GST/HST Ruling

Dear XXXXX

I refer to your letters of October 31 and December 23, 1997, January 19, March 20, April 15 and April 27, 1998, your message with attachments of June 29, 1998 as well as our conference call of January 14, 1998, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transactions described below for which we were unable to provide a ruling in our previous advance and application ruling of December 30, 1997 (Case No. 935/file 11895-4) based on the facts provided at that point in time.

Statement of Facts

1. XXXXX is a wholly owned subsidiary of the XXXXX (the City) and was incorporated under the XXXXX XXXXX 1997. XXXXX registered for the purposes of GST/HST effective XXXXX[.]

2. XXXXX a wholly owned subsidiary of XXXXX was incorporated under the XXXXX on XXXXX XXXXX is registered for the purposes of the GST. The registration is effective XXXXX[.] The business number for XXXXX is XXXXX[.]

3. Under the terms of the Master Agreement dated XXXXX [b]etween the City and XXXXX the City has sold, assigned and transferred to XXXXX certain assets, rights and obligations of the City effectiv[e] XXXXX for the payment by XXXXX to the City of the purchase price.

4. Subsequent to the transaction mentioned in paragraph 3, XXXXX and XXXXX have entered into a Supplementary Master Agreement dated XXXXX[.] Under this agreement, XXXXX being the legal and beneficial owner of all the issued shares of XXXXX has agreed to (i) sell, assign and transfer to XXXXX certain of the property, assets and rights purchased, acquired and taken by way of assignment by XXXXX from the City pursuant to the Master Agreement together with the Municipal Consent and Access Agreement re XXXXX[.]

5. Assets are defined in section 1.1.3 of the Supplementary Master Agreement to mean assets as defined in the Master Agreement and shall include the Municipal Consent and Access Agreement re: XXXXX[.]

6. Assets as defined in section 1.1.2 of the Master Agreement means, exclusive of the Excluded Assets, the property of the City notionally under the administration and control of the XXXXX as of XXXXX and shown as or included within the assets on the Closing Balance Sheet and for greater certainty, but subject to any specific provision of this Agreement to the contrary, includes:

1. the Transmission and Distribution System;

2. the Communications Facilities;

3. the Real Property;

4. the Equipment, Inventory and Other Property described in Schedule 2 to the Master Agreement;

5. the Computer Systems;

6. the Vehicles;

7. the goodwill, if any, associated with XXXXX together with the right of XXXXX to represent itself as carrying on the Business in continuation to and as successor of XXXXX and the use of any words indicating that the Business is so carried on including all of the right of the City to the use of the name, trademarks, trade names, logos and their identification of XXXXX as permitted by the Licence Agreement attached in Schedule XXXXX of the Master Agreement; all of the right of the City to use and retain XXXXX telephone, facsimile and telegraph numbers; and all required authorizations issued by a federal, provincial or municipal authority or agency thereof and required in the continued operation of the Business to the extent the same may be assignable by the City;

8. the Contracts and all work commitments relating to same and all other work commitments made by the City in connection with XXXXX whether or not there are any written contracts with respect thereto;

9. copies of all books and records relating to the operations and activities of XXXXX

1. all designs, drawings, plans, instructional and promotional and advertising plates, blocks, negatives and other similar materials, sales publications and technical materials of XXXXX[;]

2. subject to required governmental and other consents, the full benefit and entire interest of XXXXX in and to the approvals, permits, licences, order, orders in council, rights and interests described in Schedule 4 and other rights and interests of XXXXX related thereto;

3. and all the other elements listed and comprised in section XXXXX of the Master Agreement.

1. Municipal Consent and Access Agreement re: XXXXX[.]

2. Section XXXXX of the Supplementary Master Agreement defines Excluded Assets to mean "Excluded Assets" as defined in the Master Agreement and shall also include those further excluded assets described in Schedule XXXXX to the Supplementary Master Agreement.

3. Section XXXXX of the Master Agreement defines Excluded Assets as follows:

1. the right to grant, amend or interfere with any present or future franchise granted by the City or to be granted by the City;

2. all records maintained by the City with respect to XXXXX of the Master Agreement;

4. the freehold interests of the City in the lands described in Schedule XXXXX of the Master Agreement;

5. and all the other elements listed and comprised in section XXXXX of the Master Agreement.

6. The Excluded Assets pursuant to Schedule XXXXX of the Supplementary Master Agreement are:

1. Infrastructure - XXXXX[;]

2. Buildings and Facilities - Leasehold interests in the XXXXX[;]

3. General Support/Services Assets - Certain computer resources and related assets to be agreed to between XXXXX and XXXXX from time to time, certain furniture and computers and related equipment to be agreed to between XXXXX and XXXXX from time to time, certain tools and equipment to be agreed to between XXXXX and XXXXX from time to time, certain fleet items including vehicles and related equipment to be agreed to between XXXXX and XXXXX from time to time, and electronic test equipment;

4. Inventory - electronic shop materials and testing materials inventory; and

5. any other real or personal property agreed to from time to time by the parties that shall constitute excluded assets for the purposes of section XXXXX of the Supplementary Master Agreement.

6. During our conference call of January 14, 1998, you provided clarification related to the phrase "from time to time" in Schedule XXXXX of the Supplementary Master Agreement. You advised that you did not have the opportunity to identify the support assets that would be transferred to XXXXX from XXXXX when the Supplementary Master Agreement was drafted. Since drafting the agreement, you have determined the asset split, and confirm that there has been one single transfer of assets to effect the transaction between XXXXX and XXXXX as described in the Supplementary Master Agreement.

7. In your letter dated January 19, 1998, an estimate of the summary of the total assets that are being transferred from XXXXX (Consolidated column), the assets that are being transferred from XXXXX to XXXXX and the assets remaining with XXXXX was provided as follows:

1. The assets remaining in XXXXX are the Excluded Assets pursuant to Schedule XXXXX of the Supplementary Master Agreement. In addition, it is expected that XXXXX of the assets will be transferred from XXXXX to XXXXX and the excluded assets are XXXXX of the value of the total assets of XXXXX[.] Furthermore, it is anticipated that the value of the actual assets upon completion of the normal year-end closing process will not materially differ from the estimate.

2. XXXXX operates the regulated aspect of the distribution of electricity, i.e., the wires business. It owns the physical assets for and carries out the delivery of electrical energy and related services to more than XXXXX customers. XXXXX accepts delivery of electrical energy from the provincial electrical grid at high voltage bulk supply substations in the XXXXX area. XXXXX also transmits energy to substations located around the City where the voltage is stepped down to distribution levels and distributed throughout the neighbourhoods. XXXXX of the electricity acquired by XXXXX from the XXXXX is used by XXXXX to make taxable supplies of electricity to residential, commercial and industrial customers. Less than XXXXX of the supplies of electricity is made as taxable supplies to the City to be consumed by various divisions of the City. Related services to customers include meeting their facility installation needs as well as restoring power after disruptions, e.g. storms.

3. XXXXX[.]

[4.] XXXXX[.]

5. Furthermore, certain service level agreements, e.g., XXXXX have been assigned to XXXXX from XXXXX Other service level agreements, e.g., fleet repairs and maintenance, will be either fully or partially assigned to XXXXX from XXXXX[.] The service level agreements that will be assigned, are to be assigned before the end of the year.

Ruling Requested

XXXXX and XXXXX will be eligible to make a joint election under subsection 167(1) of the Excise Tax Act with respect to the acquisition of the assets described in the Supplementary Master Agreement (and Master Agreement).

Ruling Given

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

XXXXX and XXXXX may jointly make an election under subsection 167(1) of the Excise Tax Act to have subsection 167(1.1) of the Excise Tax Act apply to the acquisition of assets described in the Supplementary Master Agreement (and Master Agreement) subject to the exclusions enunciated in paragraph 167(1.1)(a) of the Excise Tax Act.

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 contact Owen Newell, Municipalities and Health Care Services at (613) 954-4280 or Jacques Allard, Corporate Reorganizations at (613) 954-4394.

Yours truly,

P. Bertrand
A/Director
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
XXXXX                                                                                 K1A 0L5

Dear XXXXX

Thank you for your letter of January 20, 1998 concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) with respect to the XXXXX (the Society).

All legislative references are to the Excise Tax Act (the Act) and regulations thereunder, unless otherwise specified. Please note than on April 1, 1997, the provincial sales tax (PST) in three participating provinces, Nova Scotia, New Brunswick, and Newfoundland was unified with the GST to create the HST. The HST, at a rate of 15%, replaces both PST and GST on supplies that are made or deemed to be made in the participating provinces and applies to the same base of goods and services as the GST. This letter does not reflect any legislation regarding the provincial component of the HST. Please contact our office if you require further information regarding the application of the HST to your supplies.

Further, please note that we are unable to provide you with an advance ruling as per GST Memorandum 1.4 Goods and Services Tax Rulings (enclosed) since an advanced ruling refers to specific transactions and specific time periods within which the transactions must be completed. Instead, for your assistance, we are providing you with an interpretation and application ruling since they will be applicable to the ongoing transactions that you are contemplating.

Our understanding of the facts from your letter and our conversations of April 27, 1998 and July 2, 1998 is as follows.

Statement of Facts

•   The Society is registered for GST purposes with business number XXXXX[.]

•   For GST purposes, the Society x qualifies as a charity.

•   The Society x is dedicated to providing information and skills that promote safety in, on and around water. The Society's Mission is XXXXX[.]

•   The Society's activities include:

XXXXX

XXXXX

XXXXX

XXXXX[.]

•   The XXXXX consists of a national body (National XXXXX individual provincial branches (Branches).

•   The National and each of the Branches is a separately registered charity and each is considered a separate "person" for GST purposes.

•   The National's responsibilities include acting as the sole distributor of all the XXXXX national programs, products, services and activities to the Branches.

•   Revenue is generated through the sale of awards, literature, equipment and merchandise, grants, and donations and miscellaneous fund raising.

•   XXXXX of the National's revenues are derived from the sale of awards and literature to the Branches.

•   Currently the sale of literature by the Society is treated as the sale of new goods so that the GST is charged. The Society literature is sold with a mark-up included in the selling prices to the Branches. The majority of the GST remitted to the Receiver General is derived from the sale of literature.

•   The National remits XXXXX of the total GST collected (as per section 225.1 of the Act) less a rebate equal to 50% of the amount of the GST that the National has paid on purchases.

•   Under the proposed new funding model, effective January 1, 1999, the National's activities will be funded by way of allocation of the National's operating costs to the Branches. Funding will be made by way of quarterly installments to National by each Branch, based on a budget of expenses for the National activities. Any excess funding of National's activities will be carried forward to the following year, to be applied against that year's expenses.

•   The proposed installment payment amount will differ from Branch to Branch; however, this difference will be based on the revenues of each Branch rather than on an allocation of the services or supplies by the National actually used by each Branch. It is still uncertain as to how these payments will be accounted for on the books or financial statements of either organization.

•   Notwithstanding the change to the method of funding the National's activities, inventory will continue to be managed by the National Office, in the same manner as in prior years. The impact on inventory will be that the Branches will purchase products at "cost". The amount that the Branches are charged will be a blend of the cost of the English and French versions of each item in order to have one set price for each publication, regardless of the language. Technically then, English publications will be sold at a profit with French publications sold at a loss. On average, the profit and loss is expected to balance each year.

Rulings Requested

•   Under the proposed new funding model, are the payments made by the Branches to the National of their share of the National's expenses taxable for GST purposes?

•   Is the sale of inventory by the National to the Branches taxable for GST purposes under the new model?

As the new revenue model will have no impact on the Society's sales of equipment, grants, donations and miscellaneous fundraising efforts, it has not asked for comments on those areas.

Rulings

Interpretations Given

•   Under the proposed new funding model, are the payments made by the Branches to the National of their share of the National's expenses taxable for GST purposes?

Because we have insufficient information in respect of the installment payments that are to be made by each Branch to the National, we are unable to provide a ruling as provided in the enclosed section 1.4 of Chapter 1 of the GST Memoranda Series. However, for your guidance we will provide the following interpretations which may be applicable to your transaction with the Branches.

If the National itself incurs the liability for purchases which are then supplied to the Branches, and the National is then reimbursed by the Branches, the reimbursement represents consideration for those supplies. However, the reimbursement would not necessarily be consideration for a taxable supply for GST purposes since most supplies by a charity are exempt of the GST pursuant to section 1 of Part V.1 of Schedule V to the Act.

In the situation where the National incurs the liability for the GST paid on its purchases, it will be entitled to recover the GST paid through either a rebate or input tax credit, depending on whether the purchase is used to make a taxable supply or an exempt supply. Allocations to the Branches in respect of apportioning usage would be consideration for the resupply of the item in question from the National to the Branch, but only when the allocation is used as a reimbursement of the expense incurred by the National (it is noted that the "allocations" are in the form of cash advances from the Branches, and that it is possible that not all advances are used to offset expenses in a given reporting period).

Paragraph 1(d) of Part V.1 of Schedule V (see attached) to the Act excludes from exemption new goods acquired, manufactured or produced for resale purposes, as well as services supplied in respect of such goods. Accordingly, allocations that represent reimbursements for the purchase and distribution of such supplies will be viewed as consideration for taxable supplies.

Another possibility is that at least a portion of the payments from the Branches to the National may be consideration for the supply of management or administration services. In this case such payments would be viewed as consideration for an exempt supply and thus not subject to tax, since these services fall under the general exemption of section 1 of Part V.1 of Schedule V to the Act.

Is the sale of inventory by the National to the Branches taxable for GST purposes under the new model?

The sale of inventory by the National to the Branches is subject to the GST at a rate of 7%.

As previously noted, most supplies by a charity are exempt from the GST pursuant to the general exemption under section 1 of Part V.1 of Schedule V to the Act. However, as you will note from paragraph 1(e) of this section, excluded from the exemption is the supply of new goods acquired, manufactured or produced for resale purposes. Thus these supplies are generally taxable for GST purposes unless another exemption applies such as the direct cost exemption. Generally this exemption applies where the consideration for the supply does not exceed the direct cost of the supply. More specifically, a supply by a charity is exempt where the charity does not charge the recipient an amount as tax and the total charge by the charity for the supply is equal to or is less than the tax-included direct cost of the goods or service. However, if the charity charges the recipient an amount as tax, the supply will remain taxable as long as the amount charged (excluding the tax) is at least equal to the cost of the item(s) to the charity, net of the GST/HST paid.

As the statement of facts indicate that the English publications are sold at a profit, and that tax was charged, the supply of the publications do not meet the above exempting criteria and are therefore taxable for GST purposes. The Society should continue to collect the GST on the sale of its literature and continue remitting the tax under its current business registration number.

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.

If you require an application ruling once you are aware of specific details concerning these arrangements, please send us a written request in accordance with the attached memorandum.

Should you have any further questions or require clarification on the above matters, please contact me at (613) 952-9214.

Yours truly,

Doris Rist
Charities and Non-Profit Organizations
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate

Legislative References:           ETA ss. 123(1), 165(1), sched. V/V.1/1, V/V.1/5.1,
case no. 2000-2,
GST Memoranda Series Chapter 1.4, 2.1, 2.4

Log of Action

980418 I called XXXXX as I could not reach XXXXX and she had signed the letter on XXXXX behalf. I wanted to question why the Society XXXXX is only remitting XXXXX of the GST collected and I wanted to clarify that the expense sharing is just a transfer of moneys from the Branch to the National. I wanted to find out how this money is being recorded in their books as they are separate charitable entities.

980418 I spoke with XXXXX who stated that they were only remitting XXXXX of the tax collected due to last year's amendments and was not able to answer my question regarding the sharing of expenses. He said he would have XXXXX call me back.

980417 I lmtc XXXXX[.]

980420 I lmtc XXXXX[.]

980421 I returned XXXXX call. lmtc.

980427 I spoke with XXXXX[.] She stated that the installment payments made by each Branch to National will only start early next year. They have not yet decided how these payments will be accounted for on the books of either organization. The installment payment will differ from Branch to Branch, however, this difference will be based on the revenues of each Branch rather than an allocation of the services or supplies actually used by each Branch.

980507 gave M. Place draft response for review

980624 I lmtc XXXXX[.] In her letter she states that the National body and the Provincial Branches are separately registered charities. I would like to determine whether or not they are 'persons' for GST purposes (as per GST Memorandum 2.4).

980702 I lmtc XXXXX. Went through guidelines listed in Memorandum 2.4 to determining whether Provincial Branches and National body are separate "persons". It appears that they are. Each branch is capable of holding property in its own name; the parent body is not liable for the debts and obligations of the branches; each branch has its now constitution and by-laws; each branch has its own board of directors; each branch enjoys a considerable degree of autonomy in its day-to-day operations; the accounting activities of each branch is separate from those of the parent; each branch has its own distinct seal where they have one; the financial andor fiscal year of the branches are not determined by the parent although they all use the calendar year end. XXXXX was, however, unsure as to whether persons automatically become members of the parent body or of another branch by becoming members of a branch ( but she thought the members of each branch was different than the members of the parent body, although they might have the option). Note: each branch is currently separately registered for GST purposes.

980706 I submitted a redraft of the response to M. Place for review.

980729 I resubmitted draft to M. Place for review.

980804 I submitted final copy of letter to M. Place.

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

Dear XXXXX

Thank you for your letter of May, 1998 concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to postal services that was forwarded by XXXXX to this office for reply.

Statement of Facts

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

•   Your business is registered for the purposes of the Excise Tax Act.

•   You mailed a shipment with Canada Post Corporation (CPC) from your place of business in XXXXX to a customer in XXXXX[.]

•   CPC charged XXXXX plus applicable GST and HST for the postage applied to this shipment.

Ruling Requested

You requested that HST was incorrectly applied by CPC to the postage.

Ruling Given

Based on the facts set out above, we rule that HST was correctly applied by CPC.1, 1997, the harmonized sales tax (HST) replaced the goods and services tax (GST) and the provincial sales tax (PST) in the three participating provinces of Nova Scotia, New Brunswick and Newfoundland with a harmonized tax rate of 15%, to the extent that they are taxable supplies (which are not zero-rated), tax must be collected at the harmonized rate.

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

Explanation

The Excise Tax Act contains specific instruction on circumstances when HST will be applied. These specifics may be referred to in Part VII of Schedule IX to the Excise Tax Act. The legislation, in part, specifies that where the postage service is $5 or more, the application of GST/HST is determined by the address where the mail is sent. From the information that you have provided, the delivery is to an address in Newfoundland, a participating province, and the CPC invoice is in excess of $5. On the strength of these facts, CPC was correct in applying HST.

Prior to the implementation of HST an information mailing was sent to all registrants explaining the application of GST/HST. Please find enclosed a copy of our publication "General Information for GST/HST Registrants" in the event your copy has been misplaced.

Important Other Information

In closing, I would also draw your attention to the fact that as a registrant you are also bound by the Excise Tax Act to apply HST when making supplies of picture frames or other tangible personal property in a participating province. Please refer to page 9 of the enclosed publication.

Should you have any further questions or require clarification on the above matter, please refer to the enclosed announcement "Revenue Canada - GST/HST Rulings and Interpretations Service".

Yours truly,

David Crawford
General Operations Unit
General Operations and Border Issues 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 Sir:

Thank you for your letter of May 5, 1998 to XXXXX (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. Your client (Medical Clinic) is a corporation incorporated under the laws of XXXXX[.]

2. Physicians associated with the Medical Clinic agree with the Medical Clinic to provide medical services to the patients of the Medical Clinic.

3. In return for the provision of management services by the Medical Clinic, physicians agree to pay the Medical Clinic a management fee of XXXXX of the rate paid by the Ministry of Health for the patient service.

We note that your draft agreement refers to the Medical Clinic's billing number that it uses to bill the Ministry of Health. Our information is, that in this situation, only the physicians would have a billing number, not the Medical Clinic. According to our information, the only situation where the Medical Clinic may bill on behalf of the physicians is where it is billing using the physician's billing numbers. However, this fact would not alter our ruling.

Transaction(s)

Physicians associated with the Medical Clinic pay the Medical Clinic a management fee of XXXXX[.]

Ruling Requested

GST/HST will not apply to the XXXXX payment to the Medical Clinic by the physicians or to the XXXXX retained by the Medical Clinic if it was able to bill using its billing number.

Ruling Given

Based on the facts set out above, we rule that GST/HST does apply to XXXXX payment by the physicians to the Medical Clinic (or to amount retained by the Medical Clinic).

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

Explanation

The Medical Clinic 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. Management corporations must register for purposes of the GST if their annual taxable revenues exceed $30,000. Their charges to health care professionals for accommodation, administration, etc. are taxable, and the corporation is entitled to input tax credits for the GST/HST paid for business expenses used to provide these services.

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.:

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

Dear Sir:

Thank you for your letter of August 12, 1997 (with attachments), concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transaction(s) described below. I apologize for the delay in responding.

Statement of Facts

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

1. XXXXX was incorporated under the XXXXX[.]

2. XXXXX currently offers courses in English as a second language ("ESL").

3. XXXXX promotional material suggests that other courses may be available in the future. These courses include job finding, settlement, citizenship, business, painting and other languages such as German, Spanish, French, Mandarin, Korean and Japanese.

4. Currently staff are entirely devoted to the ESL courses.

Transaction(s)

XXXXX offers ESL courses.

Ruling Requested

ESL courses offered by XXXXX are not subject to GST.

Ruling Given

Based on the facts set out above, we rule that the ESL courses offered by XXXXX are not subject to GST.

Section 11 of Part III of Schedule V to the Excise Tax Act sets out that a supply of instructing individuals in language courses that form part of a program of second-language instruction in either French or English is exempt of GST where the courses are offered by an organization that is established and operated primarily to provide instruction in languages.

To determine whether an organization is established primarily to provide such language courses, the Department will examine the organization's governing documents. These documents, including letters patent, articles of incorporation, memoranda of agreement and by-laws should contain information as to the purpose for the establishment of the organization. In circumstances where that information is not available, how the organization is operated will be evidence of the purpose for its establishment.

To determine whether an organization is operated primarily to provide such language courses, the Department will review the curriculum and the organization's promotional material. In order to qualify under this criterion, most of the organization's revenue and human resources should be attributed to the provision of second-language courses in English or French.

We have ruled that the ESL courses offered by XXXXX are not subject to GST. However, it should be noted that if XXXXX ceases to be operated primarily as a English language instruction organization, the supply of English courses may become taxable. Further, if XXXXX offers other courses, these courses will be taxable.

Lastly, it should be noted that a GST registrant is not able to recover the GST paid or payable on purchases and operating expenses related to its exempt supplies. In other words there are no input tax credits available when a registrant is making exempt supplies. This point was outlined in more detail in the letter of March 2, 1998 to you from XXXXX of XXXXX TIS Centre.

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 Paule Labbé, Manager at (613) 954-7957 or me at (613) 952-0370.

Yours truly,

Joyce M. Crago, LL.B.
Educational Services and Indians Unit
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 Mr. Weisbloom:

Thank you for your request of April 22, 1998, with attachments, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to courses provided by a number of first aid training organizations. Please disregard our letter of June 1, 1998 on the same subject.

Statement of Facts

Our understanding of the background facts is as follows:

The following three organizations (collectively referred to XXXXX supply courses largely related to occupational first aid courses according to the requirements of XXXXX

•   XXXXX The businesses operated for a number of years with the understanding that their courses (listed below) were exempt from GST:

•   XXXXX The businesses are registered for GST purposes; they have reported small amounts of GST collectible and claimed ITC's on all of their purchases. The businesses are also registered under XXXXX Audit assessed and determined that their supplies were taxable on the following basis:

•   prior to January 1, 1997 - courses did not fall within sections 6 nor 8 of Part III of Schedule V to the Excise Tax Act (ETA);

after January 1, 1997 - XXXXX did not fall within the meaning of "vocational school" set out in section 1 of Part III of Schedule V to the ETA.

Notices of objection have been filed by the XXXXX organizations.

Ruling Requested

•   Under our policy, do the above organizations fall within the meaning of "vocational school" as described in section 1 of Part III of Schedule V to the ETA?

•   Is it our view that courses supplied by the above organizations are exempt under sections 6 or 8 of Part III of Schedule V to the ETA?

Ruling Given

1. It is the Department's position that XXXXX is a "vocational school" in that it was established and operated primarily to provide students with courses that "develop or enhance students' occupational skills".

2. The courses provided by XXXXX are exempt under section 8 of Part III of Schedule V to the ETA. They are not exempt under section 6 of Part III of Schedule V to the ETA.

Explanation

An organization will qualify as a vocational school if it meets all the requirements in the definition. Pursuant to section 1 of Part III, a "vocational school" means 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."

To determine whether an organization is established primarily to provide courses that enhance students' occupational skills, we will examine its governing documents. These documents, which include letters patent, articles of incorporation, memoranda of agreement, and by-laws, should contain information as to the reason or purpose for the establishment of the organization. In circumstances where that information is not readily available, how the organization is operated will be evidence of the purpose for its establishment.

The Department will consider an organization to be providing instruction in skill enhancing courses if the courses it provides are not in respect of sports, games, hobbies or other courses that are designed to be taken for recreational purposes or for personal interest. The purpose or the intent of the courses may be obtained from a review of the curriculum and the organization's promotional material. Further, with respect to the operated primarily requirement, most of the organization's revenue and human resources should be attributed to the provision of courses that enhance students' occupational skills.

As you are aware, section 6 of Part III of Schedule V to the ETA sets out that courses (or examinations or certificates in respect of the courses) provided by a vocational school are exempt where the courses lead to, or maintain, or upgrade a professional or trade accreditation or designation recognized by a regulatory body. Notwithstanding that the XXXXX regulates First Aid under the Occupational Health and Safety Regulation, it is the Department's position that courses provided by XXXXX do not lead to, maintain, or upgrade a professional or trade accreditation or designation. Therefore, in our view, courses supplied by XXXXX are not exempt under section 6 of Part III of Schedule V to the ETA.

Section 8 of Part III of Schedule V to the ETA exempts the service of instructing in courses leading to a certificate that attests to the competence of individuals to practice a trade or vocation, where the vocational school is regulated by provincial legislation respecting vocational schools. In our view, courses provided by XXXXX meet the requirements of section 8 of Part III of Schedule V. More particularly, the First Aid courses offered by XXXXX are intended to be taken as part of a program of courses by persons that require such training in order to perform their trade and maintain their chosen occupation. Therefore, the courses "attest to the competence of the individuals to practice or perform a trade or vocation", and are exempt supplies pursuant to section 8 of Part III of Schedule V to the ETA.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-4157.

Yours truly,

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

GST/HST Rulings and Interpretations
Place Vanier, Tower C, 9th Floor
25 McArthur Avenue
Vanier, Ontario
XXXXX                                                                                 K1A 0L5

Dear Sir:

I refer to your letter of October 31, 1997 (with attachments), the June 29, 1998 documentation from XXXXX and your submission of September 16, 1998 concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transaction(s) described below.

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

Statement of Facts

1. XXXXX[.]

Ruling Requested

1. Are the supplies of the designated company services made by XXXXX [t]o municipalities under the Members Agreement exempt under the para-municipal provisions of section 28 of Part VI of Schedule V to the Act?

2. Are the supplies of the designated company services made by XXXXX to the XXXXX under the user agreement taxable at 7%?

3. Are the supplies of the designated company services made by XXXXX to the XXXXX treated as zero-rated supplies for ITC purposes?

Ruling Given

1. The supplies made by XXXXX to the member municipalities are exempt under paragraph 28(a) of Part VI of Schedule V to the Act.

2. The supplies made by XXXXX to XXXXX under the user agreement are taxable supplies.

3. The supplies made by XXXXX to XXXXX are treated as zero-rated supplies for ITC purposes.

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 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 Ms. Enikö Vermes, Manager, Municipalities, at (613) 954-5127 or the undersigned at (613) 954-4280.

Yours truly,

Owen W. Newell, CGA
Municipalities Unit
Governments and Public Service Bodies 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

This is in reply to your letter of December 10, 1995, to Revenue Canada in Ottawa on the above-noted subject. Your letter was transferred to this office for a reply. We apologize for the delay in responding to you and sincerely regret any inconvenience this may have caused you. 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 you do not make any supplies 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 a telephone conversation between you and I on September 18, 1998, is set out below.

1. XXXXX is a business run by you as an unincorporated sole proprietorship. It was started in XXXXX and is registered with XXXXX as a sole proprietorship. It was established and is operated solely to provide ESL (i.e. English as a second language) to XXXXX students. The program is operated from your residence in XXXXX[.]

2. You teach classes at XXXXX but will hire other instructors as needed, on a subcontractor basis.

3. XXXXX offers XXXXX different programs, each for xx hours per week and tailored to individual needs. These are described below.

Intensive English - with focus on developing critical reading and communication skills; XXXXX preparation if required.

Intensive English for Juniors - with activities designed for person aged XXXXX[.]

Language and Culture Program - includes XXXXX hours per week of classroom study and a wide range of cultural and recreational activities in an English-speaking environment.

4. The courses may include the following activities:

•   Group instruction in seasonal sports, such as tennis, swimming, sailing, canoeing, cross-country and downhill skiing and skating;

•   Group singing and Canadian folk songs;

•   Games, bowling and movie evenings; and

•   Field trip to XXXXX[.]

5. XXXXX will arrange accommodation for the students with XXXXX for the duration of the course. It will also arrange transportation to and from XXXXX[.]

6. The cost of the program for the 1998 year is XXXXX[.] This fee covers all costs associated with the program, which are tuition and books, accommodation, three meals per day and recreational activities.

Ruling Requested

That the supply of the service of instruction in English as a second language provided by 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").

Ruling Given

Based on the facts above, we rule that XXXXX is making a single supply of instruction in English as a second language which is exempt pursuant to section 11 of Part III of Schedule V of the ETA.

Explanation

The course fee paid by students includes residential accommodation and meals XXXXX books, field trips and transportation to and from XXXXX from XXXXX[.] Although the course consists of the service of second-language instruction and other items, we are of the opinion that one supply of second-language instruction is being made.

We are of this opinion because the items mentioned would be considered inputs as they are integral to the language learning process. The fact that the contract for the course is all-inclusive indicates that the items constitute a single supply of second-language instruction. Furthermore, all items are supplied by one supplier, leading to the view that a single supply is being made.

Having determined that XXXXX is making a single supply of instruction in English as a second-language (which includes the various elements listed above), we would point out that all elements included in the course fee have the same tax status as the supply of second-language instruction.

Tax Treatment of English Language Instruction

Section 11 exempts the service of instructing individuals in language courses that form part of a program of second language instruction in either English or French, where the supply is made by an organization that is established and operated primarily to provide instruction in languages.

To determine whether an organization is established primarily to provide instruction in languages, we will examine an organization's governing documents. These documents include letters patent, articles of incorporation, memoranda of agreement and by-laws and should contain information as to the reason or purpose for the establishment of the organization. If that information is not readily available, how the organization is operated will be evidence of the purpose of its establishment. With respect to the operated primarily requirement, the organization's revenue and human resources should be primarily attributed to the supply of instruction in languages.

Based on the description of XXXXX activities, as outlined above, supplies of instruction in English as a second language provided by it qualify for exemption pursuant to section 11. This means that you are not required to charge GST on the portion of the program fee related to the supply of instruction in English as a second language. However, if XXXXX makes other language instruction supplies which are not within the exemption in section 11 (for example, provision of translation services), these may be taxable supplies. Where consideration (i.e. revenue) for taxable supplies exceeds $30,000 in a year, you will be required to register for GST and file a GST return on a regular basis. More information on registration can be obtained from XXXXX Tax Services office at 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.

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

Yours truly,

Pauline Greenblatt
Educational Services and Indians Unit
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 concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transactions described below. Please accept our sincere apologies for the delay in responding.

You confirmed that, to the best of your knowledge, none of the issues described herein is being considered by a Revenue Canada Office in connection with a GST/HST return already filed and none of the issues are under objection or appeal.

Statement of Facts

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

XXXXX produces the following XXXXX products that are offered for sale to consumers in XXXXX[.] The Department is of the view that XXXXX consist of XXXXX. Each XXXXX g consists of the following:

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX are sold to consumers in a package containing x three individual servings. There is one UPC code and one list of ingredients for XXXXX[.] The XXXXX s are not labeled in XXXXX also offers these products to consumers in XXXXX[.] These are known as XXXXX[.] A XXXXX format of packaging has been created for the individual sales market. These packages are labeled in accordance with regulations that permit their individual sale. These are called XXXXX and are offered for sale to retailers in a box containing XXXXX[.]

Ruling Requested

1. The supply of a XXXXX is zero-rated.

2. The supply of a XXXXX is zero-rated.

3. The supply of XXXXX is zero-rated.

Ruling Given

Provided that the preceding statements constitute a complete and accurate disclosure of all the facts, the proposed transactions, and the purpose of the proposed transactions, and provided that the proposed transactions are completed as described above, our ruling is as follows:

The following supplies of XXXXX are zero-rated:

XXXXX

XXXXX

XXXXX[.]

The following supplies of XXXXX are taxable when sold in the XXXXX

XXXXX

XXXXX

XXXXX[.]

When sold in XXXXX, all varieties of XXXXX are zero-rated supplies.

Analysis

The supply of basic groceries, which includes the majority of supplies of food and beverages marketed for human consumption (including sweetening agents, seasonings and other ingredients to be mixed with or used in the preparation of such food or beverages), is zero-rated. Certain categories of foodstuffs, for example, carbonated beverages, candies and confections, and snack foods are, however, taxable at 7% or 15%. Pursuant to paragraph 1(m) of Part 1 of Schedule VI to the Excise Tax Act (the Act), supplies of cookies and products similar to cookies are taxable where they are prepackaged for sale to consumers in quantities of less than six items each of which is a single serving. The Department considers XXXXX to be products that are similar to cookies, and, as mentioned above, XXXXX consist of XXXXX[.] Therefore, paragraph M of part 1 provides that products similar to cookies are taxable where they are prepackaged for sale to consumers in quantities of less than 6 items, each of which is a single serving. As such, supplies of XXXXX are taxable whereas supplies of XXXXX are zero-rated.

These rulings are given subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series issued by Revenue Canada.

These rulings are based on the Excise Tax Act in its present form and does not take into account any proposed amendments to the Excise Tax Act or to departmental interpretative policy, which, if enacted, could have an effect on the ruling provided herein.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-9585.

Yours truly,

Tony Hahn
Services and Intangibles Unit
General Operations and Border Issues Division
GST/HST Rulings and Interpretations Directorate

c.c.:

Encl.:

                                                                        September 30, 1998

Dear Mr. XXXXX

Thank you for your letter in which you inquired about the application of Goods and Services Tax ("GST") to monetary advances made by XXXXX[.] Our comments are set out below.

Statement of Facts

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

Ruling Requested

1. The supply of the advance by XXXXX is an exempt supply of a financial service for GST purposes.

2. The reimbursement of the advance by XXXXX is an exempt supply of a financial service for GST purposes.

Ruling Given

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

1. The payment of the advance by XXXXX is a supply of a financial service pursuant to paragraph (g) of the definition of "financial service" in subsection 123(1) and, therefore, is an exempt supply pursuant to section 1 of Part VII of Schedule V to the Excise Tax Act.

2. The reimbursement of all or part of that advance by XXXXX is a financial service pursuant to paragraph (f) of the definition of "financial service" in subsection 123(1) and, therefore, is an exempt supply pursuant to section 1 of Part VII of Schedule V to the Excise Tax Act.

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

Explanation

The payment by XXXXX cannot be characterized as a loan as there was no obligation on the part of XXXXX to repay the same amount of money. XXXXX is a Crown corporation whose mandate is to develop XXXXX by providing various means of financial assistance. For this reason, the agreement between XXXXX and XXXXX does not contain the usual features of an ordinary commercial loan agreement; instead, the advance is subject to a conditional obligation to repay. Although the payment of the advance by XXXXX is not a loan, the fact that all or part of the advance is repayable, though only on a conditional basis, means that the advance is in the nature of a loan. For this reason, the payment of the advance by XXXXX fall within the ambit of the phrase "the making of any advance" in paragraph (g) of the definition "financial service" in subsection 123(1).

Please note that generally, a supply of a financial service provided to a non-resident person is zero-rated pursuant to Part IX of Schedule VI to the Act.

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

Yours truly,

B. Mulinda
Government Sectors Unit
Public Service Bodies & 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

                                                                        Business Number: XXXXX

Dear XXXXX

Thank you for your letter of August 5, 1998 (with attachments), concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transactions described below, which was forwarded to our office by the Southern Ontario TIS Centre for reply.

Statement of Facts

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

1. XXXXX ("the Company") was incorporated in XXXXX as the result of an amalgamation of XXXXX corporations, XXXXX[.]

2. In 1971, XXXXX was formed for the purpose of acquiring XXXXX acres of land in the Township of XXXXX legally described as Part of XXXXX ("the Property").

3. The Property has XXXXX feet of lake frontage on its easterly lot line fronting onto XXXXX[.]

4. At the time of the purchase, there were two residential detached houses located on the Property.

5. Two additional residential houses were constructed on the Property, one in 1974 and the second in 1979.

6. With the exception of the two houses built in 1974 and 1979, the Company has never engaged in the business of constructing buildings.

7. The Company has claimed no input tax credits with respect to improvements and repairs made to the houses on the Property.

8. Each house is used by a specific shareholder of the Company and his/her family with no cross usage.

9. From the time the houses were either purchased with the Property or newly-built, each has been either vacant or occupied by the same shareholder and his/her family, off and on throughout the year, as a secondary place of residence.

10. One of the houses purchased with the property was occupied by a particular shareholder as a primary place of residence from XXXXX[.]

11. Each shareholder occupying a particular house has furnished it with his/her personal belongings.

12. Each shareholder occupying a particular house has purchased insurance policies on that house under the Home Owner Policy category.

13. The area around the Property is generally occupied by cottagers and year round residents.

14. The lakefront of the Property is shared equitably by the XXXXX houses.

15. In XXXXX, with the decline in use of the houses by two of its shareholders, the Company decided to apply to XXXXX to sever the Property. The purpose of the severance was to provide more opportunity for each individual shareholder to control his/her house.

16. The Property is designated as a XXXXX under XXXXX[.]

17. Under XXXXX the maximum number of lots created from severing a "land holding" is XXXXX including the original lot.

18. XXXXX requires that all severance applications ensure that the new lots have adequate services with no undue burden on the existing potable water and sewage disposal systems. In addition, development in XXXXX is not to be linear or strip pattern, and backlotting and secondary tier development to the existing developed area are discouraged.

19. In 1996, the Company approached XXXXX with the proposal to sever the Property into XXXXX [L]ots, which was rejected.

20. The Company engaged a local planning consulting firm to formulate a severance plan that would incorporate the underlying principles of XXXXX[.]

21. The severance plan proposed to subdivide the Property with XXXXX Front Lots along the shoreline, and a Back Lot representing the balance of the Property. The lots would have the following dimensions (as the lots are irregular, the second dimension of the Front Lots is approximate):

XXXXX

XXXXX

XXXXX

XXXXX

22. Under the severance plan, the houses in place at the time of acquisition would be on XXXXX, while the houses built by the Company would be on XXXXX.

23. On XXXXX, the severance plan was adopted by XXXXX[.] Amendment was approved by the Ministry of Municipal Affairs and Housing on J XXXXX[.]

24. In describing the development proposal, XXXXX Amendment stated as follows:

"Key planning considerations incidental to the proposed lot design include:

•     maintain uniformity in the configuration of all proposed lots;

•     providing equitable shoreline frontage and area for each of the proposed lots;

•     maintaining the historic integrity of this waterfront estate development;

•     ensuring acceptable setbacks to existing dwellings, accessory buildings/structures, well and septic services;

•     ensuring that functional waterfront area and lake access are provided for each lot/dwelling ..."

25. In explaining why an exception to the policies for severances in XXXXX would be permitted, XXXXX Amendment noted the following:

XXXXX requires that the size of new lots be appropriate to accommodate the use and would not require an undue extension of major services. The proposed lots exceed the current minimum standards established in the Township's comprehensive zoning by-law for recreational dwelling lots. As the established uses are presently serviced to the extent proposed, no new services would be required. Therefore, the proposal is deemed to conform with this policy.

"The policies ... permit consents to private roads [i.e. as in the proposal] where the length of the private road is not extended; the lot created will have access to the private road; and the lot created lies between existing non-agricultural buildings separated by not more than XXXXX[.] [T]he proposed consents would maintain the spirit and intent of these policies.

XXXXX requires that proposed lots are suitable to permit the proper siting of buildings, sufficient potable water and adequate means of sewage disposal. Again, the existing dwellings are serviced by individual wells and approved sewage disposal systems. The proposed lot areas and boundaries are also adequate to ensure the reasonable separation of the existing uses.

"Overall, the proposal maintains the overall spirit and intent of the official plan, specifically in respect of multiple severances on private roads. Apart from relocation of the vehicular right-of-way the private road is not being extended. To the contrary, by virtue of its relocation and realignment, the private road will be shortened in terms of eventual length."

Transactions

1. In XXXXX the Company decided to dispose of all four houses.

2. The sale of the XXXXX Lots was completed in XXXXX[.]

Ruling Requested

The Company requests confirmation that the sale of the XXXXX Lots is GST exempt.

Ruling Given

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

a) the sale of Lots XXXXX as shown on the plan designated as XXXXX attached to XXXXX, is exempt from GST pursuant to section 4 of Part I of Schedule V to the Excise Tax Act; and

b) the sale of Lots XXXXX as shown on the plan designated as XXXXX attached to XXXXX is exempt from GST pursuant to section 2 of Part I of Schedule V to the Excise Tax Act.

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. [required only when the decision is unfavourable]

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

Yours truly,

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

Legislative References:           Excise Tax Act, subsection 123(1) builder residential complex
Excise Tax Act, subsection 191(1)
Excise Tax Act, Schedule V, Part I, section 2
Excise Tax Act, Schedule V, Part I, section 4
Excise Tax Act, Schedule V, Part I, section 14

                                                                        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 August 11, 1998 (with attachments), concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transaction(s) described below.

Statemenf of Facts

Our understanding of the facts is as follows:

XXXXX is a battery-operated, XXXXX. It is specifically designed to electrically incinerate XXXXX). This device is intended for home use by diabetics to reduce the incidence of needle-stick injuries. It thus renders them safe for disposal and handling by users and sanitation workers.

Ruling Requested

The GST/HST status of the supply XXXXX[.]

Ruling Given

Based on the facts set out above, we regrettably confirm that the supply of XXXXX is subject to the GST HST. This confirms the ruling dated February 18, 1998, from XXXXX of our XXXXX office. There are no provisions in the Excise Tax Act which would zero-rate this supply. We have undertaken to send copies of your product literature to the Department of Finance for their consideration when contemplating any future legislative changes.

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

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

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-9590.

Yours truly,

Ken Syer
Senior Rulings Officer
Municipalities and Health Care Services Unit
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate