the commodity to establish a plan for a proposed fund, levy and council, the XXXXX[.]

3. Pursuant to subsection 3(1) of the Act, "the council shall establish a levy or class of levies that shall be paid by producers or a class of producers of the commodity for which the fund was established." In accordance with subsection 3(2) of the Act, the council may pay from the fund amounts to benefit and promote the industry or to conduct or support research or educational programs.

4. Pursuant to subsection 7(1) of the Act, regulations may be made establishing the time and manner of payment of the levy and requirements of persons to collect the levy.

5. Pursuant to section 2 of the XXXXX every producer of XXXXX a levy XXXXX.

6. The XXXXX s registered for GST/HST purposes.

Ruling Requested

What is the tax status of the levy paid by XXXXX[.]

Ruling Given

Based on the facts set out above, we rule that:

The levy paid by XXXXX  is consideration for a taxable supply and is thereby subject to GST/HST.

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%. If you require information regarding the application of the HST to your activities, please contact the Department.

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

Activities consisting of research, education or the promotion of a commodity constitutes a supply of a service. Since there is no provision in the Excise Tax Act to exempt such a service, it is a taxable supply and an organization that is a GST registrant is required to collect GST/HST on the consideration paid or payable for such a supply. Levies paid to an organization by producers to fund the organization's mandate to provide such a service is regarded as consideration for the service notwithstanding that the activities of the organization may relate to the producers as a group.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-0420.

Yours truly,

Lorrie Grannary
Charities and Non-profit Organizations Unit
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate