GST/HST Ruling

Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.

Dear XXXXX:

Thank you for your letter XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the supply of a membership through the Internet XXXXX.

All legislative references are to the Excise Tax Act (ETA) and the regulations therein, unless otherwise specified.

Statement of Facts

We understand the following facts from your letter.

•   XXXXX is resident in Canada and is registered for GST/HST purposes. XXXXX a Web site; XXXXX.

•   XXXXX offers memberships for a fee XXXXX. Individuals who purchase memberships XXXXX and the right to enter the Web site XXXXX.

•   XXXXX.

•   XXXXX employs individuals, who are resident in Canada, to search the Internet XXXXX.

•   XXXXX.

•   XXXXX.

•   XXXXX.

•   XXXXX.

•   XXXXX.

•   The server is located in Canada XXXXX.

•   XXXXX makes this supply to both residents and non-residents of Canada.

Ruling Requested

Are the supplies of the memberships XXXXX subject to GST/HST?

Ruling Given

The supplies of the memberships XXXXX are taxable (other than zero-rated) supplies of intangible personal property made in Canada.

This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Goods and Services Tax Rulings. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.

Explanation

The supply of XXXXX membership XXXXX is a supply of intangible personal property (IPP) for purposes of the GST/HST.

A taxable (other than zero-rated) supply of IPP that is made in Canada is subject to GST at the rate of 7% or HST at a rate of 15% where it is made in the participating provinces of Nova Scotia, New Brunswick and Newfoundland and Labrador.

Pursuant to paragraph 142(1)(c) of the ETA, a supply of IPP is deemed to be made in Canada if the IPP may be used (meaning "allowed to be used"), in whole or in part in Canada. Paragraph 142(2)(c) of the ETA deems a supply of IPP to be made outside Canada if it may not be used in Canada.

In determining whether IPP may be used in Canada, reference may be made to any written agreement for the supply that contains terms governing the place of use of the IPP or a general restriction that may be explained on the supplier's Web site as to the use of the IPP, to which the recipient agrees either expressly or implicitly upon acquisition of the supply. As there are no restrictions regarding the place where the IPP supplied by XXXXX may be used, it is considered that the IPP may be used in Canada. This is the case regardless of whether the IPP is actually used in Canada. For example, the fact that IPP may be supplied to a recipient who is outside Canada has no bearing on whether the supply of IPP is considered made in Canada.

Pursuant to section 10 of Part V of Schedule VI to the ETA, the supply of intellectual property or any right, licence or privilege to use any such property is zero-rated when supplied to a recipient who is not resident in Canada and who is not registered for GST/HST purposes at the time the supply is made. A supply of IPP, such as the XXXXX membership, is not considered to be a supply of intellectual property nor is it a right, licence or privilege to use intellectual property, and therefore does not qualify for zero-rating under this provision.

Since the supply XXXXX is neither exempt nor zero-rated, XXXXX is required to collect tax on the supply of the IPP.

Where the supply of the membership is made in Canada, a further analysis with respect to the province in which the supply is made is necessary.

Whether a supply of IPP made in Canada is made in a participating province or non-participating province is determined by section 144.1 of the ETA and Schedule IX to the ETA. Section 144.1 provides that a supply is deemed to be made in a province if it is made in Canada and is, under the rules set out in Schedule IX, made in the province. In any other case, the supply is deemed to be made outside the province. Section 144.1 also states that a supply made in Canada that is not made in a participating province is deemed to be made in a non-participating province.

Section 3 of Part IX of Schedule IX to the ETA provides that, notwithstanding any other Part of Schedule IX, a supply of property or a service is made in a province if the supply is prescribed to be made in the province.

Pursuant to section 6 of the Place of Supply (GST/HST) Regulations, where a supply of a membership is made to an individual and the Canadian rights in respect of the membership may be exercised otherwise than exclusively in one province, the supply is made in a particular province if the mailing address of the individual is in that province. "Canadian rights" refers to that part of the IPP that may be used in Canada (Section 1 of the Place of Supply (GST/HST) Regulations). Where there are no restrictions regarding the province in which the membership may be used, it will always be the case that the membership may be used otherwise than exclusively in one province. Therefore, where the supply of the membership is made to an individual whose mailing address is in a participating province, the supply will be subject to HST at 15%. Otherwise, the supply of the membership is subject to GST at 7%. As such a non-resident who acquires a membership from XXXXX is required to pay GST at 7%.

For your convenience, find enclosed a copy of GST/HST Memorandum 1.4, Goods and Services Tax Rulings.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 729-4140.

Yours truly,

Cheryl R. Leyton
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

2006/03/17 — RITS 60371 — Application of GST/HST on Vehicle "Trade-ins"

Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.

Dear XXXXX:

Thank you for your letter 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, and the purpose of the transaction is as follows:

You are part of a research team, located at XXXXX, which is studying a very rare genetic disease i.e., XXXXX. This disease appears to affect XXXXX. XXXXX. Your research team has located a person in Canada who is willing to participate in your study.

Participants of your study are required to wear a device called the XXXXX to monitor and collect data associated with their XXXXX. The study typically takes place in the participant's home over a XXXXX period. You are planning to send the XXXXX to the Canadian participant's home.

XXXXX. Instructions for using the XXXXX are shipped to the participant's home along with the device. A research coordinator is available through e-mail or phone for any questions related to the XXXXX. You do not charge the participant any amount to participate in your study. Once the study is completed, the XXXXX is sent back to your location in XXXXX. Your organization pays for all the shipping charges to and from the participant's home.

XXXXX. The XXXXX is not for resale.

Transaction(s)

Importation of the XXXXX.

Ruling Requested

Whether the importation of the XXXXX for medical research in Canada is a taxable importation that is subject to GST.

Ruling Given

Based on the facts set out above, we rule that the importation of the XXXXX medical device is a taxable importation.

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

Explanation

Generally, all goods imported into Canada are taxable unless specifically relieved under section 213 of the Excise Tax Act (ETA). Importations of goods relieved of tax under section 213 of the ETA are set out in Schedule VII to the ETA.

Section 6 of Schedule VII to the ETA allows, in part, specific medical and assistive devices the supply of which is zero-rated under Part II of Schedule VI to the ETA to be treated as non-taxable importations. Therefore, where the supply of a device is zero-rated as a medical device under Part II of Schedule VI to the ETA, the importation of the device is also considered a non-taxable importation pursuant to Section 6 of Schedule VII to the ETA. Enclosed is a copy of section 4.2 of Chapter 4 of the GST/HST Memoranda Series, Medical and Assistive Devices, which provides detailed information on zero-rated medical and assistive devices for purposes of the GST/HST.

There is no provision in Part II of Schedule VI to the ETA that would zero-rate the supply of the XXXXX as a medical device. As a result, its importation is taxable. There is no other GST/HST provision that could provide for the non-taxable importation of the XXXXX.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-4294.

Yours truly,

Donato Licursi
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

2005/01/10 — RITS 49116 — GST/HST Treatment of Site Leases

Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.

Dear XXXXX:

Thank you for your letter XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to supplies made by your client, a residential condominium corporation (RCC), to its residential condominium unit owners and lessees.

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

Statement of Facts

Our understanding of the facts, based on your letter XXXXX and follow-up phone conversation, is as follows:

Your client, an RCC, operates a condominium complex that contains XXXXX residential condominium units in one building. The RCC owns and supplies laundry facilities, which consist of washers and dryers, to its residential condominium unit owners and lessees. The RCC collects approximately $XXXXX per year from fees charged for use of the washers and dryers. The laundry facilities are located within the building and are available only for the use of condominium unit owners and lessees.

Ruling Requested

What is the application of GST to the supply of washing machines and clothes-dryers for use by condominium unit owners and lessee?

Ruling Given

Based on the facts set out above, we rule that the supply of washing machines and clothes-dryers located in the condominium complex for use by condominium unit owners and lessees is an exempt supply under section 13.3 of Part I of Schedule V to the ETA.

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

Explanation

In general, section 13 of Part I of Schedule V exempts the supply of property or a service by a residential condominium corporation, where the supply is made to an owner or lessee of a residential condominium unit described on the condominium plan, if the property or service relates to the occupancy or use of the unit.

More specifically, with respect to the supply of the right to use a washing machine or clothes-dryer, section 13.3 of Part I of Schedule V exempts the supply to a consumer where the machines are located in a common area of the residential complex. Under subsection 123(1), a "condominium complex" means a residential complex that contains more than one residential condominium unit.

Given that the supply of the right to use the washers and dryers is exempt, the RCC is not entitled to claim input tax credits in respect of GST paid on goods and services obtained for use in providing such supplies to residential condominium unit owners and lessees.

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

Yours truly,

Carmela Antonelli
Real Property Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate

2005/03/29 — RITS 58721 — [Application of Section 159 to the Supply of Parking]

Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.

Dear XXXXX:

Thank you for your letter concerning the application of the Goods and Services Tax (GST)/ Harmonized Sales Tax (HST) to your operations, which was forwarded on XXXXX. You provided additional information in a conference call with myself and Robert Douthwright XXXXX and subsequent phone calls and e-mails XXXXX.

Since you have indicated that all of your supplies are made in XXXXX, this response will only discuss GST. You have also stated that all of your supplies are made to non-residents of Canada ("non-residents").

You have expressed concern with respect to how the GST applies to supplies of tour packages by GST-registered tour operators compared to supplies of tour packages by non-registered, non-resident tour operators. Your concern relates to the rebate of GST paid to non-residents for short-term accommodation ("Rebate"), when the Rebate is paid or credited directly to a non-resident, non-registered tour operator. The Rebate is paid on short-term accommodation and on tour packages that include short-term accommodation.

You have asked us the following questions:

1. For supplies of tour packages to non-residents, which have accommodation as the major component, is it more advantageous to operate as a non-registered supplier (i.e., a non-resident tour operator) or as a registered supplier (i.e., a Canadian tour operator)?

2. If there is an advantage to being a non-registered, non-resident tour operator compared to a registered tour operator, is there anything that can be done to remedy the situation?

3. Is a non-resident tour operator supplying packages to non-residents that include elements supplied or made available in Canada required to be registered for the GST?

4. Does GST apply on "US expenses"? Some examples of US expenses you incur are travel agents' commissions, marketing charges and credit card charges.

5. Is GST charged and collected on a tour package based on the selling price or the selling price after deducting the commission amount paid to a non-resident travel agent?

6. You have asked us to confirm your understanding that GST should have no effect on the revenues or expenses of a registrant. However, when you receive a refund of net tax (GST), you question why the amount received does not increase revenues or reduce expenses?

7. You have been assessed for unremitted GST. You have asked us to look into your situation with respect to the original assessment and your subsequent appeal.

8. Is it correct that the Canadian Government encourages less than 24 hours stays at included tourist destinations by offering a zero-rated option on transportation costs? If so, why?

9. Is it correct that Canadian vacationers pay 7% more for the cost of accommodation than a visitor from another country?

We provide the following in response to your questions:

1 & 2. Depending on the facts of a particular situation, it may appear that there is an advantage when a significant portion of a tour package is short-term accommodation. Appendix A illustrates how the Rebate impacts a tour operator's revenue (before other expenses) when the total amount charged to a customer for a tour package by either a registered tour operator or a non-registered, non-resident tour operator is the same.

The facts with respect to Appendix A are that:

(i) the total of the amounts including the GST but net of the Rebate charged by the registered tour operator equals what the non-registered, non-resident tour operator charges for its package, and

(ii) the registered tour operator calculates GST on the package taking into account the amount of the Rebate credited to the non-resident acquiring the tour package, i.e., 50 % of the tax on the package.

The scenario does not reflect any impact with respect to other taxes (such as state sales taxes) the non-registered, non-resident tour operator may have to charge in respect of the supply of the package to a non-resident.

Regarding your concerns with respect to the Rebate, by copy of this letter your views have been brought to the attention of the Department of Finance. The CRA is responsible for administering the GST legislation as enacted by Parliament and any legislative amendment that would address your concerns is a matter of tax policy, which falls within the scope of the Department of Finance.

3. Every person who makes a taxable supply in Canada in the course of a commercial activity engaged in by the person in Canada is required to be registered with some exceptions.

One exception is where the person is a non-resident person who does not carry on business in Canada. Whether a non-resident person is carrying on business in Canada is a question of fact.

The CRA is responsible for administering the GST legislation and it is a continuing goal to carry out this responsibility fairly and uniformly for all taxpayers. Consequently, any incidents of non-compliance are treated very seriously. Any information you wish to provide with respect to a person, who, in your view, is required to be registered and is not, can be forwarded to your local Tax Services Office.

4. Every recipient of a taxable supply made in Canada pays the GST, i.e., only taxable supplies made in Canada are subject to tax. A supply made wholly outside Canada is not subject to tax.

Assuming that the travel agents' commissions are in respect of services the travel agents provided to you outside Canada, you would not have to pay tax on the services since they are supplied outside Canada. With respect to other "US expenses", they may or may not be subject to tax depending on the facts of the situation.

5. GST is charged on the value of the consideration for a supply made in Canada. The supply you are making is the tour package to the non-resident. Accordingly, tax would be charged on the full amount of the consideration received. For example, in Appendix A, the value of the consideration for the package is $2,510.15 and GST is $175.71. The total after crediting the Rebate of $87.86 is $2,598.00.

The commission you pay to a travel agent is consideration for a supply made to you. Your obligation is to pay the GST as the recipient of a supply if the supply is taxable. However, this does not affect your obligation to collect tax on the consideration for your supply of your tour package.

6. You are correct in your understanding that GST has no effect on the revenues or expenses of a registrant.

The GST is a consumption tax where the end user or consumer of goods and services pays the tax. You may be the end user of goods and services but as a registrant, you recover the tax paid on those goods and services used in the course of operating your business. In other words, the tax is not an added cost or expense of doing business. This is unlike the case of the non-resident, non-registered tour operator who absorbs the amount of GST not rebated as a cost of doing business.

As a registrant, your obligation is to charge and collect GST on the taxable supplies you make in Canada. The GST you collect is as agent of Her Majesty in right of Canada and the amounts collected as or on account of GST are considered to be held in trust. Consequently, the amounts are not your revenue.

A refund of net tax (GST) means that the GST you charged is less than the tax you must pay on the goods and services used in the course of operating your business. Therefore, when you receive a refund of net tax (GST) there is no impact on your revenues or expenses.

7. We cannot comment on assessments. However, we reviewed the letter you received from the Appeals Office XXXXX and agree with the information you were provided.

We cannot provide any remedy with respect to the assessment. However, Appeals had provided you with information with respect to pursuing the matter with the Tax Court of Canada.

8. Most passenger transportation services supplied in Canada, which may or may not be part of a tour package, are subject to tax. However, when certain conditions are met, a supply of a passenger transportation service may be zero-rated for GST.

You have identified one condition that may determine if a supply of a passenger transportation service can be zero-rated. There are other legislative provisions that impact this determination. Zero-rating a supply of a passenger transportation service depends on the facts of the situation. For example, the passenger transportation services included in the set of passenger transportation services provided on a single ticket/voucher may be zero-rated.

9. A recipient of a taxable supply of accommodation in Canada is required to pay GST on that supply. Therefore, a Canadian resident and a non-resident will pay the same amount of tax for a supply of accommodation. However, a non-resident is entitled to a rebate of the GST paid on the supply of short-term accommodation where certain conditions are met.

If you have any further questions please contact XXXXX the XXXXX GST/HST Rulings CentreXXXXX.

Yours truly,

Alyson Trattner
Manager,
Services and Intangibles Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

APPENDIX A - Tour Package elements:

Supply made by a non-registered, non-resident tour operator (NR/NR) to a non-resident

Operator's selling price $ 2,598.00 20% mark-up on cost ($930 + $1,200)

GST not applicable - plus GST not rebated ($42)

 -------------

Operator's revenue $ 2,598.00

Operator's revenue $ 2,598.00

less: Short-term accommodation 930.00

less: Tour package 1,242.00 includes GST paid and not rebated ($42)

 --------------

Net amount $ 426.00 (before other expenses)

Registered tour operator's amount charged to customer

Operator's revenue (consideration) $ 2,510.15

GST 175.71

less: Rebate 87.86

 -------------

$ 2,598.00 amount the same as the NR/NR's selling price

Supply made by a registered tour operator to a non-resident Operator's revenue (consideration) $ 2,510.15

less: Short-term accommodation 930.00 registered tour operator entitled to claim ITC for GST

less: Tour package 1,200.00 registered tour operator entitled to claim ITC for GST

 ------------

Net amount $ 380.15 (before other expenses)

2005/07/25 — RITS 60361 — Monitoring Services

Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.

Dear XXXXX:

Thank you for your letter XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the sale by the Corporation XXXXX of the former location of the XXXXX. Your letter was transferred to the Real Property Unit for response by the XXXXX GST/HST Rulings Centre. We apologize for the delay in providing you with this ruling.

All legislative references are to the Excise Tax Act and the regulations therein, unless otherwise specified.

Statement of Facts

Our understanding of the facts and transactions is as follows:

1. The land and building (the "Property") sold by the Corporation XXXXX (the "Municipality") is the former location of XXXXX (the "Lodge") XXXXX, which was built by the Municipality in XXXXX.

2. In XXXXX, the Municipality entered into a Purchase and Sale Agreement for the sale of the Property. The closing of the transaction was to take place on or before 60 days following the opening of the new facility.

3. In XXXXX, the Lodge was relocated to a newly constructed facility at XXXXX.

4. The Lodge, a non-profit, XXXXX long-term care facility, is owned and operated by the Municipality, and has provided care for the elderly since XXXXX. The Lodge provides residents with furnished rooms that include a fully electric bed. Residents may bring in personal items (e.g., pictures, ornaments).

5. The Lodge operates under the XXXXX Act, the XXXXX. It operates under the direction of the Ministry of XXXXX and is subject to its regulations and standards.

6. An individual wishing to apply for admission must apply through the XXXXX and be deemed eligible in accordance with provincially established criteria. The Placement Co-ordinator determines eligibility for and authorizes admission to long-term care facilities.

7. The Lodge provides 24-hour nursing and personal care, meals and snacks, activation and recreation, rehabilitation, palliative and pastoral care, housekeeping, laundry and administrative support. The Lodge also provides assistance with transportation arrangements for medical appointments.

8. The Lodge is not a facility operated for the purpose of providing medical or hospital care, including acute, rehabilitative or chronic care, and is not a hospital or institution primarily for individuals with a mental health disability.

9. The Property has been vacant since the Lodge moved to its new location, except for XXXXX square feet, of a total building area of XXXXX square feet, on the roof of the building which is being rented for a couple of XXXXX.

10. The Property has not been substantially renovated, and the Municipality has not claimed any input tax credits (ITCs) in respect of the Property.

Ruling Requested

You would like to know whether the sale of the Property by the Municipality is subject to GST.

Ruling Given

Based on the facts set out above, we rule that the supply by way of sale by the Municipality of that part of the Property that is a residential complex is an exempt supply of real property under section 5 of Part I of Schedule V. The supply by way of sale by the Municipality of that part of the Property that is not part of the residential complex is a taxable supply of real property.

This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Goods and Services Tax Rulings. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.

Explanation

Generally, a supply of real property made in Canada is taxable unless there is a specific exempting provision. Part I of Schedule V sets out certain exempting provisions in respect to the supply of real property.

Section 5 of Part I of Schedule V exempts the sale of a multiple unit residential complex by the builder of the complex where the complex was previously received as an exempt supply by way of sale, provided that certain conditions are met. This section may also apply where the builder was required to self-supply under subsection 191(3) with respect to the complex and the resulting deemed taxable supply was the last supply of the complex made to the builder by way of sale.

By virtue of section 14 of Part I of Schedule V, the self-supply rules in section 191 are deemed to have been in effect at all times before 1991 for the purposes of determining whether a sale of a residential complex constitutes an exempt sale under section 5 of Part I of Schedule V. As a result, the sale by a builder of a multiple unit residential complex constructed and occupied prior to 1991 will generally be exempt under section 5 of Part I of Schedule V, provided the conditions set out therein are met.

Section 5 of Part I of Schedule V generally provides that the subsequent sale of the multiple unit residential complex is an exempt supply provided that:

•   ITCs were not claimed with respect to the last acquisition of or improvements made to the complex after the complex was last acquired by the builder; and

•   after the complex was last received by the builder, there was not a substantial renovation of the complex.

Residential Complex / Residential Unit

A "residential complex" is defined under paragraph 123(1) to include a building or that part of a building in which one or more residential units are located, together with certain other elements such as common areas of the building, appurtenances to, and land subjacent and immediately contiguous to the building.

A "residential unit" is defined in subsection 123(1) to include:

"(b) a suite or room ... in a residence for ... seniors, individuals with disability or other individuals, or

(c) any other similar premises,

or that part thereof that

(d) is occupied by an individual as a place of residence or lodging,

(e) is supplied by way of lease, licence or similar arrangement for the occupancy thereof as a place of residence or lodging for individuals,

(f) is vacant, but was last occupied or supplied as a place of residence or lodging for individuals ..."

A room or suite in a long-term residential care facility for seniors falls within the definition of "residential unit" in paragraph 123(1)(b). Once admitted to a long-term care facility, the room or suite assigned to the individual is normally the only place where the individual will reside for an indefinite period. As such, the facility would ordinarily be a place of residence for individuals.

Until the Lodge was relocated to its newly constructed facility at XXXXX a part of the Property was "occupied or supplied as a place of residence or lodging for individuals". Therefore, paragraph (f) of the definition of "residential unit" is met.

As a result, that part of the building in which the residential units are located, together with common areas and other appurtenances to the building, land on which the building is situated that is attributable to the residential units, and the land that is reasonably necessary for the use and enjoyment of the building as a place of residence for individuals, is a "residential complex" within the definition under subsection 123(1).

Separate supplies of real property

Where a supply of real property includes a residential complex and other real property that is not part of the residential complex, subsection 136(2) will apply to deem the supply of the residential complex and that other part of the real property to be separate supplies and neither supply is incidental to the other.

Based on the foregoing, the supply by way of sale by the Municipality of that part of the Property that is a residential complex is an exempt supply of real property under section 5 of Part I of Schedule V. The supply by way of sale by the Municipality of that part of the Property that is not a residential complex (e.g., space provided to the operator of the hair salon) is a taxable supply of real property since no other exempting provision applies.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 952-9212.

Yours truly,

C. Antonelli
Real Property Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate

2005/10/06 — RITS 60011 — Application of GST/HST to [Fortifying Fruit Beverages]

Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.

Dear XXXXX:

Thank you for your letter XXXXX, with attachments, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to services supplied by XXXXX. Specifically, XXXXX supplies independent medical examination services and independent medical assessment services through its XXXXX. In your letter, you indicated that you were unclear whether these services were exempt or taxable, based on your review of GST/HST Policy Statement P-248, The Application of the GST/HST to the Supply of an Independent Medical Examination ("IME") and to Other Independent Assessments ("P-248"). We apologize for the delay in providing our response.

During our telephone conversation of XXXXX, I advised you that based on my preliminary review of the detailed descriptions you gave for each service, as set out in the scenarios described in Appendix I to VI of your letter, almost all of the services supplied by XXXXX to its customers were taxable. In all cases, the supply of the independent medical evaluations (IME) services by the Medical Practitioner and the independent assessment services by the Practitioner to XXXXX were exempt.

The advice given to you was based on the assumption that the IME services and independent assessment services in question have the same meaning as those described in the GST/HST policy referred to above. That is, an IME means the service of providing an expert opinion contained in a written report that is prepared by a medical practitioner acting in the course of the practice of medicine (physician). This expert opinion is supplied by the physician or by the operator of a health care facility. An independent assessment (IA) service means the service of providing an expert opinion contained in a written report that is prepared by a medical practitioner acting in the course of the practice of dentistry (dentist) or by a practitioner acting in the course of the practice of optometry, chiropractic, physiotherapy, chiropody, podiatry, osteopathy, audiology, speech-language pathology, occupational therapy, or psychology. This expert opinion is supplied by the dentist or by the other practitioner.

The advice given was also based on the assumption that the Medical Practitioner and Practitioner in each of the detailed descriptions reviewed met the definitions of "medical practitioner" and "practitioner" in section 1 of Part II of Schedule V to the Excise Tax Act.

To be consistent with the terms used in P-248, your reference to an IMA (independent medical assessment) in the appendices is referenced as an IA service for purposes of this letter.

All legislative references are to the Excise Tax Act (ETA) and the regulations thereunder, unless otherwise specified.

Effective January 1, 2008, the rate of the GST has been reduced from 6% to 5% and the rate of HST from 14% to 13%. The new rates apply to supplies for which the GST/HST is paid on or after January 1, 2008, without having become payable before that date. Specific transitional rules apply to certain supplies, for example, real property. For more information on the transitional rules for the reduction of the GST/HST rate, please refer to GST/HST Notice 226, Proposed GST/HST Rate Reduction in 2008 on the CRA Web site at www.cra-arc.gc.ca/E/pub/gi/notice226/README.html.

Statement of Facts

We understand that:

1. XXXXX.

2. XXXXX offers independent medical examinations and other independent assessments to its client base, the majority of which are insurance companies.

3. XXXXX is a GST/HST registrant. It currently charges GST on the supply of its IME and IA services to its customers. Some customers are refusing to pay GST charged by XXXXX for the provision of its services. The appendices you submitted for our review provide a detailed description of the services, the types of professionals involved, as well as the place where the services are rendered. The information contained in these appendices has been restated, as written, below.

4. The variety of services are subcontracted and performed by either a medical practitioner (MD), as defined in section 1 of Part II of Schedule V or by a practitioner (Practitioner), as defined in section 1 of Part II of Schedule V. The evaluation or assessment services can be rendered at the XXXXX facilities, at the offices of the MD or Practitioner, and at a patient's home.

5. The XXXXX' offices located throughout XXXXX have facilities to interview and examine patients. Some of the XXXXX facilities only provide IME services. XXXXX does provide medical supplies in order for the MD or Practitioner to perform the examination (i.e., examination bed, gowns, stethoscopes, reflect hammers, etc.). XXXXX also has an office in XXXXX with the same facilities. The XXXXX and some of the XXXXX facilities also contain administrative offices.

Appendix I

1. XXXXX enters into a contract with a customer (typically an insurance company) to perform an IME service.

2. XXXXX subcontracts the service to a MD to perform the examination and prepare the assessment report. The examination is performed at the offices of the MD.

3. XXXXX prepares the consent form allowing for the examination by a physician and the disclosure of the findings to the customer. The MD has the individual sign the form.

4. The MD approves and signs the report and submits it back to XXXXX.

5. The report is reviewed for quality assurance purposes with an administrative team made of XXXXX' employees. There is no further MD involvement. The quality control and review process is performed at the XXXXX facilities.

6. The MD receives consideration from XXXXX for the services rendered above.

Appendix II

1. XXXXX enters into a contract with a customer (typically an insurance company) to perform an IME service.

2. XXXXX subcontracts to a MD to perform the examination and prepare the assessment report. The examination is performed at the XXXXX office.

3. XXXXX prepares the consent form allowing for the examination by a physician and the disclosure of the findings to the customer. The MD has the individual sign the form.

4. The MD approves and signs the report and submits it back to XXXXX.

5. The report is reviewed for quality assurance purposes with an administrative team made up of XXXXX' employees. There is no further MD involvement. The quality review process is also performed at the XXXXX facilities.

6. XXXXX keeps a copy of the signed report and medical brief. A copy of the signed report is given to the MD.

7. The MD receives consideration from XXXXX for the services rendered above.

Appendix III

1. XXXXX enters into a contract with a customer (typically an insurance company) to perform an IA service.

2. XXXXX subcontracts the service to a Practitioner to perform the assessment and prepare the report. The assessment is performed at the offices of the Practitioner.

3. XXXXX prepares the consent form allowing for the examination by a physician and the disclosure of the finding to the customer. The Practitioner has the individual sign the form.

4. The Practitioner approves and signs the report and submits it back to XXXXX to provide to the customer. XXXXX keeps a copy of the medical brief and the report copy.

5. The report is reviewed for quality assurance purposes with an administrative team made up of XXXXX' employees. The team does not include a MD. The quality review process is performed at the XXXXX facilities.

6. XXXXX keeps a copy of the signed report and medical brief. A copy of the signed report is given to the Practitioner.

7. The Practitioner receives consideration from XXXXX for the services rendered above.

Appendix IV

1. XXXXX enters into a contract with a customer (typically an insurance company) to perform an IA service.

2. XXXXX subcontracts the service to a Practitioner to perform the assessment and prepare the report. The examination is performed at the offices of XXXXX.

3. XXXXX prepares the consent form allowing for the examination by a physician and the disclosure of the findings to the customer. The Practitioner has the individual sign the form.

4. The Practitioner approves and signs the report and submits it back to XXXXX to provide to the customer. XXXXX keeps a copy of the medical brief and the report copy.

5. The report is reviewed for quality assurance purposes with an administrative team made up of XXXXX' employees. The team does not include a MD. The quality review process is performed at the XXXXX facilities.

6. XXXXX keeps a copy of the signed report and medical brief. A copy of the signed report is given to the Practitioner.

7. The Practitioner receives consideration from XXXXX for the services rendered above.

Appendix V

1. XXXXX enters into a contract with a customer (typically an insurance company) to perform an IA service.

2. XXXXX subcontracts to a Practitioner to perform the assessment and prepare the report. The examination is performed at either a patient's home or at a hospital.

3. XXXXX prepares the consent form allowing for the examination by a physician and the disclosure of the findings to the customer. The Practitioner has the individual sign the form.

4. The Practitioner approves and signs the report and submits it back to XXXXX to provide to the customer. XXXXX keeps a copy of the medical brief and the report copy.

5. The report is reviewed for quality assurance purposes with an administrative team made up of XXXXX'employees. The team does not include a MD. The quality review process is performed at the XXXXX facilities.

6. XXXXX keeps a copy of the signed report and medical brief. A copy of the signed report is given to the Practitioner.

7. The Practitioner receives consideration from XXXXX for the services rendered above.

Appendix VI

Same fact pattern as described in Appendix I to V but with the following additional review:

1. In the XXXXX office of XXXXX, there is an MD who is involved in the quality control and review process. This service is performed on a selected basis and not on every file.

Ruling Requested

You would like to know whether the supply of the IME service by a MD and the IA service by a Practitioner to XXXXX, in the scenarios described in Appendix I to Appendix V are exempt pursuant to section 5 of Part II of Schedule V and section 7 of Part II of Schedule V respectively.

You would also like to know whether the supply of the service by XXXXX to its customer, in the scenarios described in Appendix I to Appendix VI is exempt pursuant to section 2 of Part II of Schedule V.

Ruling Given

Appendix I

Based on the facts set out above, we rule that the supply of the IME service by a MD to XXXXX is exempt pursuant to section 5 of Part II of Schedule V. The supply of the service by XXXXX to its customer is taxable as no exempting provisions within Schedule V apply.

Appendix II

Based on the facts set out above, we rule that the supply of the IME service by a MD to XXXXX is exempt pursuant to section 5 of Part II of Schedule V. The supply of the service by XXXXX to its customer is exempt pursuant to section 2 of Part II of Schedule V.

Appendix III

Based on the facts set out above, we rule that the supply of the IA service by a Practitioner to XXXXX is exempt pursuant to section 7 of Part II of Schedule V. The supply of the service by XXXXX to its customer is taxable as no exempting provisions within Schedule V apply.

Appendix IV

Based on the facts set out above, we rule that the supply of the IA service by a Practitioner to XXXXX is exempt pursuant to section 7 of Part II of Schedule V. The supply of the service by XXXXX to its customer is taxable as no exempting provisions within Schedule V apply.

Appendix V

Based on the facts set out above, we rule that the supply of the IA service by a Practitioner to XXXXX is exempt pursuant to section 7 of Part II of Schedule V. The supply of the service by XXXXX to its customer is taxable as no exemption provisions within Schedule V apply.

Appendix VI

Based on the facts set out above, we rule that the supply of the service by XXXXX to its customer is taxable in the case of Appendix I, Appendix III, Appendix IV and Appendix V as no exempting provisions within Schedule V apply.

As noted above, the supply of the service by XXXXX to its customer is exempt in the case of Appendix II pursuant to section 2 of Part II of Schedule V.

This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.

Explanation

The Policy Statement P-248 describes the circumstances when the service of supplying an IME and other independent assessments is an exempt supply under sections 2, 5 or 7 of Part II of Schedule V.

The following definitions are relevant for purposes of applying P-248 to the facts presented in Appendix I to Appendix VI, as set out above.

Institution health care service

Section 2 of Part II of Schedule V exempts a supply of an "institution health care service" made by the operator of a health care facility if the service is rendered to a patient or resident of the facility, but not including a supply of a service related to the provision of a surgical or dental service that is performed for cosmetic purposes and not for medical or reconstructive purposes.

An "institutional health care service" is defined in section 1 of Part II of Schedule V as meaning any of the following when provided in a health care facility:

(a) laboratory, radiological or other diagnostic services,

(b) drugs, biologicals or related preparations when administered, or a medical or surgical prosthesis when installed, in the facility in conjunction with the supply of a service included in any of paragraphs (a) and (c) to (g),

(c) the use of operating rooms, case rooms or anaesthetic facilities, including necessary equipment or supplies,

(d) medical or surgical equipment or supplies

(i) used by the operator of the facility in providing a service included in any of paragraphs (a) to (c) and (e) to (g), or

(ii) supplied to a patient or resident of the facility otherwise than by way of sale,

(e) the use of radiotherapy, physiotherapy or occupational therapy facilities,

(f) accommodation,

(g) meals (other than meals served in a restaurant, cafeteria or similar eating establishment), and

(h) services rendered by persons who receive remuneration therefore from the operator of the facility.

Health care facility

A "health care facility" is defined, in part in section 1 of Part II of Schedule V as meaning a facility, or a part thereof, operated for the purpose of providing medical or hospital care, including acute, rehabilitative or chronic care.

Medical practitioner

Section 5 of Part II of Schedule V exempts a supply made by a medical practitioner of a consultative, diagnostic, treatment or other health care service rendered to an individual (other than a surgical or dental service that is performed for cosmetic purposes and not for medical or reconstructive purposes). A "medical practitioner" is defined in section 1 of Part II of Schedule V as meaning a person who is entitled under the laws of a province to practise the profession of medicine or dentistry.

Practitioner

Section 7 of Part II of Schedule V exempts "A supply of any of the following services when rendered to an individual, where the supply is made by a practitioner of the service:

(a) optometric services;

(b) chiropractic services;

(c) physiotherapy services;

(d) chiropodic services;

(e) podiatric services;

(f) osteopathic services;

(g) audiological services;

(h) speech-language pathology services;

(i) occupational therapy services;

(j) psychological services; and

(k) midwifery services.

For purposes of this provision, section 1 of Part II of Schedule V provides a definition of "practitioner". A "practitioner", in respect of a supply of optometric, chiropractic, physiotherapy, chiropodic, podiatric, osteopathic, audiological, speech-language pathology, occupational therapy, psychological, midwifery or dietetic services, means a person who

(a) practises the profession of optometry, chiropractic, physiotherapy, chiropody, podiatry, osteopathy, audiology, speech-language pathology, occupational therapy, psychology, midwifery or dietetics, as the case may be,

(b) where the person is required to be licensed or otherwise certified to practise the profession in the province in which the service is supplied, is so licensed or certified, and

(c) where the person is not required to be licensed or otherwise certified to practise the profession in that province, has the qualifications equivalent to those necessary to be so licensed or otherwise certified in another province.

Appendix I

The supply of the IME service by a MD of examining an individual and preparing the assessment report is exempt pursuant to section 5 of Part II of Schedule V. The fact that the MD receives consideration from XXXXX for the supply does not change the tax status of the service rendered by the MD to the individual.

The supply of the service by XXXXX to its customer is taxable. This is because it is not rendered to a patient of a health care facility operated by XXXXX, as required by section 2 of Part II of Schedule V. The exempt supply of the IME service by the MD to XXXXX is rendered to the individual in the office of the MD. As the supply of the IME service by the MD to XXXXX is not a component part of an "institutional health care service", the supply of the service by XXXXX to its customer is taxable as neither section 2 of Part II of Schedule V or any other exempting provision within Schedule V applies.

Appendix II

The supply of the IME service by a MD of examining an individual and preparing the assessment report is exempt pursuant to section 5 of Part II of Schedule V. The fact that the MD receives consideration from XXXXX for the supply does not change the tax status of the service rendered by the MD to the individual.

The supply of the service by XXXXX to its customer is exempt. This is because the exempt supply of the IME service by the MD to XXXXX is a component part of an "institutional health care service". That is, the IME service by the MD is rendered to a patient of a health care facility operated by XXXXX. The facility, or a part thereof, operated by XXXXX is a "health care facility" for purposes of P-248 because XXXXX contracts with a MD to provide medical care to a patient of the XXXXX facility, or a part thereof; the MD provides medical care in the XXXXX facility, or a part thereof; and consultation and examination rooms and all necessary equipment and supplies (e.g., examination bed, gowns, stethoscopes, reflex hammers) to support the provision of medical care are in the XXXXX facility or a part thereof. Accordingly, the supply of the service by XXXXX to its customer is an exempt institutional health care service under section 2 of Part II of Schedule V.

Appendix III

The supply of the IA service by a Practitioner of assessing an individual and preparing the assessment report is exempt pursuant to section 7 of Part II of Schedule V. The fact that the Practitioner receives consideration from XXXXX for the supply does not change the tax status of the service rendered by the Practitioner to the individual.

The supply of the service by XXXXX to its customer is taxable. This is because the supply of the IA service by the Practitioner to XXXXX is not a component part of an "institutional health care service". That is, the IA service by the Practitioner – whether rendered to an individual at the XXXXX facility or at the offices of the Practitioner – is not medical care. Therefore, the part of the facility operated by XXXXX that relates to the provision of care by a Practitioner is not a "health care facility" as defined in the ETA. Medical care, for purposes of P-248 means all types of services provided by physicians acting in the course of the practice of medicine. As the supply of the IA service by the Practitioner to XXXXX is not a component part of an institutional health care service, the supply of the service by XXXXX to its customer is taxable as neither section 2 of Part II of Schedule V or any other exempting provision within Schedule V applies.

Appendix IV

The supply of the IA service by a Practitioner of assessing an individual and preparing the assessment report is exempt pursuant to section 7 of Part II of Schedule V. The fact that the Practitioner receives consideration from XXXXX for the supply does not change the tax status of the service rendered by the Practitioner to the individual.

The supply of the service by XXXXX to its customer is taxable. This is because the supply of the IA service by the Practitioner to XXXXX is not a component part of an "institutional health care service". That is, the IA service by a Practitioner – whether rendered to an individual at the XXXXX facility or at the offices of the Practitioner – is not medical care. Therefore, the part of the facility operated by XXXXX that relates to the provision of care by a Practitioner is not a "health care facility" as defined in the ETA. As the supply of the IA service by a Practitioner to XXXXX is not a component part of an institutional health care service, the supply of the service by XXXXX to its customer is taxable as neither section 2 of Part II of Schedule V or any other exempting provision within Schedule V applies.

Appendix V

The supply of the IA service by a Practitioner of assessing an individual and preparing the assessment report is exempt pursuant to section 7 of Part II of Schedule V. The fact that the Practitioner receives consideration from XXXXX for the supply does not change the tax status of the rendered by the Practitioner to the individual.

The supply of the service by XXXXX to its customer is taxable. For the same reasons as explained for purposes of Appendix III, the supply of the IA service by the Practitioner to XXXXX is not a component part of an "institutional health care service" and therefore neither section 2 of Part II of Schedule V or any other exempting provision within Schedule V applies.

Appendix VI

In the case of Appendix I, Appendix III, Appendix IV and Appendix V, the supply of the service by XXXXX to its customer, where the quality control and review process includes the services of a MD in the XXXXX office of XXXXX is taxable. This is because the exempt supply of the IA service by the Practitioner to XXXXX, as described in these appendices, is not a component part of an exempt "institutional health care service" (i.e., not medical care rendered to a patient or resident of a health care facility). The involvement of a MD in the quality control and review process does not alter the nature of this supply. Accordingly, the supply of the service by XXXXX to its customer remains taxable as neither section 2 of Part II of Schedule V or any other exempting provision within Schedule V applies.

In the case of Appendix II, the supply of the service by XXXXX to its customer is exempt. This is because the exempt supply of the IME service by the MD, as described in this Appendix is a component part of an exempt "institutional health care service". The involvement of a MD in the quality control and review process does not alter the nature of the supply.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-4395. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.

Yours truly,

Lynn F. Renner
Municipalities and Health Care Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate

2008/01/15 — RITS 96386 — [Application of the GST/HST on Weight-Loss] Products

Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.

Dear XXXXX:

Thank you for your request XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to XXXXX (the Product).

All legislative references are to the Excise Tax Act (ETA) and the regulations thereunder, unless otherwise specified.

Effective January 1, 2008, the rate of the GST has been reduced from 6% to 5% and the rate of HST from 14% to 13%. The new rates apply to supplies for which the GST/HST is paid on or after January 1, 2008, without having become payable before that date. Specific transitional rules apply to certain supplies, for example, real property. For more information on the transitional rules for the reduction of the GST/HST rate, please refer to GST/HST Notice 226, GST/HST Rate Reduction in 2008 on the CRA Web site at www.cra-arc.gc.ca/E/pub/gi/notice226/README.html.

Statement of Facts

We understand the facts to be as follows:

1. The Product's ingredients include: XXXXX.

2. The Product comes in a XXXXX.

3. The net weight of the Product, as indicated on the package, is XXXXX g.

4. The Product is labelled as XXXXX.

5. The Product consists of XXXXX fruit, which has been frozen to maintain freshness.

6. Directions for consumption of the Product are (per packaging): XXXXX. The Product is to be kept frozen.

7. The Product is sold in the frozen foods section of retail grocery stores.

8 XXXXX.

9 XXXXX.

Ruling Requested

You would like to know how the GST/HST applies to supplies of the Product.

Ruling Given

Based on the facts set out above, we rule that supplies of the Product are zero-rated pursuant to Section 1 of Part III of Schedule VI.

This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.

Explanation

Section 1 of Part III of Schedule VI zero-rates supplies of food or beverages for human consumption ("basic groceries") and sweetening agents, seasonings and other ingredient mixed with or used in the preparation of such foods and beverages, unless one of the exceptions set out in paragraphs 1(a) through 1(r) apply.

Paragraph 1(o.1) of Part III of Schedule VI excludes from zero-rating the supply of "salads not canned or vacuum sealed". In the case 1146491 Ontario Ltd et al v The Queen [2002] 2900 ETC, salad kits were not considered to be salad for the purposes of paragraph 1(o.1) of Part III of Schedule VI, as the salad kits were not "fully assembled ready to eat salads, requiring no further effort to make it so". In this case, the Product is sold in a frozen state, where the consumer is required to thaw the Product and time passes before the Product may be consumed. Due to this, we do not consider the Product to be a salad for the purposes of paragraph 1(o.1) of Part III of Schedule VI.

As the Product does not fall within any of the exclusions in Section 1, the Product is considered to be zero-rated as a basic grocery pursuant to Section 1 of Part III of Schedule VI.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-952-9218. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.

Yours truly,

Michelle McCrae
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

2008/01/08 — RITS 98477 — XXXXX [Frozen Fruit] XXXXX

Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.

Dear XXXXX:

Thank you for your request XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to XXXXX [Frozen] Fruit XXXXX (the Product).

All legislative references are to the Excise Tax Act (ETA) and the regulations thereunder, unless otherwise specified.

Effective January 1, 2008, the rate of the GST has been reduced from 6% to 5% and the rate of HST from 14% to 13%. The new rates apply to supplies for which the GST/HST is paid on or after January 1, 2008, without having become payable before that date. Specific transitional rules apply to certain supplies, for example, real property. For more information on the transitional rules for the reduction of the GST/HST rate, please refer to GST/HST Notice 226, GST/HST Rate Reduction in 2008 on the CRA Web site at www.cra-arc.gc.ca/E/pub/gi/notice226/README.html.

Statement of Facts

We understand the facts to be as follows:

1. The Product's ingredients include: XXXXX. [various fruit]

2. The Product comes in a XXXXX.

3. The net weight of the Product, as indicated on the package, is XXXXX g.

4. The Product is labelled as XXXXX.

5. The Product consists of XXXXX fruit, which has been frozen to maintain freshness.

6. Directions for consumption of the Product are (per packaging): XXXXX.

7. The Product is sold in the frozen foods section of retail grocery stores.

8. XXXXX.

9. XXXXX.

Ruling Requested

You would like to know how the GST/HST applies to supplies of the Product.

Ruling Given

Based on the facts set out above, we rule that supplies of the Product are zero-rated pursuant to Section 1 of Part III of Schedule VI.

This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.

Explanation

Section 1 of Part III of Schedule VI zero-rates supplies of food or beverages for human consumption ("basic groceries") and sweetening agents, seasonings and other ingredient mixed with or used in the preparation of such foods and beverages, unless one of the exceptions set out in paragraphs 1(a) through 1(r) apply.

Paragraph 1(o.1) of Part III of Schedule VI excludes from zero-rating the supply of "salads not canned or vacuum sealed". In the case 1146491 Ontario Ltd et al v The Queen [2002] 2900 ETC, salad kits were not considered to be salad for the purposes of paragraph 1(o.1) of Part III of Schedule VI, as the salad kits were not "fully assembled ready to eat salads, requiring no further effort to make it so". In this case, the Product is sold in a frozen state, where the consumer is required to thaw the Product and time passes before the Product may be consumed. Due to this, we do not consider the Product to be a salad for the purposes of paragraph 1(o.1) of Part III of Schedule VI.

As the Product does not fall within any of the exclusions in Section 1, the Product is considered to be zero-rated as a basic grocery pursuant to Section 1 of Part III of Schedule VI.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-952-9218. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.

Yours truly,

Michelle McCrae
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

2007/12/31 — RITS 98510 — XXXXX Oil XXXXX in Liquid Form

Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.

Dear XXXXX:

This is in response to a letter XXXXX. XXXXX's letter concerned the XXXXX and whether it is entitled to the 83% public service body (PSB) rebate of the Goods and Services Tax (GST) and the federal component of the Harmonized Sales Tax (HST) as a facility operator under section 259 of the Excise Tax Act. XXXXX provided additional information. We apologize for the delay in providing this response.

All legislative references are to the Excise Tax Act (ETA) and the regulations thereunder, unless otherwise specified.

The following is based on our understanding of information provided and that available on the websites of the XXXXX and the XXXXX.

Statement of Facts

1. The XXXXX is a registered charity within the meaning assigned by subsection 248(1) of the Income Tax Act. As such, it meets the definition of "charity" in subsection 123(1).

2. The XXXXX is not registered for GST/HST purposes.

3. XXXXX.

4. The XXXXX has XXXXX locations in XXXXX.

5. The facilities of the XXXXX are staffed with: XXXXX nurses, occupational therapists, psychologists, physicians, physiotherapists XXXXX.

6. XXXXX

7. XXXXX

8. XXXXX

9. XXXXX

10. The XXXXX facilities at its XXXXX, each offer medical clinics. In terms of staff physicians at these clinics, the XXXXX medical doctors XXXXX. The physicians provide services under the following specializations: XXXXX. All physicians are involved in the assessment of XXXXX medical needs related to their diagnosis, and offer prevention strategies and ongoing specialized management and follow up.

In addition to medical doctors, the XXXXX has a staff of XXXXX psychologists who provide assessment and diagnostic services to clients. XXXXX.

11. The XXXXX offers the following programs and services through its various facilities:

XXXXX.

12. The XXXXX does not provide palliative care nor does it provide chronic care that requires the individual to stay overnight at its facilities.

13. The XXXXX has been classified as a XXXXX Hospital by the XXXXX.

14. XXXXX

15. The FINANCIAL STATEMENTS For XXXXX.

Ruling Requested

You would like to know whether the XXXXX is a facility operator entitled to the 83% PSB rebate under section 259 of the non-creditable tax charged on property or a service acquired by the XXXXX in the course of making supplies at its facilities. If the XXXXX does qualify for the 83% PSB rebate, you would also like to know whether the XXXXX is entitled to claim the rebate retroactively to January 1, 2005.

Ruling Given

Information provided by the XXXXX respecting physician involvement in the provision of its programs and services pertains only to the Medical Clinics offered at its XXXXX facilities located at XXXXX. For this reason, this ruling is limited to the activities carried out by the XXXXX at its XXXXX facilities at this location. Regarding the entitlement of the XXXXX to the 83% PSB rebate with respect to the operation of its other facilities, please see our comments below.

Based on the facts set out above, we rule that the XXXXX is a facility operator entitled to the 83% PSB rebate of the non-creditable tax charged on property or a service acquired by the XXXXX in the course of making exempt supplies that constitute facility supplies at its XXXXX facilities located at the XXXXX.

As a facility operator, the XXXXX may claim the rebate retroactively to January 1, 2005, for the GST and federal component of the HST it paid on purchases used to operate its facilities for use in making facility supplies, or of making facility supplies as the 83% PSB rebate applies to claim periods ending in 2005 and later. For a claim period that includes January 1, 2005, the 83% PSB rebate may also be claimed for tax deemed to have been paid or that became payable on or after that day.

This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.

Explanation

To be eligible for the 83% PSB rebate, an entity must be a "hospital authority", a "facility operator" or an "external supplier", as set out below. Eligible entities are entitled to claim the 83% PSB rebate for tax that became payable on or after January 1, 2005, on supplies acquired in the course of providing certain defined supplies. The relevant definitions, which are taken from subsection 259(1) unless otherwise noted and our comments follow.

Hospital authority

A "hospital authority" is defined in subsection 123(1) of the ETA as "an organization that operates a public hospital and that is designated by the Minister of National Revenue as a hospital authority" for purposes of the ETA.

Since the Minister of National Revenue has not designated the XXXXX as a "hospital authority", it is not a hospital authority for purposes of the ETA. It is therefore necessary to determine whether it is a facility operator or an external supplier.

Facility operator

A "facility operator" means "a charity, a public institution or a qualifying non-profit organization (other than a hospital authority), that operates a qualifying facility".

As the XXXXX is a charity for purposes of the ETA, it meets the first requirement of this definition. In order to meet the second requirement, it must operate a qualifying facility.

Qualifying facility

Subsection 259(2.1) sets out three criteria that must be met in order for a facility or part of a facility, other than a public hospital, to be a qualifying facility in a fiscal year, or any part of a fiscal year. A facility or part of a facility will be considered a qualifying facility if:

(a) supplies of services that are ordinarily rendered during that fiscal year or part to the public at the facility or part would be facility supplies if the references in the definition of "facility supply" in subsection (1) to "public hospital or qualifying facility" were references to the facility or part;

(b) an amount, other than a nominal amount, is paid or payable to the operator as qualifying funding in respect of the facility or part for the fiscal year or part; and

(c) an accreditation, licence or other authorization that is recognized or provided for under a law of Canada or a province in respect of facilities for the provision of health care services applies to the facility or part during that fiscal year or part.

Facility supply

The term "facility supply" means an exempt supply (other than a prescribed supply) of property or a service in respect of which:

(a) the property is made available, or the service is rendered, to an individual at a public hospital or qualifying facility as part of a medically necessary process of health care for the individual for the purpose of maintaining health, preventing disease or diagnosing or treating an injury, illness or disability or providing palliative health care, which process

(i) is undertaken in whole or in part at the public hospital or qualifying facility,

(ii) is reasonably expected to take place under the active direction or supervision, or with the active involvement, of

(A) a physician acting in the course of the practise of medicine,

(B) a midwife acting in the course of the practise of midwifery,

(C) if a physician is not readily accessible in the geographic area in which the process takes place, a nurse practitioner acting in the course of the practise of a nurse practitioner, or

(D) a prescribed person acting in prescribed circumstances, and

(iii) in the case of chronic care that requires the individual to stay overnight at the public hospital or qualifying facility, requires or is reasonably expected to require that

(A) a registered nurse be at the public hospital or qualifying facility at all times when the individual is at the public hospital or qualifying facility,

(B) a physician or, if a physician is not readily accessible in the geographic area in which the process takes place, a nurse practitioner, be at, or be on-call to attend at, the public hospital or qualifying facility at all times when the individual is at the public hospital or qualifying facility,

(C) throughout the process, the individual be subject to medical management and receive a range of therapeutic health care services that includes registered nursing care, and

(D) it not be the case that all or substantially all of each calendar day or part during which the individual stays at the public hospital or qualifying facility is time during which the individual does not receive therapeutic health care services referred to in clause (C), and

(b) if the supplier does not operate the public hospital or qualifying facility, an amount, other than a nominal amount, is paid or payable as medical funding to the supplier.

A "physician" means a person who is entitled under the laws of a province to practise the profession of medicine.

For purposes of determining whether the XXXXX makes supplies that constitute facility supplies we have not addressed the requirements that must be met in the definition of "facility supply" respecting palliative care or chronic care that requires an individual to stay overnight since the XXXXX does not provide this type of health care at its facilities.

To meet the first requirement in the definition of "facility supply", the property made available or the service rendered to an individual must be an exempt supply (other than a prescribed supply).

Section 2 of Part II of Schedule V exempts a supply of an institutional health care service made by the operator of a health care facility if the service is rendered to a patient or resident of the facility, but not including the supply of a service related to the provision of surgical or dental service that is performed for cosmetic purposes and not for medical or reconstructive purposes. Section 1 of Part II of Schedule V defines "institutional health care service" and "health care facility".

Section 1 of Part V.1 of Schedule V exempts supplies of property or a service made by a charity unless specifically excluded under paragraphs (a) to (n) of that section. A charity that makes exempt supplies is entitled to claim a 50% PSB rebate of "non-creditable tax charged", as defined in subsection 259(1). "Non-creditable tax charged" is generally tax paid or payable on property or services acquired by a person that is not recoverable by way of an input tax credit (ITC).

Accordingly, section 2 of Part II and section 1 of Part V.1 of Schedule V would generally apply to exempt the supplies made by the XXXXX. As such, any exempt supplies made by the XXXXX under its programs and services, as described in fact 11 above would constitute facility supplies if the other conditions set out in the definition of "facility supply" were met.

Paragraph (a) of the definition of "facility supply" requires that the exempt property be made available or the exempt service be rendered to an individual at the facility. As such, only those exempt supplies made by the XXXXX at its facilities would fulfil this requirement.

Subparagraphs (a)(i) and (a)(ii) of the definition of "facility supply" further require that the exempt property made available or the exempt service rendered at the public hospital or qualifying facility be part of a medically necessary process of health care for the individual for the purpose of maintaining health, preventing disease, diagnosing or treating an injury, illness or disability or providing palliative care. This process must be undertaken in whole or in part at the public hospital or qualifying facility under the active direction or supervision, or with the active involvement, of a physician acting in the course of the practice of medicine (or by a nurse practitioner in certain circumstances or a prescribed person in prescribed circumstances).

The XXXXX offers various programs and services through its facilities. However, the information provided by the XXXXX respecting physician involvement in the provision of its programs and services is limited to the activities undertaken by it at the Medical Clinics offered at its XXXXX facilities located at the XXXXX. As a result, the determination of whether the XXXXX is a facility operator making exempt supplies that meet the requirements of subparagraph (a)(i) and (a)(ii) is based on its operations at that location, and not at its other facilities.

XXXXX. The physicians provide services under the following specializations: XXXXX. All physicians are involved in the assessment of XXXXX's medical needs related to their diagnosis, as well as offer prevention strategies and ongoing specialized management and follow up. In addition to medical doctors, the XXXXX has approximately XXXXX psychologists on staff who provide assessment and diagnostic services to XXXXX.

XXXXX. It is clear that any exempt supply made by the XXXXX to its clients at the Medical Clinics held at its XXXXX facilities located at the XXXXX as part of a medically necessary process of health care for the individual is a facility supply because the process is reasonably expected to take place under the active direction, or supervision, or with the active involvement, of a physician, as required under paragraph (a) and subparagraphs (a)(i) and (a)(ii) of the definition of "facility supply".

For purposes of establishing whether a facility is a qualifying facility, subsection 259(2.1) sets out three criteria that must be met. The first criterion that must be met under paragraph 259(2.1)(a) is that the exempt supplies made at the facility must be facility supplies. The XXXXX meets this first criterion in respect of its exempt supplies made to its clients at the Medical Clinics held at its XXXXX facilities located at the XXXXX.

The other supplies made by the XXXXX through its other programs and services offered at its XXXXX facilities located at the XXXXX may also constitute facility supplies if paragraph (a) and subparagraphs (a)(i) and (a)(ii) of the definition of "facility supply" are met. However, we were not provided with sufficient information to make a definitive determination.

The second criterion that must be met in order for a facility to be a qualifying facility is that "qualifying funding", as defined, be paid or payable to the operator of the facility in respect of the facility for all or part of a fiscal year of the operator.

Qualifying funding

Subsection 259(1) defines "qualifying funding" of the operator of a facility for all or part of a fiscal year of the operator to mean a readily ascertainable amount of money (including a forgivable loan but not including any other loan or a refund, remission or rebate of, or credit in respect of, taxes, duties or fees imposed under any statute) that is paid or payable to the operator in respect of the delivery of health care services to the public for the purpose of financially assisting in operating the facility during the fiscal year or part, as consideration for an exempt supply of making the facility available for use in making facility supplies at the facility during the fiscal year or part or as consideration for facility supplies of property or services that are made available or rendered at the facility during the fiscal year or part and is paid or payable by

(a) a government, or

(b) a person that is a charity, a public institution or a qualifying non-profit organization

(i) one of the purposes of which is organizing or coordinating the delivery of health care services to the public, and

(ii) in respect of which it is reasonable to expect that a government will be the primary source of funding for the activities of the person in respect of the delivery of health care services to the public during the fiscal year of the person in which the supply is made.

Since the XXXXX provides funding to the XXXXX to financial assist it in the provision of XXXXX, its XXXXX facilities located at the XXXXX meets this second criterion as a qualifying facility.

The third criterion that must be met in order for a facility to be a qualifying facility is that an accreditation, licence or other authorization recognized by the federal or a provincial government in respect of its facilities for the provision of health care services must exist.

The XXXXX has been classified by the XXXXX as a XXXXX Hospital. Therefore, the third criterion has been met and the XXXXX facilities located at the XXXXX meet the definition of "qualifying facility".

Should any of the other facilities operated by the XXXXX make facility supplies and meet the requirements set out in subsection 259(2.1) each of these facilities would also constitute a "qualifying facility" thereby entitling the XXXXXto claim the 83% PSB rebate as a "facility operator" in respect of each of its facilities.

In summary, the XXXXX meets the definition of facility operator because it is a charity that operates a qualifying facility(s). It is therefore entitled to claim the 83% PSB rebate for non-creditable tax charged in respect of facility supplies it makes at its XXXXX facilities located at the XXXXX. Please note, the 83% PSB rebate is also available to a facility operator that makes an "ancillary supply" or "home medical supply", as defined in subsection 259(1). As there is no indication in the facts presented above that the XXXXX makes ancillary supplies or home medical supplies we have not addressed this issue.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-7952.

Yours truly,

Lynn Fournier Renner
Municipalities and Health Care Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate

2008/01/25 — RITS 87870 — Services Provided by [an IME]

Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.

Dear XXXXX:

Thank you for your letter XXXXX with respect to form GST111 – Schedule 1 – Financial Institution GST/HST Annual Information Schedule (AIS).

We would like to thank you for providing your comments with respect to the AIS. Your comments and suggestions were considered in the development of guide RC4419, Financial Institution GST/HST Annual Information Schedule (the guide). We are currently finalizing the guide and it should be released shortly. The guide will provide line-by-line instructions, additional clarification, as well as examples. We would like to provide the following clarification in response to some of your comments.

A financial institution will be able to use estimates for certain lines in the AIS when the actual amounts are not reasonably ascertainable. A financial institution will have to use its best efforts to provide as accurate information as possible. We are not currently contemplating expanding the areas where an estimate may be used. It is recognized that where estimates are used certain totals may include estimated amounts.

The AIS refers to total annual revenue. The meaning of total annual revenue will be clarified in the guide. A financial institution will be able to use the total of all revenue amounts as stated in its financial statements which are filed with its income tax return or the total of all revenue amounts included in its financial statement information filed with its income tax return (for example, the General Index of Financial Information (GIFI)). A specific reference to a line in the GIFI will not be included.

At this time, a drop down menu to select major business activities will not be included in Section A of the AIS. When indicating its major business activity, a financial institution will be able to provide a North American Industry Classification System code. However, a detailed description of its major activities will also have to be included.

For certain lines, a financial institution will be able to use amounts reported for income tax purposes including amounts reported in the GIFI. There will be explanations in the guide as to when this is possible. Specific references to lines of the GIFI will not be included in the guide.

We appreciate XXXXX's interest in assisting in the process of eliminating information required in the AIS to minimize the administrative burden and compliance costs to the taxpayer. However, we are not currently contemplating the elimination of any part of the information requested in the AIS.

We are providing the following additional information in respect of specific questions raised in the Appendix to your letter.

1. Although revenue from capital leases may be treated as interest income for financial statement purposes as well as by some taxpayers for income tax purposes, leases are not financial services for GST/HST purposes. Revenues from taxable supplies subject to GST made during the fiscal year should be entered on line 072 of the AIS. Revenues from taxable supplies subject to HST made during the fiscal year should be entered on line 073 of the AIS.

2. On line 060 of the AIS a financial institution will have to enter the total amount of exempt supplies of financial services made during the year. A financial institution will be able to use revenues reported for income tax purposes that are attributable to its exempt supplies of financial services.

3. In general, a financial institution will have to include in Section C of the AIS income statement as well as balance sheet acquisitions. Line 160 of the AIS requires a financial institution to enter the total amount of exempt and zero-rated financial services purchased during the fiscal year. This amount should be based on costs reported for income tax purposes that are attributable to its purchases of exempt and zero-rated supplies of financial services.

4. A financial institution should include on line 550 of the AIS the GST/HST part of credit notes received and debit notes issued as well as adjustments for tax paid in error, price adjustments, and patronage dividends.

5. Other deductions that should be entered on line 562 of the AIS include adjustments for rebates paid or credited to buyers. For example, where an insurer supplies taxable "specified services" to a segregated fund and the fund is entitled to a rebate for the tax it paid on these services, the insurer can credit the fund with the amount of the rebate. In this situation, the insurer files Form GST189, General Application for Rebate of GST/HST, with its GST/HST return (claiming the amount on line 107 of the return). The insurer would include the amount it credited to the fund on line 562 of the AIS.

6. A financial institution should enter on line 563 the total amount of other adjustments to be deducted from its net tax during the fiscal year. For example, where a selected listed financial institution (SLFI) has a negative amount on line 031 of its GST494 return, the SLFI would include this amount on line 563.

XXXXX

These comments are not rulings and, in accordance with the guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, do not bind the Canada Revenue Agency with respect to a particular situation.

If you require clarification with respect to any of the issues discussed in this letter, please call me at 613-952-9248 or Dawn Weisberg at 613-952-9210.

Yours truly,

Ivan Bastasic
Director
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate

2007/12/31 — RITS 100376 — Energy XXXXX Drink XXXXX

Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.

Dear XXXXX:

Thank you for your letter XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the charter vehicle industry.

All legislative references are to the Excise Tax Act (ETA) and the regulations thereunder, unless otherwise specified.

Effective January 1, 2008, the rate of the GST has been reduced from 6% to 5% and the rate of HST from 14% to 13%. The new rates apply to supplies for which the GST/HST is paid on or after January 1, 2008, without having become payable before that date. Specific transitional rules apply to certain supplies, for example, real property. For more information on the transitional rules for the reduction of the GST/HST rate, please refer to GST/HST Notice 226, GST/HST Rate Reduction in 2008 on the Canada Revenue Agency (CRA) Web site at www.cra-arc.gc.ca/E/pub/gi/notice226/README.html.

XXXXX.

XXXXX.

We acknowledge your request for a ruling; however, in accordance with GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretation Service, rulings can only be issued with respect to a clearly defined fact situation of a person. Instead, we offer the following interpretation.

Interpretation Requested

You are concerned that there is a lack of consistency in the charter vehicle industry with respect to charging GST/HST. You are particularly interested in the GST/HST rules concerning a continuous journey and how they relate to the industry. Therefore, you have presented three different scenarios and would like to know what amount of GST/HST is applicable in each one. These scenarios involve charter vehicle trips to and from the United States where payment for the trip is accompanied by a gratuity.

Interpretation Given

Different businesses operating within the same industry may nevertheless be doing business in different ways. As a result, the application of GST/HST may vary. In the absence of specific facts, such as agreements, we cannot comment further on the scenarios that you have presented.

Information for the travel industry may be found in the guide RC4036, GST/HST Information for the Travel and Convention Industry. The topic of continuous journey is covered in the guide under the main heading of Passenger transportation services. All CRA publications are available on the CRA Web site at www.cra-arc.gc.ca/formspubs/type/menu-e.html. It is important to note that there are several conditions, as well as documentary requirements, that must be met for a passenger transportation service to be part of a continuous journey.

Gratuities

Gratuities will not be subject to GST/HST when given voluntarily by a customer to an employee of a business. However, when a business that is registered for GST/HST includes a gratuity as part of the charge for a taxable supply, whether it is a mandatory or a suggested amount, GST/HST will be calculated on the total amount including the gratuity.

Where it cannot be distinguished whether payment for a taxable supply includes a voluntary gratuity or not (e.g., taxi chit) the entire amount is subject to GST/HST. In the example of a taxi chit, because taxi fares are inclusive of GST/HST, the entire amount is then taken into consideration when calculating the amount of GST/HST.

The foregoing comments represent our general views with respect to the subject matter of your request. These comments are not rulings and, in accordance with the guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, do not bind the CRA with respect to a particular situation. Future changes to the ETA, regulations, or our interpretative policy could affect this interpretation.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 954-2488. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.

Yours truly,

Carla Schur-Ellison
Services and Intangibles Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

2008/02/13 — RITS 96408 — Distinction Between Small and Large Seeds for GST/HST Purposes