GST/HST Ruling

                                                                        GST/HST Rulings and Interpretations
                                                                                                Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Avenue
Vanier, ON K1A 0L5

Dear XXXXX

Thank you for your letter of October 5, 1994, with attachments, wherein you requested a review of the Department's position, as reflected in a letter to you of September 6, 1994, concerning the application of GST/HST to the following transaction. We apologize for the delay in this response.

Statement of Facts

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

XXXXX

1.  XXXXX[.] A registered brand is property of the registered owner, and he has the exclusive right to its use." "Brand" is defined in section 1 of the XXXXX as "a symbol, letter or numeral impressed or to be impressed on the hide of livestock to indicate ownership;". "Registered Brand" is a brand registered under XXXXX

2.  XXXXX states that "An inspector may, for the purpose of carrying out his duties under this Act and the regulations, ...

(b) inspect livestock, a carcass or a hide for evidence of a brand, ownership or purchase ..."

3.  XXXXX states that "A certificate signed by an inspector or the recorder respecting a matter or thing for which he is responsible under this Act or the regulations is evidence of the facts stated in the certificate concerning the matter or thing."

4.  XXXXX provides that, in part, the XXXXX respecting duties of inspectors; brand inspection of livestock and hides; movement of livestock, hides and meat; slaughter of livestock; fees for registration, licences, inspection or other services under the Act or the regulations; inspection of livestock by an inspector and the issue of an inspection certificate.

5.  XXXXX (Regulation) states that "No contributor shall send cattle from a place in a brand inspection area to a place outside it other than to an outlet in the prescribed area unless the cattle have been inspected at the place where they are first loaded for transporting...and the inspector has issued his inspection certificate to which a copy of Form 3 must be attached." A "contributor" is defined as a person who

(a) consigns livestock to an outlet,

(b) sells or transports hides,

(c) slaughters livestock in a place other than a licensed premise,

(d) presents livestock to an inspector for inspection, or

(e) transports livestock or causes livestock to be transported.

XXXXX[.]

6.  XXXXX of the Regulation states that "No person shall send horses to a slaughterhouse in or out of the Province unless the horses have been inspected by an inspector at the place where they are first loaded for transporting or at a place specified by the inspector and the inspector has issued his certificate of inspection to which a copy of the Form 3 must be attached."

7. Under the heading "Duties of inspector" XXXXX of the Regulation states that "An inspector shall

(a) inspect livestock,

(b) issue a brand inspection certificate..."

8.  XXXXX of the Regulation states that "There shall be paid in respect to the inspections, applications and registrations and other matters under this Act the fees set out in the XXXXX XXXXX of the XXXXX states that an "Inspector's fee for inspecting cattle not exceeding 4 in number" is $ XXXXX XXXXX states that an "Inspector's fee for inspecting cattle exceeding 4 in number, for each head of cattle" is XXXXX[.]

9. The XXXXX" used for purposes of the XXXXX states "THIS IS TO CERTIFY that I have this day personally inspected the undermentioned stock". This certificate provides space for the name of consignee; signature of inspector; name of shipper, etc. Columns are provided to allow for the calculation of the "FEES PAID" for "Brand Inspection".

10. By means of XXXXX the XXXXX was renamed XXXXX[.] The Regulation made pursuant to the XXXXX was amended by XXXXX XXXXX[.]

11.  XXXXX states that "A registered brand is property of the registered owner who has the exclusive right to its use." "Brand" is defined as meaning "an identification impressed or affixed on or within the body of livestock to indicate ownership". "Registered Brand" means a brand registered under the XXXXX

12.  XXXXX states that "For the purpose of carrying out duties under this Act and the regulations an inspector may do any of the following ...

(b) inspect livestock, a carcass or a hide for evidence of a brand, ownership or purchase ..."

13.  XXXXX states that

"(1) A certificate signed by an inspector respecting a matter or thing for which the inspector is responsible under this Act or the regulations is evidence of the facts stated in the certificate concerning the matter or thing ..." A "certificate of inspection" is defined as a completed certificate of inspection in a form approved by a designated organization.

14.  XXXXX states that "The minister, by order, may

(a) designate organizations that may establish one or more programs specified in the order for the registration of brands or use of identification brands for XXXXX[.]

15.  XXXXX states that "An organization designated under subsection (1) may charge and retain fees for services it performs."

16. An organization designed under XXXXX carries out brand inspection services for purposes of that Act.

17. As indicated earlier, the Regulation made under XXXXX was amended by XXXXX[.] The circumstances under which livestock must be inspected, as in the examples described under facts number 5 and 6 above, remain in place under the amended Regulation.

18. Items 1 to 5 of XXXXX were repealed by XXXXX[.]

Transaction

For purposes of XXXXX carried out brand inspection services and issued "XXXXX up until it designated an organization, pursuant to XXXXX to perform these services effective September 1997.

Ruling Requested

The supply of a brand inspection service and a "XXXXX is an exempt supply by XXXXX under subparagraph (e)(ii) of section 20 of Part VI of Schedule V to the Excise Tax Act, as it formerly read prior to its amendment effective 1997.

Ruling Given

Based on the facts set out above, we rule that

The supply of a brand inspection service and a XXXXX" is a taxable supply pursuant to section 146 of the Excise Tax Act and therefore subject to GST. Accordingly, the Department's position, as stated in its letter of September 6, 1994 to you, remains unchanged.

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

"Consideration", as defined in subsection 123(1) of the Excise Tax Act, "includes any amount that is payable for a supply by operation of law". It is evident from this definition, that an amount payable for a supply is consideration for that supply.

XXXXX imposes a fee for inspection services carried out under that Act. This fee is set out in XXXXX clearly indicates that the amount payable is for the service of inspecting cattle. There is nothing in the XXXXX or its Regulation which states that the payment of the brand inspection fee is consideration for the supply of a certificate or document. Since "consideration" is defined in the ETA as including any amount that is payable for a "supply" by operation of law and the fee payable under XXXXX is for brand inspection services, the supply in question is that of brand inspection services.

Subparagraph (e)(i) of section 20 of Part VI of Schedule V to the Excise Tax Act, as it presently reads, specifically exempts a supply of any certificate or other document that is in respect of the title to property. Prior to amendments made to paragraph (e) of this section, a supply of any certificate or other document evidencing the title to property was exempt under subparagraph (e)(ii).

Although the XXXXX may evidence ownership of livestock, the payment of the brand inspection fee is, under XXXXX for the supply of an inspection service. Whether this service is performed by XXXXX or the organization designated under subsection XXXXX it is a taxable supply as no exempting provisions within the Excise Tax Act apply.

Section 146 of the Excise Tax Act states, in part, that a supply of a service of inspecting any property by a government for the purpose of verifying or certifying that the property is suitable for consumption, use or supply in a particular manner, is deemed for greater certainty, to be made in the course of a commercial activity, except where the supply is an exempt supply.

While the licencing of livestock dealers, slaughterhouses and hide dealers controls the sale and slaughter of livestock, the certification of livestock through the inspection process ensures that livestock meets the requirements of XXXXX and is suitable for "consumption, use or supply" in the course of a business or other activity. As the words "consumption", "use" and "supply" are broadly defined for GST/HST, they would include the purposes for which brand inspection services are conducted.

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

Yours truly,

Lynn F. Renner
Rulings Officer
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate

                                                                        GST/HST Rulings and Interpretations
  Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Avenue
Vanier, ON K1A 0L5

Dear XXXXX

Thank you for your letter of January 22, 1997 (with attachments), concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transactions described below.

Statement of Facts

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

1. Those at the top of the motor fuel distribution chain in XXXXX ("collectors") are required to collect XXXXX when they sell to retailers and to wholesalers that are not designated collectors ("wholesalers"). These taxes are based on volume of product (as opposed to value). The collectors remit the fuel taxes to XXXXX[.]

2. Retailers reimburse themselves for the fuel taxes they have paid to the collectors or wholesalers when they in turn sell the motor fuel to consumers, charging the same fuel taxes. Ideally, the amount recovered by the retailer from consumers will be equal to the amount paid to the collector or wholesaler.

3. Because the volume of motor fuels can fluctuate considerably with temperature, a volume corrected method of measurement has been introduced which establishes a baseline temperature of 15 degrees Celsius. However, many retailers still use equipment that measures fuel on an ambient temperature basis only (i.e. is not temperature compensated).

4. Problems arise, where retailers or wholesalers sell fuel based on ambient temperature measurement, having purchased the fuel from a collector in a volume determined by the temperature compensated method. In those circumstances, the retailer or wholesaler will, over the course of a year, consistently experience a shortfall in the fuel taxes collected from consumers in comparison with the fuel taxes paid to the collector.

5. When a collector or wholesaler sells to a retailer with ambient temperature equipment, XXXXX has granted the collector or wholesaler the authority to include an "ambient temperature allowance" in the amount of fuel taxes that they collect from the retailer and subsequently remit. The "allowance" is intended to ensure that the amount recovered by the retailer from the consumers is equal to the amount paid to the collector.

XXXXX

Transactions

The ambient temperature allowance is applied in circumstances where sales are made to retailers who use only ambient temperature measuring equipment. There are four possible scenarios:

1. The first scenario is found where the collectors (supplying fuel to a wholesaler or retailer) or wholesalers (supplying to a retailer) are authorized in advance to reduce the amount of tax to be remitted by the amount of the allowance granted by the collector or wholesaler to the retailer or wholesaler. The allowance must be shown on the invoice to the retailer or wholesaler.

2. In the second scenario, a retailer requests the ambient temperature allowance from a collector or wholesaler retroactively, after having already been invoiced.

3. In the third scenario, where the retailer has not claimed or has not received the ambient temperature allowance from the collector or wholesaler, the retailer submits a refund claim form directly to XXXXX[.]

4. The final scenario occurs when a wholesaler has applied the ambient temperature allowance in its sales of fuel to retailers. However, the fuel taxes that the wholesalers have paid to their own suppliers exceeds the amount collected from the retailers. In these circumstances, the wholesaler applies directly to XXXXX for a refund of the difference.

Ruling Requested

1.  XXXXX seeks a ruling as to whether the GST is to be calculated on the basis of:

a) XXXXX as usually calculated without regard to the ambient temperature allowance,

b) XXXXX as usually calculated, then applying the ambient temperature allowance and allowing a GST credit to be claimed with respect to the allowance, or

c) XXXXX (incorporating the ambient temperature allowance) so that no credits or adjustments are necessary with respect to the allowance

Ruling Given

Based on the facts set out above, we rule that

1. In the circumstances described above in the third and fourth transactions, where wholesalers or retailers apply directly to the XXXXX for the ambient temperature allowance retroactively, the GST is to be calculated on the amount payable for the supply of the fuel without regard to the ambient temperature allowance.

2. In the circumstances described above in the second transaction, where a retailer requests the ambient temperature allowance from a collector or wholesaler retroactively, after having already been invoiced, the GST is to be based upon the amount payable for the fuel without regard to the ambient temperature allowance. A GST credit may be claimed with respect to the allowance in accordance with section 232 of the Excise Tax Act. Under subsection 232(1), a supplier who has erroneously collected an amount as GST is authorized to refund the amount to the customer or provide the customer with a credit. If the erroneous amount has been charged, but not collected, the supplier may adjust the amount of tax charged. Under subsection 232(2), a supplier may adjust GST charged on a supply to reflect a reduction in consideration. Where the GST has not been collected, the registrant may adjust the amount of tax charged. Where the tax has been collected, the registrant is allowed to refund or credit the excess tax to the recipient. Subsection 232(3) requires the supplier to issue a credit note to the customer where that supplier makes an adjustment, refund or credit of GST in respect of a supply to the customer. It should be noted, however, that where the retailer is a registrant, the collector or wholesaler making the GST adjustment may choose not to refund or adjust the GST previously charged or collected. This may be desirable where the collector or wholesaler making the adjustment, refund or credit has already accounted for the GST and the retailer has already claimed or is entitled to claim a corresponding input tax credit.

3. In the circumstances described above in the first transaction, where the supplier, at the point of sale, reduces the amount payable for the supply of fuel by applying the ambient temperature allowance, the GST will be calculated based on that reduced amount.

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

1. Section 165(1) of the Excise Tax Act (ETA) states that: "Subject to this Part, 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 a rate of 7% on the value of the consideration for the supply."

2. Section 154 of the Excise Tax Act clarifies that: "For the purposes of this Part, the consideration for a supply of property or a service includes any tax, duty or fee (other than a prescribed tax, duty or fee, or tax under this Part, payable by the recipient in respect of the supply) imposed under an Act of Parliament or the legislature of a province in respect of the supply, production, importation, consumption or use of the property or service that is payable by the recipient or is payable or collectible by the supplier."

3.  XXXXX are not prescribed taxes for the purposes of section 154 of the Excise Tax Act and thus form part of the consideration upon which the GST is to be calculated.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-9580.

Yours truly,

Oscar Jacobs
Governments Unit
Public Service Bodies Division
GST/HST Rulings and Interpretations Directorate

c.c.:

Encl.:

                                                                        GST/HST Rulings and Interpretations
  Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Avenue
Vanier, ON K1A 0L5
XXXXX
XXXXX                                                                                 Case: HQR0001216
Business Number: XXXXX

Dear XXXXX

This is in response to your letter of February 11, 1998, (with attachments) sent to the XXXXX Tax Services Office (TSO), concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the activities of the XXXXX[.] The TSO has requested that we respond to you directly.

Statement of Facts

Our understanding of the facts from documentation submitted and conversations with Corporation representatives is as follows:

1. Pursuant to article XXXXX of the By-laws of the General By-Law of the Corporation (the by-laws), XXXXX[.]

2. Pursuant to article XXXXX of the by-laws, XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

(g) XXXXX[.]

3. The Corporation is incorporated separately from its provincial institutes and it is a GST/HST registrant.

4. The XXXXX designates XXXXX professionals who have successfully completed XXXXX approved courses and exams (provided to the individual by another organization) as XXXXX[.] Once an individual successfully completes the course and exam requirements for a particular designation, the individual applies to the XXXXX to receive certification to use the particular designation. A person using the designation of XXXXX or XXXXX must be a certified member of the Corporation, or the designation and membership privileges are withdrawn. Currently, an individual does not require certification in order to work in the field o XXXXX[.]

5. The Corporation's primary revenue is obtained through sales of memberships. The Corporation invoices (with GST/HST added extra) its provincial institutes an amount of XXXXX times per year for every individual registered as a certified member with the provincial institute. Members (full/certified, student and affiliate members) receive discounted fees to attend Corporation educational programs (there is a XXXXX discount per item purchased, for all Corporation members) and are mailed the Corporation newsletter in the same mailing as the provincial institute newsletter.

6. The Corporation has elected to treat its memberships as taxable supplies, using the election: GST 23 - Election by a Public Sector Body to Have its Exempt Memberships Treated as Taxable Supplies.

7. The provincial institutes collect membership fees from their individual members (i.e. student members XXXXX affiliate members XXXXX, full members XXXXX[.] Membership in the provincial institutes accords discounted fees to attend provincial institute educational programs as well as other benefits (e.g. the right to vote, right to receive newsletter, etc.).

8. To summarize, by paying an annual fee to the provincial institute, individual XXXXX become members of both the provincial institute and the Corporation. Provincial Institutes pay an annual fee to the Corporation as consideration for their membership in the Corporation, as well as for the Corporation membership of the individual XXXXX.

9. The Corporation's secondary source of revenue is the sale of books, distance learning programs, and seminar based programs. The distance learning and seminar programs (available to individuals) usually cost between XXXXX each, but there are typically XXXXX which could cost up to XXXXX each. The Corporation also publishes and sells, for a fee that exceeds direct cost, several textbooks (part of the Corporation's approved core curriculum) to institutions that offer training programs to become aXXXXX. The Corporation invoices for the sale of books, and seminar based core curriculum programs, and charges GST/HST on all these materials.

10. Since the Corporation has historically charged GST/HST on all its supplies, it has taken full input tax credits on all property and services acquired for its operations.

Ruling Requested

1. If any of the Corporation's provincial affiliates determines that the supply of its memberships sold to individual members is exempt of GST/HST, should the Corporation continue to charge GST/HST on the total amount invoiced to provincial institutes for membership fees?

2. Should the Corporation charge GST/HST on the fees invoiced for the sale of textbooks and Corporation educational programs - distance learning and seminar based?

3. If the Corporation is not required to charge GST/HST on memberships, then what of the following items do not qualify for GST/HST input tax credits:

•   a special computer program created to maintain a membership database,

•   the cost to print newsletters and circulate to members,

•   web site creation and maintenance if the primary use is for membership services?

Ruling Given

Based on the facts set out above, we rule that

1. The amount invoiced to Provincial Institutes by the Corporation is consideration for their membership in the Corporation, as well as for Corporation membership of individual counsellors. Since the Corporation has elected under section 17 of Part VI of Schedule V to the ETA to have its memberships taxable, the Corporation is required to charge GST/HST on the total amount invoiced to its provincial institutes regardless of the status of memberships provided by the provincial institutes.

2. Supplies of textbooks for a fee that exceeds direct cost and supplies of educational programs by the Corporation, both distance learning and seminar based, are taxable.

3. Since its memberships are taxable, the Corporation is entitled to claim input tax credits for GST/HST on the following purchases:

•   a special computer program created to maintain a membership database,

•   the cost to print newsletters and circulate to members,

•   web site creation and maintenance used for membership services.

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%. For example, goods that are delivered or made available in a participating province are subject to the HST. To the extent that they are taxable supplies (which are not zero-rated), tax must be collected at the harmonized rate.

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

Explanation

1. Tax Status of Memberships

A supply by a non-profit organization is taxable and subject to GST/HST unless it is exempt under a specific provision in the ETA.

Pursuant to section 17 of Part VI of Schedule V to the ETA, membership in a public sector body which includes a non-profit organization, is exempt only if members are entitled to no benefits other than the following "allowable benefits":

•   the right to receive an indirect benefit intended to accrue to all members collectively;

•   the right to receive investigation, conciliation, or complaint-settlement services supplied by the body for issues involving members;

•   the right to vote at or participate in meetings;

•   the right to receive or acquire property or services at the fair market value of the property or services at the time of supply by the organization.

•   the right to receive a discount on the fee paid for a supply provided by the organization where the total value of all such discounts to which a member is entitled is insignificant in relation to the membership fee; and

•   the right to receive periodic newsletters.

If a membership in a public sector body is exempt under this provision, the organization may elect to make its memberships taxable by completing form GST 23 - Election by a Public Sector Body to Have its Exempt Memberships Treated as Taxable Supplies. This election does not have to be filed with the Department, but a copy of the completed election form GST 23, or a statement containing the prescribed information, must be kept with the registrant's books and records.

For your information and assistance, we note that since individual members are accorded by reason of their membership in the Corporation, benefits other than the "allowable benefits" specified in section 17 of Part VI of Schedule V to the ETA, it appears that supplies of membership by the Corporation to individual counsellors would be taxable even if the above noted election had not been made. We have not been provided sufficient information regarding membership benefits provided by the Corporation to provincial institutes to determine if these memberships would have been taxable if the election had not been made.

Also, although we have not been asked to provide a ruling regarding the tax status of memberships provided by provincial institutes, the documentation submitted indicates that provincial institutes provide members educational programs at a discounted fee. If the discount is significant in relation to the membership fee, or if other benefits, except for the allowable benefits listed above, are conferred upon members, supplies of membership in the provincial institute are taxable.

2. Tax Status of Textbooks and Educational Programs

A supply of tangible personal property (e.g. text-book) by a non-profit organization is taxable provided the non-profit organization charges GST/HST and the consideration before tax equals or exceeds the direct cost of the supply without reference to the GST/HST. A supply of tangible personal property would be exempt if the non-profit organization does not charge GST/HST and the consideration does not exceed the direct cost of the supply, including GST/HST. The following examples illustrate how the direct cost exemption applies:

Example 1

A non-profit organization acquires books for $1000 plus 7% GST. The direct cost of the books is $1070. It sells the books for $1070 and does not charge an amount as tax.

In this situation, the sale of the books is exempt under paragraph 6(a) of Part VI of Schedule V to the ETA as the amount charged does not exceed the direct cost of the supply.

Example 2

A non-profit organization acquires books for $1000 plus 7% GST. The direct cost of the books is $1070. It sells the books for $1000 plus $70 of GST.

The resupply in this situation is taxable. The direct cost exemption does not apply since the organization charged tax on the sale and the sale price "is equal to or exceeds" the direct cost after deducting the GST paid on the purchase.

Section 6 of Part III of Schedule V to the ETA sets out an exemption for (a) a service of instructing individuals in courses leading to a professional or trade accreditation recognized by a regulatory body or (b) a certificate, or a service of administering an examination, in respect of a course, or accreditation or designation described in (a). A regulatory body is defined in section 1 of Part III of Schedule V to the ETA as "a body that is constituted or empowered by an Act of Parliament or of the legislature of a province to regulate ... a profession or trade. ..."

Since the Corporation educational programs do not lead to an accreditation that is recognized by a regulatory body, the programs are not exempt under this provision.

Section 8 of Part III of Schedule V to the ETA sets out an exemption for a service of instruction or administering examinations supplied by a school authority, vocational school, public college or university in respect of courses leading to certificates, diplomas, licences or similar documents, or classes or ratings in respect of licenses that attest to the ability to practice or perform a trade or vocation where:

(a) the document, class or rating is prescribed by federal or provincial regulation;

(b) the supplier is governed by federal or provincial legislation respecting vocational schools, or

(c) the supplier is a non-profit organization or charity.

"Vocational school" is defined in section 1 of the same Part as "an organization that is established and operated primarily to provide students with correspondence courses, or instruction in courses that develop or enhance students' occupational skills".

Based on the information submitted, it does not appear that Corporation falls within the meaning of "vocational school" (nor school authority, public college or university); consequently Corporation educational programs are not exempt under section 8, of Part III of Schedule V to the ETA.

3. Other Items: Input Tax Credits

In accordance with subsection 169(1) of the ETA, a person is entitled to an input tax credit equal to the extent (expressed as a percentage) to which the property or service is for consumption, use or supply in the course of the registrant's commercial activities. Section 141.01 clarifies that a registrant will be entitled to claim an input tax credit in respect of an acquisition only to the extent that it has been acquired for the purpose of making taxable supplies for consideration. If the registrant is not able to track the extent to which the property is for consumption, use or supply in the course of its commercial activities, it must use a fair and reasonable method of apportioning these inputs for the purpose of claiming input tax credits. It should be noted that where substantially all of the consumption or use of the property by the registrant is in the course of the registrant's commercial activities, based on a direct attribution method, the registrant would be entitled to full input tax credits on the acquisition of the property.

A non-profit organization that is making taxable supplies of membership is entitled to claim input tax credits for tax paid on purchases related to the provision of those memberships.

Although we have not been provided detailed information concerning the use of the purchases in question, it is apparent that these are directly related to the supply of Corporation memberships which are taxable supplies. On this basis, full input tax credits may be claimed.

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

Legislative References:           17/VI/V

                                                                        GST/HST Rulings and Interpretations
  Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Avenue
Vanier, ON K1A 0L5

Dear XXXXX

Thank you for your letter of January 5, 1998 (with attachments), concerning the application of the Goods and Services Tax (GST) to the transaction described below.

Statement of Facts and Transaction

Our understanding of the facts, and the transaction is based on the Agreement provided between the XXXXX (referred to in the Agreement as "the Client") and XXXXX for operation of food services at XXXXX ("the School").

•   Under the terms of the Agreement, the Client agrees to appoint XXXXX to operate food services at the School.

•   The Agreement was signed on XXXXX, 19 XX, was effective XXXXX, 19 XX and continues in full force unless terminated as provided for in the Agreement. Either party has the right to terminate the agreement on thirty days written notice.

•   XXXXX agrees to manage and operate the food services operation including planning and preparation of meals; purchasing and maintaining inventories of food and other supplies; hiring, training and paying employees; routine housekeeping of food preparation and service areas.

•   The Client agrees to provide the premises and such items as: fixed and loose equipment and maintenance thereof; heat, light and power; maintenance, repair and painting of premises; and pest and rodent control services

•   The agreement sets out operating hours for the cafeteria.

•   The financial arrangements set out in Schedule A to the Agreement ("the Schedule") provide that XXXXX agrees to operate the cafeteria facility on a profit or loss basis and retain all revenues and pay costs as set out in the Schedule. The School is not responsible to reimburse XXXXX for any cafeteria operating losses.

•   The Schedule provides for an annual contribution by XXXXX to the School of $ XXXXX payable on XXXXX, prior to each contract year. This may be renegotiated to a mutually agreeable amount. It is our understanding based on sample of letters from XXXXX to the School principal that this arrangement has been altered such that XXXXX now pays a percentage of sales with a minimum guaranteed amount paid to the School at the beginning of each school year. An additional payment is made at the end of the school year if required based on actual results.

•   You have also confirmed that the School Board is a registered charity and has been designated as a school authority for GST purposes.

Ruling Requested

You have inquired as to the GST status of the annual payment made by XXXXX to the School.

Ruling Given

Based on the facts set out above, we rule that the payment by XXXXX to the XXXXX is exempt from 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.

Explanation

The above ruling applies only to the particular agreement which was submitted to us for review.

We offer the following explanation of the ruling to assist you in applying the provisions of the GST legislation to other arrangements which may be in place for other schools.

The status for GST purposes of a payment under an arrangement such as set out above depends on a number of factors.

The first is the nature of the contractual relationship between the parties to the agreement. It is the Department's position that the particular agreement reviewed in this case is for a supply of real property by way of licence by the School Board to XXXXX. XXXXX is allowed access to the school premises for the purposes of operating the cafeteria on its own account. The contribution referred to in the Schedule to the Agreement is consideration for this supply.

A supply of real property by way of licence by a public service body such as a school authority is normally subject to GST as such a supply is excluded from the general exemption for supplies of real property in section 25 of Part VI of Schedule V to the Excise Tax Act by virtue of paragraph (f) of this section. This exclusion, however, applies to supplies made under agreements entered into after September 14, 1992. Since the agreement provided was entered into in 19 xx, payments made by XXXXX pursuant to this agreement remain exempt from GST.

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

Yours truly,

Michael Warren
Real Property Unit
Financial Institutions and Real Property Division
GST/HST Rulings and Interpretations Directorate
XXXXX

                                                                        GST/HST Rulings and Interpretations
  Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Avenue
Vanier, ON K1A 0L5

                                                                        July 24, 1998

Dear XXXXX

Thank you for your letter of August 15, 1997, concerning the application of the Goods and Services Tax (GST) to dance lessons.

Our understanding of the facts is based on the information in you letter and telephone conversations of November 27, December 2 and 4, 1997, January 6 and 14, 1998, and February 13, 1997, with XXXXX Technical Interpretation and Services office, and is as follows:

Statement of Facts

1) You operate a sole proprietorship under the trade name of XXXXX. Your business is a seasonal business operating 10 months of the year (i.e., September to June). XXXXX seventh XXXXX[.]

2) You are a member of the XXXXX which is located in XXXXX[.]

3) You provide dance lessons, which include ballet, tap, and jazz, to students ages 3 to 18. You charge a yearly fee for the lessons which is broken down into monthly payments.

4) The dance lessons are provided as follows: an introductory class (for children of age 3), a pre-primary class (for children of ages 4 to 5), a primary class (for children of ages 6 to 7), grades 1 to 5 (for children of ages 8 to 13), an elementary program (for children of at least age 14), an associate program (for children of least of age 16), a membership program, and a fellowship program. You have no pamphlets describing any of the lessons you provide.

5) There are currently XXXXX students enrolled in your dance lessons. You have XXXXX students enrolled in the grades XXXXX students in the elementary program, and x students who have just completed the associate program. There are no students presently enrolled in the grade XXXXX, membership, or fellowship programs.

6) Students are required to pass exams in order to move to the next class. The exams are not administered to students under the age of six. All exams are administered by a member of the XXXXX[.]

7) Certificates are issued to the students for competitions or exams. All certificates are issued from XXXXX by the XXXXX and signed by XXXXX[.]

8) The associate program which is XXXXX in length, leads to a student becoming a teacher of dance by becoming a member of the XXXXX[.] To qualify for this program, a student must be at least 16 years old and must have completed the elementary program. This program consists of taking various classes including observation classes where a student learns how to teach dance. At the end of the program, a student is required to pass an exam administered by the XXXXX[.] If the student is successful they receive a certificate from the XXXXX attesting that they are an associate of the XXXXX and thus able to teach dance. As indicated above, only XXXXX students have currently attained this certificate.

9) You compare the completion of the associate program to receiving a bachelor's degree, the completion of the membership program to receiving of a masters degree, and the completion of the fellowship program to becoming a professor.

10) You have XXXXX students who have informed you that their dance lessons will be approved for credit by their school, however, you have not received confirmation of this from their schools.

11) You have never been certified by the Minister of Employment and Immigration for purposes of subsection 118.5(1) of the Income Tax Act.

12) In 1993 you called the XXXXX Tax Services Office to enquire whether you were required to collect GST on the fees for the dance lessons. You indicated that you were advised at that time that since the lessons were provided primarily to children ages 14 years and under, that you were not obligated to register for GST. You subsequently discussed this with your accountant who called the XXXXX Tax Services Office who confirmed the information provided to you, quoting section 12 of Part VI of Schedule V to the Excise Tax Act (the Act).

13) During the summer of 1997, you were informed by officials at the Summerside Tax Centre that you are required to be registered for GST and to charge GST on your dance lessons. You have been assigned Business Number XXXXX with a registration date backdated to XXXXX, 1994. As a result, you started charging GST on your dance lessons as of the current season beginning XXXXX 1997.

Ruling Requested

You request confirmation that the dance instruction is subject to the GST and that you are required to collect and remit GST on the provision of the dance instruction.

Ruling Given

Based on the facts set out above, we rule that

(1) the dance lessons you provide are taxable for GST purposes at the rate of 7%;

(2) as a registrant, you are required to collect and remit GST on the supply of the dance lessons; and

(3) as a registrant you are entitled to claim input tax credits for the GST you paid or owe on the purchases and operating expense in relation to providing these taxable dance lessons.

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

In general, there are no provisions in the Excise Tax Act (the ETA) to exempt a supply of dance instruction made by a private, for-profit dance school. Specifically, neither section 12 of Part VI, nor the educational services provisions in Part III of Schedule V apply to the supply of instruction provided by you.

Section 12 of Part VI of Schedule V exempts a supply of instruction in dance provided as part of a program by a "public sector body" primarily to children 14 years of age or under, underprivileged individuals, or individuals with a disability. A "public sector body" means a government, a non-profit organization, a municipality, a school authority, a hospital authority, a public college or a university. XXXXX is not a public sector body, and consequently supplies of instruction provided by you are not exempted by section 12.

Generally, the exemption for educational services in Part III of Schedule V are in respect of a supply of instruction made by a university, public college, school authority, or a vocational school. Pursuant to the definitions in the ETA, XXXXX is neither a university, public college, school authority, nor vocational school. Supplies of instruction provided by you would not be exempt in the same manner as these organizations.

However, there is one area, where a supply of instruction provided by you may be exempt from tax. Specifically, pursuant to section 9 of Part III of Schedule V, if you provide instruction in a course that is approved for credit by, or follows a curriculum designated by, a school authority, then the supply of the instruction to the student who is eligible for the credit, or who may count the course as part of their school curriculum, is exempt. However, in this particular case, you have been unable to confirm that the students will receive a credit towards their graduation diploma. Therefore, the supply of the instruction to the students will continue to be taxable.

In accordance with subsection 221(1) of the ETA, every person who makes a taxable supply is required to collect tax, payable by the recipient of the supply. If the person acquires or imports property or services to be used in the course of making taxable supplies, and has paid tax or is required to pay tax on the acquisition or importation of the property or services, the person may claim an input tax credit for the tax paid or payable on the property and services (i.e., the person is entitled to a credit of the tax paid or payable).

Should you have any further questions or require clarification on the information provided in this letter, please do not hesitate to contact me at (613) 954-4206. With respect to any concerns about your registration, please contact your local Revenue Canada office.

Yours truly,

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

c.c:       D. Moore
XXXXX
XXXXX
XXXXX

Dear XXXXX

Thank you for your letter of December 9, 1997 (with attachments), concerning the application of the Goods and Services Tax (GST) to the transaction(s) described below.

Statement of Facts and Transactions

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

XXXXX purchased the above-noted lots from XXXXX under a contract of purchase and sale ("the Agreement") which became binding on the parties on XXXXX

•   Lots XXXXX were bare while lots XXXXX had houses which had been constructed by XXXXX and required deficiency work to be done prior to being listed for sale. Neither of these houses had been previously occupied as a place of residence and the houses are considered to single unit residential complexes as defined for GST/HST purposes.

•   The Agreement gave XXXXX possession of the lots from XXXXX and entitled XXXXX to complete and sell the homes on lots XXXXX and construct homes on and sell lots XXXXX[.]

XXXXX retained title to the lots and the agreed to transfer title of the individual lots directly to the ultimate purchasers of the homes at the direction of XXXXX to XXXXX in the event of a sale of a lot. Payment of the specified amounts was on account of the purchase price for the XXXXX lots provided for in the Agreement. Proceeds from the sale of a particular lot in excess of the amount specified to be paid to XXXXX in respect of the lot were retained by XXXXX completed construction of the houses on lots XXXXX and constructed houses on lots XXXXX. Each of the lots has been sold. The offers to purchase the completed homes were accepted by XXXXX Title to each property was transferred to the purchaser by XXXXX at the direction of XXXXX on closing of each sale.

Ruling Requested

You have asked whether XXXXX is responsible for collecting and remitting GST on the sale of the houses and if the company may credit the GST/HST New Housing Rebates to qualifying purchasers.

Ruling Given

Based on the facts set out above, we are providing the following rulings:

•   XXXXX is a "builder" as defined for GST/HST purposes of the residential complexes on the XXXXX lots.

•   XXXXX has made a taxable supply by way of sale to the purchasers of each of the residential complexes and, as a builder, is required to collect and remit GST applicable on each sale.

•   Where pursuant to subsection 254(2) of the Excise Tax Act ("the Act"), a purchaser of a residential complex is entitled to claim a rebate of a portion of GST payable on the purchase and the purchaser submits an application in prescribed form to XXXXX may, pursuant to subsection 254(4) of the Act, credit the amount of the rebate in favour of the purchaser.

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

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

Yours truly,

Michael Warren
Real Property Unit
Financial Institutions and Real Property Division
GST/HST Rulings and Interpretations Directorate

                                                                        GST/HST Rulings and Interpretations
  Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Avenue
Vanier, ON K1A 0L5

Dear XXXXX

Thank you for your letter of March 13, 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) in question, is as follows:

1. The XXXXX XXXXX was established with the object of providing instruction in courses that develop or enhance skills needed to perform occupations in the beauty industry. The provision of these courses is the XXXXX primary activity.

2. The XXXXX offers the courses listed below. Two of the courses, namely the XXXXX, and the XXXXX courses, are diploma courses. The remaining courses are certificate courses, some of which are designed to provide your clients with an opportunity to practice the skills acquired in the courses for which they are registered.

3. The XXXXX is registered as a Vocational School under XXXXX[.] The cost of professional kits (where indicated) and books is included in the tuition fees, which range from $ XXXXX to $ XXXXX[.] The courses vary from XXXXX in length.

Transaction(s)

It is our understanding that the Academy offers the following courses:

XXXXX

Ruling Requested

1. Are the courses listed above exempt supplies pursuant to Section 8 of Part III of Schedule V to the Excise Tax Act (hereinafter "the ETA")?

2. Are the books and professional kits provided by the Academy to its students subject to the Goods and Services Tax/Harmonized Sales Tax (hereinafter "GST/HST")?

Ruling Given

It is the position of the Department that the Academy was established and is operated primarily to provide students with instruction in courses that develop or enhance students' occupational skills. As such, it is a "vocational school" for the purposes of the ETA. Therefore, it may offer courses exempted from the application of GST/HST under section 8 of Part III of Schedule V to the ETA if the courses lead to certificates or diplomas that attest to the competence of individuals to practice or perform a trade or vocation, and the Academy is governed by provincial legislation respecting vocational schools.

It is the position of the Department that all of the above-mentioned courses lead to documents attesting to the competence of individuals to practice or perform a trade or vocation. Since the Academy is registered as a vocational school with the Ontario Ministry of Education and Training, the supply of the courses is considered to be exempt and GST/HST is not applicable to that portion of the tuition that represents consideration for the supply of the courses.

With respect to that portion of the tuition that represents consideration for the books and professional kits, it is the Department's view that in most cases such items provided with an educational program are integral elements of a single supply of a service of instructing individuals and as such, hold the same tax status as the course itself. Generally, this view applies where the supply of instruction is contingent upon the acquisition of these items (i.e., a student could not purchase the service of instruction without having the lesson materials, professional kits, etc.).

Based on the information provided, and a "single vs. multiple supplies" analysis as set out in Policy P-077R, it is the Department's position that the books and professional kits provided by the Academy to its clients are an element of a single supply of instruction, and are therefore exempt.

Please note however, that where an individual purchases the kits or books separately, without registering for a course, the nature of that supply may be tangible personal property and therefore subject to GST/HST as a taxable supply.

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

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series, a copy of which is enclosed for your reference. 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) 952-4157.

Yours truly,

Kristine A. Allen
Educational Services and Indians Unit
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate

Legislative References:           Section 8 of Part III of Schedule V to the ETA

                                                                        GST/HST Rulings and Interpretations
  Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Avenue
Vanier, ON K1A 0L5

Dear XXXXX:

Thank you for your letter of April 29, 1997 (with attachments), concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transaction(s) described below.

Statement of Facts

Our understanding of the facts is as follows:

1. The XXXXX is a body corporate that was established by the XXXXX (Minister) for the purposes of managing scrap tires (i.e. to administer a program for the collection and processing of scrap tires generated XXXXX[.] The governing legislation is the XXXXX (Regulation) made under XXXXX (Act).

2. The XXXXX is authorized by the Regulation to:

•   subject to the Act, finance any of its undertakings through fees and through such other means as may be approved by the Lieutenant-Governor in Council.

•   make arrangements and enter into agreements and contracts in relation to a scrap management program.

•   establish and administer a scrap tire management program, including the management of the distribution, supply, packaging, labelling, use, storage, collection, transportation, recycling, processing, disposal and other handling of tires and scrap tires. operate scrap tire storage, collection, transportation, recycling, processing or disposal facilities.

•   employ persons, establish their conditions of employment and provide for and pay their compensation and reimbursement.

3. The Regulation requires suppliers of new tires to be registered with the XXXXX[.] The XXXXX is also authorised by the Regulation to collect from suppliers of new tires a fee for each new tire supplied by them in XXXXX. The current fee is $ x or $ x per tire depending upon the size of the tire and is remitted to the XXXXX on a monthly basis. The XXXXX uses the fee collected solely to meet its purposes as established under the Act.

4. XXXXX as represented by the Minister entered into an agreement (Agreement) with the XXXXX for the collection and the recycling of old tires. As provided for in the Agreement, the Minister has assigned all of his rights, responsibilities and authorities under the Agreement to the XXXXX[.] It is consequently the XXXXX that is making payments to XXXXX[.] The Agreement provides that:

•   XXXXX agrees to collect and process scrap tires in accord with the terms of the Agreement and the Minister shall make payment to XXXXX for such collection and processing. Processing means the completion of the tasks of shredding of scrap tires, removal of the fibre and metal and crumbing the rubber, and with other additives, molding the rubber into marketable products for resale. The tires are stored and processed in facilities owned by XXXXX shall, commencing September 30, 1996, collect derimmed scrap tires from all locations as designated by the Minister at such times and in accord with such priorities as may be identified in writing from time to time.

•   XXXXX undertakes that it shall commence processing of scrap tire in accord with the terms of the Agreement no later than January 20, 1997. (Your letter indicates that this deadline was not met).

•   XXXXX shall store scrap tires which have been collected at sites and under such terms and conditions which comply with the technical guidelines for such storage.

•   XXXXX shall make available to retailers operating designated sites who so request, a cage for holding scrap tires pending collection. XXXXX may require a refundable damage deposit from such retailers in an amount not exceeding the cost of the cage. Retailers shall continue to be responsible for storage of tires at their location until collected. XXXXX is responsible for loading the tires on the vehicle used for collection and shall not impose unreasonable demands upon retailers for assistance

•   Commencing on September 30, 1996 and terminating January 20, 1997, the Minister shall pay to XXXXX $ XXXXX for each PTE(1) upon collection and delivery to the processing plant during that period. PTE(1): XXXXX means a weight of XXXXX kilograms determined before other components are removed from scrap tires.

•   Commencing on January 20, 1997, the Minister shall pay to XXXXX upon completion of processing and after sale of reconstituted rubber product, the value of XXXXX PTE(2) less any payment made under the paragraph above. PTE(2): XXXXX means a weight of XXXXX kilograms of rubber determined after other components have been removed from scrap tires.

•   Commencing January 20, 1997, XXXXX shall have the right to obtain an interim payment of XXXXX for each PTE(1) upon completion of shredding.

5. You have indicated in your letter that the fee structure was not changed effective January 20, 1997 as stipulated in the Agreement. In a subsequent fax message you explained that this was due to the fact that the production was behind, and confirmed that the payment structure established in the Agreement is in place since the beginning of this year.

Ruling Requested

XXXXX paid to XXXXX for every PTE(1) collected is consideration for an exempt supply under paragraph 20(h) of Part VI of Schedule V to the Excise Tax Act (ETA).

XXXXX per PTE(2) paid to XXXXX upon completion of processing and sale of a reconstituted rubber product is not consideration for a supply and is not subject to tax.

Ruling Given

Based on the facts set out above, we rule that the total amount of XXXXX per tire paid by XXXXX to XXXXX under the Agreement is consideration for a taxable supply provided by XXXXX to the XXXXX and is subject to 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 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

The XXXXX is not making payments for two different transactions as suggested in your submission. The Agreement provides that XXXXX would be paid a total of XXXXX for each tire collected and processed. However, XXXXX could claim an interim payment of $ XXXXX per tire upon delivery to the processing plant (before January 20, 1997) or upon completion of shredding (starting January 20, 1997), and the rest of the amount would be payable upon completion of processing and after sale of reconstituted rubber product. All payments made to XXXXX for the collection and processing of old tires will have the same tax status.

Section 165 of the ETA requires recipients of taxable supplies to pay tax in respect of the supply calculated on the value of the consideration. Therefore, it must be determined if the payments made under the Agreement are consideration for a supply. To determine if a payment is consideration for a supply, it must first be established whether the recipient of the payment has made or will make a supply in return for the payment.

The XXXXX was established with the mandate to administer a program for the collection and processing of scrap tires generated in XXXXX[.] Therefore, it can be argued that the XXXXX is responsible for the recycling of scrap tires in XXXXX[.] In fact, the XXXXX is authorized under the Regulation to operate a tire recycling facility with the money collected from suppliers of new tires. However, instead of carrying out the recycling activities itself, the XXXXX pays XXXXX to collect and recycle old tires. The XXXXX is purchasing services from XXXXX and therefore the payment is consideration for a taxable supply.

You questioned whether a portion of the money paid to XXXXX could be consideration for a supply that is exempt under paragraph 20(h) of Part VI of Schedule V to the ETA. This paragraph applies to a supply of a service of collecting recyclable materials made by a government or municipality or by a board, commission or other body established by a government or municipality. As there is no indication that XXXXX was established by a government or a municipality, this exempting provision does not apply.

Ruling Requested

Should the retailers remit the environmental levy directly to XXXXX and the XXXXX subsequently invoice XXXXX a management fee for the administration of this program, would this be considered commercial activity and would the management fee attract HST? Would this in turn allow the XXXXX to claim Input Tax Credits (ITCs) with respect to this commercial activity?

Information Given

The Department does not provide rulings based on hypothetical situations, therefore we are providing general information with respect to your question. If the facts were as presented above and the only variation was that the fee was paid to XXXXX and then redirected to the XXXXX it is our view that the payment by the Department to the XXXXX would not be consideration for a supply and would not be subject to tax. The XXXXX would not be entitled to ITCs since it does not make any taxable supplies for consideration. If that payment qualified as government funding and if the XXXXX is a non-profit organization as defined in the ETA, the XXXXX could be entitled to a rebate under section 259 of the ETA.

Clarification Requested

On November 14, 1996, the XXXXX Tax Services Office (TSO) issued a ruling to the XXXXX saying that it is not eligible to claim any tax credits as it is considered to have exempt activities as opposed to commercial activities. You want us to revisit the conclusion and provide appropriate legislative reference.

Information Given

The Department's current opinion is that the XXXXX does not make any supply in return for the fee collected from suppliers of new tires and the fee is not consideration for a supply. The fee collected is used by the XXXXX to meet its purposes as established under the Act.

Section 169 of the ETA allows registrants to claim ITCs for tax paid or payable on the inputs used in the course of commercial activities. Section 141.01 of the ETA specifies that an input is regarded as being for use in commercial activities only to the extent it is for use in making taxable supplies for consideration. As the XXXXX does not make any taxable supplies for consideration, it is therefore not entitled to claim ITCs.

As stated above, the XXXXX is denied ITCs because it does not make any supply at all rather than because it is making exempt supplies as implied in the TSO ruling. However, the tax consequences in both situations are the same: the fee is not subject to tax when collected by the XXXXX from the supplier of new tires, and the XXXXX is not entitled to claim ITCs. Persons who make exempt supplies only or who are involved in activities where there is no supply made are generally not entitled to claim ITCs.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-9589.

Yours truly,

B. Mulinda
Governments Sectors Unit
GST Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate

c.c.:      XXXXX

Dear XXXXX:

Thank you for your letter of December 8, 1997 (with attachments), concerning the application of the Goods and Services Tax (GST) to the financial contribution paid by Her Majesty the Queen in Right of Canada to XXXXX with respect to the operation of the XXXXX for the purposes of ship construction and repair. XXXXX[.]

Statement of Facts

A) The Transfer Agreement:

A Transfer Agreement (Agreement) was entered into by Her Majesty the Queen in Right of Canada (Her Majesty) and XXXXX. The Agreement indicates that Her Majesty agrees to transfer, and XXXXX accepts to purchase all Her Majesty's rights, titles and interests relative to the Lands and the Existing Facilities (Immovable) situated in the XXXXX commonly called: the XXXXX. The Agreement includes a detailed description of the lands and facilities to be transferred.

Her Majesty was represented by the Minister of Public Works and Government Services pursuant to the Surplus Crown Assets Act and Federal Real Property Regulations.

Along with the Agreement, an Act of Transfer and a Contribution Agreement were entered into by both parties and attached to the Agreement as Schedule A and Schedule B respectively. Both Schedules form an integral part of the Agreement.

We understand the Agreement, the Act of Transfer and the Contribution Agreement were signed by both parties on March 31, 1998.

The following are some of the provisions of the Agreement concerning the XXXXX XXXXX agrees to accept title to the property (except mine and mineral rights), subject to municipal bylaws, rights of way, leases, servitudes or any published real rights, and subject to any restriction set out in the original grant from the Crown.

XXXXX acknowledges and agrees that the transfer of the Immovable will be made without any warranty and at its risk and peril.

XXXXX acknowledges that Her Majesty will not be required to provide it with the property titles in her possession, or with a copy of the act of acquisition of the Immovable, or a copy of prior titles.

The Agreement shall be binding on the parties hereto and on their successors and assigns.

B) The Act of Transfer:

Under the Act of Transfer, Her Majesty transfers the Immovable to XXXXX in the consideration of the sum of one dollar ($1.00), subject to certain conditions, in particular the obligation of I XXXXX to continuously operate the XXXXX for the purposes of ship construction and repair.

The following are some of the clauses found in the Act of Transfer:

Her Majesty reserves and creates, for her benefit, for a term of XXXXX from the Transfer Date, on the Immovable transferred herein, as the servient land, a servitude by virtue of which the Immovable may be used only for purposes relating to the operation of a shipyard, and for no other purpose.

Her Majesty is the owner of the Immovable.

The Transferee shall be the owner of the Immovable as and from the date of signature, the Transferee already having possession and occupation of part of the Immovable.

The Transferee agrees to take the Immovable in the condition in which it is found, and declares that it has seen and examined the Immovable to its satisfaction and that it has itself verified with the competent authorities that the purpose for which it intends to use the Immovable is in compliance with the laws and regulations in force.

Her Majesty and the Transferee further agree that the transfer of the Immovable is subject to the following obligations which the Transferee shall assume and comply with for a term of XXXXX from the Transfer Date (Operating Period):

•   By and through its officers, employees, agents, contractors or subcontractors, on its own behalf and not on behalf of Her Majesty, at its cost, continuously, actively, diligently and carefully use the Immovable for the purpose of the operation of a shipyard, in accordance with this Act of Transfer and the applicable laws, and for no other purpose. The Transferee shall further comply with and ensure compliance with the servitude of use of the Immovable which is reserved to Her Majesty in the Immovable. The Transferee shall be deemed to have fulfilled its obligation regarding the operation of a shipyard by leasing the Immovable or the part of the Immovable that continues to be owned by it to a person, or by allowing the Immovable, that continues to be owned by it, to be used by a person, providing that person uses the Immovable for the purpose of the operation of a shipyard, in accordance with this Act of Transfer.

•   The Transferee shall not alienate the Immovable or part of the Immovable, except in accordance with the provisions of article 11.

•   In the event that the Immovable or part of the Immovable is alienated by the Transferee, the Transferee shall require that any purchaser, transferee or assignee perform the obligations that the Transferee has covenanted to Her Majesty to perform.

If, during the Operating Period, at the request of the Transferee or any future purchaser, transferee or assign, Her Majesty renounces the obligation to operate all or part of the Immovable as a shipyard, or in the event of the cessation of operation as a shipyard, the Transferee shall repay to Her Majesty, if Her Majesty so requests, part of the contribution paid by Her Majesty under the Contribution Agreement.

For the purposes of article 11, the expression "Alienation" means any alienation of the real rights in all or part of the Immovable, including, but without restricting the generality of the foregoing, a sale, donation, transfer, exchange, hypothec or transfer by emphyteusis. The Transferee shall not, during the Operating Period, alienate the Immovable or part of the Immovable without first obtaining the written consent of Her Majesty, which may be refused without reasonable cause.

The Transferee will be in default if, during the Operating Period, it:

•   alienates the Immovable or part of the Immovable in breach of the Act of Transfer;

•   becomes bankrupt or insolvent, goes into receivership or takes the benefit of any statute relating to bankruptcy or insolvency or is required to wind up or dissolve by any order or any decision that it is unable to meet its liabilities as they come due;

•   ceases to operate the Immovable or part of the Immovable in accordance with articles of the Act of Transfer, is in default of any provision of the Act of Transfer or is in default of the provisions of the Contribution Agreement and such default continues for a period of thirty days after notice by Her Majesty to the Transferee specifying the nature of the default and requiring the default to be remedied.

Her Majesty and the Transferee expressly disclaim any intention to create a partnership or association, within the meaning of the XXXXX, or a joint venture. It is understood, acknowledged and agreed that nothing contained in this Act of Transfer nor any acts of Her Majesty or the Transferee shall constitute or be deemed to constitute between Her Majesty and the Transferee any partnership or association, within the meaning of the XXXXX, or any joint venture or mandate. The Transferee shall not represent or hold itself out to be a mandatary of Her Majesty. No party hereto shall have any authority to act for or to assume any obligations or responsibility on behalf of the other party hereto.

The parties declare and acknowledge that this Transfer does not constitute a sale of an enterprise within the meaning of articles 1767 et seq. of the XXXXX[.]

The parties declare that the value of the consideration for the purposes of the Excise Tax Act is one dollar ($1.00) and for the purposes of the Act respecting the XXXXX sales tax is one dollar ($1.00).

The GST payable is seven cents ($0.07) and XXXXX[.]

C) The Contribution Agreement:

The Contribution Agreement reflects Her Majesty's engagement to provide XXXXX with a financial contribution (Contribution) for the purposes stipulated in the agreement. The Contribution Agreement will be in force for a term of XXXXX from the transfer date, the term of the operating period specified in the Act of Transfer.

Subject to the terms and conditions of this agreement, Her Majesty agreed to pay a Contribution to XXXXX during the term of this agreement, payable as follows:

XXXXX in installments of XXXXX per year for a term of XXXXX years, representing XXXXX years of continuous operation of the XXXXX, for the purposes of ship construction and repair activities;

XXXXX representing the cost of major repairs to the XXXXX on production of a progress certificate, to be paid into a separate account as determined by the fund management agreement, after being recognized as true and signed for identification by the representatives of the parties in the presence of the notary. Nonetheless it is agreed that until the Fund Manager is identified, the Contribution shall be paid into a separate account of Her Majesty during the period required to appoint the Fund Manager.

The total amount of the Contribution shall be XXXXX[.]

It is agreed that the amount of the Contribution representing the cost of major repairs shall be payable provided that the repairs to be done by XXXXX are done within XXXXX years of the signing of this Agreement. If the major repairs are not done within that time, the uncommitted amount of the Contribution shall be remitted to Her Majesty. The Contribution shall be used only for major repairs to the XXXXX, in the amount of XXXXX in accordance with the description of work to be done on the XXXXX set out in Appendix A "Allowable Expenses" (not attached to the request).

We understand there is no obligation for XXXXX to enter into subsequent agreements to provide ship construction and repair services to Her Majesty following the Contribution received.

Ruling Requested

What is the GST status of the financial Contribution paid by Her Majesty the Queen in Right of Canada to XXXXX with respect to the operation of the XXXXX for the purposes of ship construction and repair.

Based on the facts set out above, we rule that payments made by Her Majesty to XXXXX with respect to the operation of the XXXXX for the purposes of ship construction and repair during the operating period are not consideration for a supply and are not subject to 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 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) 952-9589.

Yours truly,

B. Mulinda
Governments Sectors Unit
GST Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate

                                                                        GST/HST Rulings and Interpretations
  Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Avenue
Vanier, ON K1A 0L5

Dear XXXXX

Thank you for your letter of June 29, 1994 (with attachments), concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transactions described below.

Statement of Facts

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

1. A Transport Canada employee, participating in the Interchange Canada program, was engaged by XXXXX necessitating a relocation XXXXX to XXXXX.

2. The Interchange Canada Agreement between Transport Canada and XXXXX states that the costs of moving the participant from XXXXX to XXXXX would be borne by XXXXX[.] The costs of moving the participant from XXXXX to XXXXX would be borne by Transport Canada.

3. In fact, Transport Canada paid the costs of moving the participant from XXXXX to XXXXX Transport Canada subsequently issued invoices to XXXXX for the moving expenses plus GST at the rate of seven percent.

Ruling Requested

The Public Service Commission of Canada seeks a ruling on the applicability of the GST to the reimbursement of the relocation expenses incurred by the participant in the Interchange Canada program.

Ruling Given

Based on the facts set out above, we rule that

1. The GST does apply to the reimbursement of the relocation expenses.

Explanation

2. Pursuant to section 165(1) of the Excise Tax Act, "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 rate of 7% on the value of the consideration for the supply."

3. Transport Canada made a supply of the service of effecting the move of the Interchange participant to XXXXX[.]

4. This supply does not come within any of the exemptions found in the Excise Tax Act. Thus, it is taxable at the rate of 7%.

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act, or to 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) 952-9580.

Yours truly,

Oscar Jacobs
Governments Unit
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate

c.c.:

Encl.:

Thank you for your letter received May 28, 1998 to Enikö Vermes (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. XXXXX is a corporation incorporated under the laws of XXXXX agree with XXXXX to carry on their practices (full or part-time) at the XXXXX premises.

3. In return for the provision of management services by XXXXX physicians agree to pay XXXXX a management fee of XXXXX [o]f their gross receipts attributable to their practices.

Transaction(s)

Physicians associated with XXXXX pay XXXXX a management fee o[f] XXXXX[.]

Ruling Requested

GST will not apply to the 40% payment to XXXXX by the physicians.

Ruling Given

Based on the facts set out above, we rule that GST does apply to the XXXXX payment by the physicians to 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 is a management corporation. The Department's administrative position regarding management corporations and health care services is set out in GST Memorandum 300-2 at paragraph 27. It is that management corporations must register for purposes of the GST if their annual revenues exceed $30,000. Their charges to health care professionals for accommodation, administration, etc. are taxable, and the corporation is entitled to claim input tax credits for the tax paid for business expenses used to provide these services.

Your incoming letter refers to our policy on locums. As outlined in the above-mentioned Memorandum at paragraph 30, an established medical practitioner may employ a locum to handle patient overloads or fill in during vacation. It is the Department's view that the policy regarding locums is not at issue with respect to XXXXX[.] For your convenience I enclose a copy of the relevant portions of GST Memorandum 300-2.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact Enikö Vermes, Manager at (613) 954-5127 or me at (613) 952-0370.

Yours truly,

Joyce M. Crago, LL.B.
Public Service Bodies & Governments Division
GST/HST Rulings and Interpretations Directorate

Encl.:

Dear XXXXX

Thank you for your letter of March 27, 1998 concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the fees for courses and designations given by the XXXXX[.]

Please note that all legislative references are to the Excise Tax Act (the Act) and Regulations thereunder, unless otherwise specified. This letter does not reflect any legislation regarding the provincial component of the HST which applies in the provinces of Nova Scotia, New Brunswick and Newfoundland.

Statement of Facts

Our understanding of the facts, according to your letter and facsimile of July 16, 1998, and XXXXX facsimile of November 12, 1997, is as follows:

•   XXXXX

•   XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

•   XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

Rulings Given

Provided that the preceding statements constitute a complete and accurate disclosure of all the facts, our rulings are as follows:

•   In respect of section 6 of Part III of Schedule V to the Act, if a course leads to (or is taken to maintain or upgrade) a professional or trade accreditation or designation recognized by a regulatory body in at least one province, the course will be tax exempt in all provinces where the course is offered.

•   Pursuant to section 6 of Part III of Schedule V to the Act, the fees for the courses and examinations in question, XXXXX and XXXXX are exempt from the GST.

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 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 Paule Labbé, Manager, Educational Services and Indians Unit, at (613) 954-7957.

Yours truly,

Doris Rist
Rulings Officer
Charities, Non-Profit Organizations
GST/HST Rulings and Interpretations Directorate

LOG OF ACTION

980527 I received case in workload.

980528 I called XXXXX to confirm whether or not the XXXXX is a "regulatory body" as per the definition she was provided with in HQR0000566. She will check that out and call me back.

980528 XXXXX saying that XXXXX is unavailable until June 3 to provide her with the necessary information so she will be getting back to me at that time.

980529 XXXXX is registered for GST purposes as division acct. no. XXXXX[.] Their parent acct. is XXXXX of XXXXX whose major activity is regulatory activities. I phoned the XXXXX and spoke with a gentleman there that told me the XXXXX set the standards of practice for the XXXXX and regulated the securities industry throughout XXXXX[.] For this reason I will consider the XXXXX to meet the definition of a "regulatory body" for GST purposes in my ruling.

980529 submitted first draft response for review

980715 I'm with XXXXX who will be faxing me information regarding the XXXXX regulatory body.

980806 submitted draft to M. Place for review.

980811 submitted draft to L. Grannary for review. Draft will be forwarded to Educational Services Unit for further review.

980818 case returned to me. Paul Labbé has reviewed the case and agrees with the result.