GST/HST Ruling

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ETA 123(1) financial service (l), ETA 123(1) financial service (r.4)

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

[Addressee]
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5

Case Number: 126191

Business Number: [...]

December 23, 2010

Dear [Client]:

Subject:

GST/HST RULING
Application of the GST/HST to services provided for a finders fee

Rhank you for your fax of July 9, 2010, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to services provided by [...] ([the Company]). We apologize for the delay in responding to your enquiry.

HST applies at the rate of 15% in Nova Scotia, 13% in Ontario, New Brunswick, and Newfoundland and Labrador, and 12% in British Columbia. GST applies at the rate of 5% in the remaining provinces and territories.

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

Statement of Facts

We understand the facts to be as follows based on the copy of the [...] provided, information contained in your fax and our telephone conversation of October 14, 2010. The following additional documentation was also submitted: [...].

1. [The Company] is registered for GST/HST purposes.

2. A ruling was issued to [the Company] [...].

3. [The Company] entered into an [...] (the Agreement) on [mm/dd/yyyy], with [...] (the Funder), a business located in [...] [Province X].

4. Based on section [...] of the Agreement, [the Company] agrees to solicit new prospective commercial clients (Clients) for the Funder and to provide the Funder completed document packages for the Funder's evaluation and possible acceptance, in accordance with the Funder's instructions to [the Company] and the terms and provisions of this Agreement.

5. Based on section [...] of the Agreement, in consideration for the services performed by [the Company], the Funder agrees to pay [the Company] a finders fee equal to [...] percent [...] arising from Clients referred to the Funder by [the Company] under this Agreement.

6. Also in section [...] of the Agreement, the obligation of the Funder to pay a finders fee with respect to any particular Client is subject to the following conditions: [...].

• All finders fees as determined above are and shall be inclusive of any and all taxes eligible thereon including, without limitation, any GST.

7. Based on section [...] of the Agreement, [the Company] is acting as an independent contractor and not as an employee or agent of the Funder.

Ruling Requested

You would like to know whether the supply of services provided by [the Company] to the Funder under the Agreement is subject to GST/HST.

Ruling Given

Based on the facts set out above, we rule that the supply of services provided by [the Company] to the Funder under the Agreement of soliciting new prospective commercial clients and providing completed document packages for the Funder's evaluation and possible acceptance is a taxable supply subject to GST/HST.

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

Under the ETA, supplies are taxable unless they are specifically exempt.

A supply of financial services is exempt under Part VII of Schedule V unless it is specifically zero-rated under Part XI of Schedule VI (which generally requires that the supply be made by a financial institution to a non-resident and that certain other conditions are met). A service will be a financial service where it is included in any of paragraphs (a) to (m) of the definition of financial service in subsection 123(1) and is not otherwise excluded by any of paragraphs (n) to (t) of that same definition. This would include for example, in paragraph (l) of the definition of financial service the arranging for a service referred to in any of paragraphs (a) to (i) and not referred to in any of paragraphs (n) to (t).

Paragraph (g) of the definition of financial service in subsection 123(1) provides that the making of any advance, the granting of any credit or the lending of money are financial services.

Paragraph (d) of that same definition provides, among other things, that the issue, granting and transfer of ownership or repayment of a financial instrument are financial services. A "financial instrument" is defined in subsection 123(1) and includes a "debt security" which in turn is defined under that provision to include a right to be paid money (e.g. accounts receivables).

When the Funder agrees, for example, to lend money to the Client or to purchase the Client's accounts receivables the Funder is generally making an exempt supply of a financial service to the Client.

Based on sections [...] of the Agreement, [the Company] is providing services to the Funder of soliciting Clients on behalf of the Funder and providing completed document packages to the Funder for evaluation and possible acceptance. Where an agreement provides for the provision of a number of services or property and services, it must first be determined whether a single supply or multiple supplies are being provided under the agreement. This distinction is important in cases where a combination of services and or property is supplied by a person under an agreement, some of which would be taxable and some of which would be exempt if supplied separately. Whether the person is making a single supply or multiple supplies is a question of fact. GST/HST Policy Statement P-077R2, Single and Multiple Supplies, provides additional information on determining whether a single supply or multiple supplies are being provided.

Where it is determined that a single supply is being provided, then the predominant element of that supply must be established to determine the nature of the supply. If the predominant element of the single supply is determined to be a financial service, then the supply as a whole will be considered a financial service. This determination is generally based on written agreements, between the person providing the service and the person's client, detailing the actions, responsibilities and obligations of the person in connection with the supply.

The services noted above that are provided by [the Company] to the Funder under the Agreement are considered the provision of a single taxable supply.

The term "arranging for" is generally intended to include intermediation activities that are normally performed by financial intermediaries described in subparagraph 149(1)(a)(iii), such as agents, brokers and dealers in financial instruments or money.

In determining if an intermediary's service is included in paragraph (l), all the facts surrounding the transaction, including the following factors, must be considered:

• the degree of direct involvement and effort of the person in the provision of a financial service referred to in any of paragraphs (a) to (i);
• the time expended by the intermediary in the provision of a financial service referred to in any of paragraphs (a) to (i);
• the degree of reliance of either or both the supplier and the recipient on the intermediary in the course of providing a financial service referred to in any of paragraphs (a) to (i);
• the intention of the intermediary to effect a supply of a financial service referred to in any of paragraphs (a) to (i); and
• the normal activities of an intermediary in a given industry (including whether the intermediary is engaged in a business of providing financial services).

Based on the information provided, while some of [the Company's] activities, such as assisting with the completion of an application, and providing the Funder completed document packages assist the Funder in providing a financial service of lending money to a Client, [the Company's] activities when considered as a whole are predominantly customer assistance and document preparation. As a result, the supply of the services provided by [the Company] to a Funder is not considered to be included in paragraph (l) of the definition of financial service.

Even if it could be argued that the supply by [the Company] is included in paragraph (l) of the definition of financial service in subsection 123(1), it is excluded from that definition by paragraph (r.4) of that same definition.

Paragraph (r.4) clarifies that certain services that are preparatory to or provided in conjunction with a financial service are excluded from that definition. Specifically, paragraph (r.4) excludes from the definition of financial service, a service (other than a prescribed service) that is preparatory to the provision or the potential provision of a service referred to in any of paragraphs (a) to (i) and (l) of the definition of "financial service", or that is provided in conjunction with a service referred to in any of those paragraphs, that is:

• a service of collecting, collating or providing information, or
• a market research, product design, document preparation, document processing, customer assistance, promotional or advertising service or similar service.

Currently, no services are prescribed for the purposes of paragraph (r.4).

Coming into force

Paragraph (r.4) in the definition of financial service is deemed to have come into force on December 17, 1990, except where certain conditions are met.

Specifically, the amendments would not apply where, under a written agreement:

• all of the consideration for the supply became due or was paid on or before December 14, 2009;
• the supplier did not, on or before December 14, 2009, charge, collect or remit any amount as or on account of tax in respect of the supply; and
• the supplier did not, on or before December 14, 2009, charge, collect, or remit any amount as or on account of tax in respect of any other supply that is made under the agreement and that includes the provision of a service referred to in paragraphs (q), (q.1) and (r.3) to (r.5) of the definition of financial service.

[The Company] entered into the Agreement on [mm/dd/yyyy]. Therefore, paragraph (r.4) clarifies that the supply made by [the Company] to the Funder is not a financial service. As no other exempting provisions apply, the supply will be subject to GST/HST.

Please note that where [the Company] provides a supply to a funder that is the same as in the Agreement and consideration for the supply became due or was paid after December 14, 2009, the supply will also be subject to GST/HST.

Tax rate applicable to the supply of a service

As we have determined that the supply provided by [the Company] to the Funder under the Agreement is a single taxable supply we are providing further clarification on whether GST or HST would apply on [the Company's] taxable supplies for periods before and after July 1, 2010.

There are two important steps involved in the determination of whether GST or HST will apply to a taxable supply of a service.

The first step is to determine the place of supply of the service. As of May 1, 2010, the place of supply rules used to determine whether suppliers must charge the HST, and at what rate, have changed to accommodate variable rates of the provincial part of the HST. The new rules apply for supplies made in Canada after April 30, 2010.

The new rules for determining the place of supply for services generally rely on where the consumer of the supply (i.e. the recipient) is located rather than on the location of the service provider (i.e. the supplier).

Under these rules, a supply of a service will generally be regarded as made in a province where the supplier obtains a single home or business address of the recipient in the ordinary course of its business and that address is situated in that province. Additional information can be found on pages 25-31 of Technical Information Bulletin B-103, Harmonized Sales Tax Place of supply rules for determining whether a supply is made in a province.

The second step is to determine when the service is performed. For example, where 90% or more of the service is performed before July 2010 and the place of supply of the service is Ontario, only the GST applies to any amount that becomes due or is paid without having become due for the service.

On the other hand where more than 10% of a service is performed on or after July 1, 2010, and the place of supply of the service is Ontario generally:

• The supplier charges GST on any amount that becomes due or is paid without having become due before May 2010; and
• When an amount becomes due or is paid without having become due on or after May 1, 2010:

• GST applies to any amount that relates to the portion of the service performed before July 2010; and
• HST applies to any amount that relates to the portion of the service performed on or after July 1, 2010.

Further information on whether the GST or HST applies to services performed during the period that includes the July 1, 2010 implementation date of the HST in Ontario and British Columbia as well as information on how to account for those amounts is available in Info Sheet GI-056, Ontario and British Columbia: Transition to the Harmonized Sales Tax - Services.

ADDITIONAL INFORMATION
Tax status of a supply of a service to a non-resident funder

You mentioned in a phone conversation that in some circumstances [the Company] may enter into an agreement with a funder that is a non-resident of Canada with the same provisions as the Agreement. Since we have determined that the supply of services made by [the Company] to the Funder under the Agreement is a taxable supply, we provide the following additional information with respect to such a supply provided to a non-resident funder.

Section 5 of Part V of Schedule VI zero-rates (i.e. taxed at the rate of 0%) a supply made to a non-resident person of a service of acting as an agent or representative of that person or of arranging for, procuring or soliciting orders for supplies by or to the person to the extent that the service is in respect of a supply that is
(a) a zero-rated export to the non-resident under Part V of Schedule VI, or
(b) a supply made outside Canada by or to the non-resident person.

Subsection 142(2) deems supplies to be made outside Canada in certain circumstances. For example, a supply of a loan by a non-resident funder to a client that is performed wholly (100%) outside Canada is considered to be made outside Canada.

A supply of a service may also be deemed to be made outside Canada under the provisions of subsection 143(1) provided the supplier is a non-resident and the conditions outlined in that subsection are met. For example, a supply of a service made in Canada by a non-resident that is not registered for GST/HST purposes and that is not making a supply in the course of a business carried on in Canada is deemed to be made outside Canada. For additional information on these provisions please refer to GST/HST Memorandum 3.3, Place of Supply.

Where the supply of the services made by a funder to a client is determined to be made outside Canada[,] the supply by [the Company] to the funder of the services as provided in an agreement that is the same as the Agreement would be zero-rated under Section 5 of Part V of Schedule VI.

For additional information on zero-rated supplies please refer to GST/HST Memorandum 4.5.3, Exports - Services and Intellectual Property.

As it is the responsibility of the supplier (i.e. [the Company]) to ensure that the appropriate amount of GST/HST is collected and remitted, please refer to GST/HST Memorandum 4.5.1, Exports - Determining Residence Status for information on what is considered satisfactory evidence of non-resident status.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-952-9211. 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,
Hélène Bustamante
Financial Institutions Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate

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ETA 181.2

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[Addressee]
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5

Case Number: 127289

Business Number: [...]

November 23, 2010

Dear [Client]:

Subject:

GST/HST RULING
GST/HST ruling on Game Cards

Thank you for your letter of August 5, 2010, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) on Game Cards.

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

Statement of Facts

We understand from your letter that you require confirmation of the GST/HST status of the supply of certain Game Cards that [...] (the "retailer") sells to its customers. The Game Cards for which you are asking us to issue a ruling are the following:

1. [...] [Game Card 1] allow[s] customers to download this game online after card is activated [...]. To redeem the cards, the cardholders must go on the [...] system, [...] system or [...] to enter the PIN number necessary to download the game. The PIN number is found at the back of the card. [...].

2. [...] [Game Card 2] allow[s] the users to download several games, add-ons and more after card is activated. To be redeemed, the cardholders must go on the [...] system, [...] system or [...] to enter the PIN number necessary to download the game. The PIN number is found at the back of the card. On the back of the card it says [...].

3. [...] [GPS Card 3] allow[s] customers to download update[s] for their maps for their GPS device. Cardholders must go online to proceed with the update of the maps that are already installed on their [...] GPS device. To do so, the cardholders must enter the activation number found on the back of their cards. [...].

4. [...] [Game Card 4] allow[s] customers to play online games and purchase virtual items. The cardholders must go on the website [...] to redeem it by entering the PIN code shown on the back of the cards.

5. [...] [Game Card 5] allows customers to play online games for [...] days only. The cardholder must accept the use and licence terms on the website to be able to access the games in order to redeem the card. [...]. The card is sold at $[...].

6. [...] [Game Card 6] allow[s] customers to download games after the card is activated. States at the back of the card that card must be redeemed [...]. To redeem the card, cardholder must go online and enter the PIN provided on the back of the card.

7. [...] [Game Card 7] allows customers to go on the [...] website to download games. [...].The cardholder must accept the use and licence terms on the website to be able to access the games in order to redeem the card. To redeem the card, the cardholder must enter the PIN code shown on the card.

8. [...] [Game Card 8] allow[s] customers to play up to [...] games online after the card is activated. The cardholder must go on one of the websites [...] to redeem the card by entering the code found on the back of the card.

9. [...] [Game Card 9] give[s] customers a membership for a period of [...] for the price of $[...] and $[...] respectively for online activities on the [...] website. [...]. To redeem the card, cardholder must go on the [...] website and enter the code found on the back of the card.

10. [...] [Game Card 10] give[s] customers access to online games and entertainment services accessible from [...] system for a period of [...]. To redeem the card, the user must enter the PIN number found on the back of the card. The [...] subscription is sold for $[...].

11. [...] [Games Points Card 11] for a retail price the customers purchase or [...] points which will allow them to do online shopping for games for their [...] system. To redeem the card, the cardholder must go to the [...] system and enter the PIN on the back of the card. The [...] points card is sold for $[...].

You also included in your submission a [...] card. Further research is required regarding this card in order the determine if the supply is one of telecommunication services or not, therefore this card will be the subject of a separate ruling that will be issued by the Services and Intangibles Unit. [...].

Ruling Requested

You would like to know how GST/HST applies to those Game Cards sold by [...] [the retailer].

Ruling Given

This ruling applies only to the physical cards sold by the retailer. Based on the facts set out above, we rule that the supply of:

1. [Game Card 1] as described above is a gift certificate for GST/HST purposes, subject to section 181.2, and, accordingly, is not subject to GST/HST at the time of the sale;
2. [Game Card 2] as described above is a gift certificate for GST/HST purposes, subject to section 181.2, and, accordingly, is not subject to GST/HST at the time of the sale;
3. [Game Card 3] as described above is a gift certificate for GST/HST purposes, subject to section 181.2, and, accordingly, is not subject to GST/HST at the time of the sale;
4. [Game Card 4] as described above is a gift certificate for GST/HST purposes, subject to section 181.2, and, accordingly, is not subject to GST/HST at the time of the sale;
5. [Game Card 5] as described above is a gift certificate for GST/HST purposes, subject to section 181.2, and, accordingly, is not subject to GST/HST at the time of the sale;
6. [Game Card 6] as described above is a gift certificate for GST/HST purposes, subject to section 181.2, and, accordingly, is not subject to GST/HST at the time of the sale;
7. Game Card 7] as described above is a gift certificate for GST/HST purposes, subject to section 181.2, and, accordingly, is not subject to GST/HST at the time of the sale;
8. [Game Card 8] as described above is a gift certificate for GST/HST purposes, subject to section 181.2, and, accordingly, is not subject to GST/HST at the time of the sale;
9. [Game Card 9] as described above is a gift certificate for GST/HST purposes, subject to section 181.2, and, accordingly, is not subject to GST/HST at the time of the sale;
10. [Game Card 10] as described above is a gift certificate for GST/HST purposes, subject to section 181.2, and, accordingly, is not subject to GST/HST at the time of the sale;

11. [Games Points Card 11] as described above is a gift certificate for GST/HST purposes, subject to section 181.2, and, accordingly, is not subject to GST/HST at the time of the sale.

Explanation

To be a gift certificate, the gift card must entitle the bearer to a particular supply of goods or services or a reduction of the total amount of money payable (i.e. consideration plus applicable taxes including GST/HST) for any supply of goods or services supplied by the issuing vendor [...]. Furthermore, a gift card must have all the characteristics of a gift certificate as described in GST/HST Policy Statement P-202, Gift Certificates, to be considered a gift certificate for purposes section 181.2 of the ETA; in other words, for a gift card to be considered a gift certificate, the gift card:

a) must have a specified value or be for a particular supply of property or services;
b) be redeemable for the purchase of property or services;
c) consideration must have been given; and
d) have no intrinsic value.

The above-noted Game Cards meet all the characteristics of gift certificates.

Where a card is determined to be a gift certificate for purposes of section 181.2 of the ETA, the supply of that gift certificate is deemed not to be a supply and therefore no GST/HST is to be collected on the supply of that card. When that card is redeemed, it is treated like cash and the redeeming party, if a registrant, is required to charge and collect the GST/HST on the value of the consideration where the supply is a taxable supply (other than a zero-rated supply).

We acknowledge that one of the cards states the "any applicable taxes must be paid separately and are not included". However, a gift certificate is always to be treated as money, therefore GST/HST applies upon redemption of the gift certificate when the supply is made, not at the time of purchase of the gift certificate.

For your convenience, find enclosed a copy of GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-952-8811 or Ken Syer, Manager, at 613-952-9219. 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,
Jasmine Gallant
Specialty Tax Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate

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ETA Sch VI, Part III, 1(k)

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[Addressee]
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5

Case Number: 128466

December 24, 2010

Dear [Client]:

Subject:

GST/HST RULING
Zero Rating for [...] [Flavoured Liquid Products]

Thank you for your letter of August 30, 2010, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the supply of [Flavoured Liquid Products] (the Product).

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

Statement of Facts

Our understanding of the facts is as follows:

1. [...] has requested a ruling regarding the tax status of the Product.

2. The Producer has stated that the Product is an addition to [...] line-up of products and that [...] flavours are considered formulated liquid diets under Division 24 of the Food and Drug Act Regulations.

3. The Product label states [...].

4. The Product is sold in multiples of [...].

5. The Product is sold ready to serve.

6. The Product is available in [...] flavours; [...].

7. The package of the Product is in English and French.

8. The Product's [...] ingredients are: [...].

9. The Product's [...].

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.

Explanation

Supplies of property or services made in Canada are either taxable supplies or exempt supplies. Exempt supplies are listed in Schedule V and are not subject to the GST/HST. Taxable supplies are either subject to the GST at the rate of 5% or HST at the applicable rate where the supply is made in a participating province, or are zero-rated supplies (taxable at the rate of 0%) listed in Schedule VI.

The terms "food" and "beverage" are not defined in the ETA. However, the Canada Revenue Agency (CRA) considers a product to be a food or beverage if an average consumer would recognize and purchase the product as such in the ordinary course of buying basic groceries. Consumers usually consume food and beverages to allay hunger or thirst or for enjoyment rather than for therapeutic or preventative effects.

The CRA's approach is based on the views of an "average consumer". Products that meet the special dietary needs of certain segments of the population, such as those with restricted or special purpose diets, high performance athletes and dieters may not necessarily be viewed by the average consumer as food or beverages. These types of products are commonly referred to as dietary supplements.

However, the CRA's approach would not preclude a product from zero-rating that is specially processed or formulated to meet the dietary requirements of a person in whom a physical or physiological condition exists as a result of a disease, disorder or injury or whom a particular effect is to be obtained by a controlled intake of food. This includes products such as formulated liquid diets, provided these products are intended to allay hunger or thirst or for enjoyment through the digestive system rather than for therapeutic effects. The Regulations under The Food and Drug Act provide that "formulated liquid diet" means a food that is sold for consumption in liquid form, and is sold or represented as a nutritionally complete diet for oral or tube feeding of a person. Further, formulated liquid diets have specific caloric, fat content and vitamin and mineral requirements. Although these products are different from what an ordinary consumer would view as food, their main purpose is to provide nutrition and nourishment for people with a medical condition.

In determining the tax status of a particular product, the composition of each particular product in a product line must be considered to determine if each particular product is, for example, a formulated liquid diet, meal replacement, nutritional supplement, dietary supplement, or food or beverage.

Products that qualify as formulated liquid diets under the Food and Drug Act and Regulations are considered basic groceries for GST/HST purposes. All supplies of formulated liquid diets are zero-rated (except when sold from a vending machine). We accept that the Product is a formulated liquid diet as the label represents the product as such; consequently its supplies are zero-rated.

If a product is represented as being a formulated liquid diet as evidenced by the label, the CRA will accept this information as fact in determining its tax status. If, however, after a ruling has been issued, it is determined that a product is in fact not a formulated liquid diet, the ruling will not be valid in accordance with GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-5124. 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,
Angela Stachowski
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

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ETA 165(2), ETA Sch VIII

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Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5

Case Number: 128618

October 29, 2010

Dear [Client]:

Subject:

GST/HST RULING
Rate of HST on Purchase of New House

Thank you for your letter of September 20, 2010, addressed to the Atlantic GST/HST Rulings Centre concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the purchase of a new house in Nova Scotia. Your request was transferred to our office for response.

Effective July 1, 2010, the provincial part of the HST in Nova Scotia changed from 8% to 10% and therefore the HST rate for Nova Scotia was increased from 13% to 15%, consisting of a 5% federal part and a 10% provincial part.

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

Statement of Facts

You have provided with your letter copies of the agreement of purchase and sale dated April [...], 2010, Addendum Schedule [...] and Addendum Schedule [...] both dated April [...], 2010, a counter offer dated April [...], 2010, and a Notice of Removal of Schedule [...] dated May [...], 2010. You also subsequently sent us copies of Addendum Schedule [...] and Addendum Schedule [...] both undated and copies of the Statement of Sale and the Statement of Funds Received and Disbursed prepared by the vendor's solicitor.

Based on these documents and [...] telephone conversation with [...] of our Halifax office on September 27, 2010, we understand the following:

1. Both of you entered into a written agreement of purchase and sale with [...] (the builder) for the purchase of a newly constructed house located at [...], Nova Scotia.

2. The agreement was entered into on April [...], 2010, and both ownership and possession were to be transferred to both of you on June [...], 2010.

3. The purchase price in the agreement of purchase and sale is $[...] including HST (identified as 13%) and reduced by the GST/HST new housing rebate in respect of the federal part of the HST that was credited by the builder. Neither of you is entitled to claim the Nova Scotia new housing rebate.

4. Addendum [...] states that the purchase price is to read $[...] including applicable tax, and the closing date is to read on or before August [...], 2010.

5. The Statement of Sale indicates that an additional amount of $[...] is payable to the builder in respect of additional upgrades.

6. The actual closing date was August [...], 2010. Ownership and possession of the house transferred to both of you on that date.

7. Addendum Schedule [...] states the buyers and the seller agree that the buyers are to provide a certified cheque in the amount of $[...].

Ruling Requested

You would like confirmation that the purchase of the new house is subject to the HST at 15% and whether relief can be provided with respect to the 2% increase.

Ruling Given

Based on the facts set out above, we rule that the supply of the new house by the builder is subject to the HST at 15% and that there is no provision under the ETA that would allow the CRA to reduce the amount of HST payable in respect of this transaction.

Explanation

Pursuant to paragraph 19(2)(e) of the Nova Scotia HST Regulations, 2010 (the Regulations), a supply by way of sale of a new house in Nova Scotia is subject to the HST at 15% if ownership and possession of the house are transferred on or after July 1, 2010. Since ownership and possession of the new house transferred to both of you on August [...], 2010, the supply of the new house is subject to the HST at 15%.

We are also providing the following information on additional transitional rules that are applicable in respect of a sale of a residential complex in Nova Scotia.

Section 13 of the Regulations sets out specific disclosure requirements for builders who enter into agreements of purchase and sale for supplies of residential complexes in Nova Scotia after April 6, 2010 and before July 1, 2010.

Subsection 13(1) of the Regulations requires a builder to indicate in the agreement of purchase and sale either:

a) the total tax payable in respect of the supply in a manner that clearly indicates the amount of that total and whether or not that amount is net of the GST/HST new housing rebate in respect of the federal part of the HST, or
b) the HST rate that applies in respect of the supply.

Subsection 13(2) of the Regulations provides that if a builder fails to disclose the above information, the tax payable by the recipient in respect of the supply is to be calculated as if the HST applied in respect of the supply at a rate of 13% and not at a rate of 15%; and the builder is deemed to have collected the tax in respect of the supply at a rate of 15%.

It is a question of fact whether the disclosure requirement discussed above is met given the changes that have been made to the original agreement of purchase and sale in an effort to collect the HST at the rate of 15%. The determination of the total amount payable under the purchase and sale agreement is a matter to be resolved between you and the builder.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-952-9587. 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,
Béatrice Mulinda
Real Property Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate

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ETA 165, ETA Sch VI, Part III, 1(l)

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[Addressee]
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5

Case Number: 129135

Business Number: [...]

November 29, 2010

Dear [Client]:

Subject:

GST/HST RULING
[...] [Fruit Flavoured Snacks]

Thank you for your letter of October 6, 2010, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to [...] [Fruit Flavoured Snacks] (the Product).

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

Statement of Facts

Our understanding of the facts is as follows:

1. The Product is sold by [...] [the Company].

2. You have described the Product as a fruit [...] flavoured [...]. It is labelled [...]. Each packet weighs [...]g. The Product is marketed as [...].

3. The Product is currently available in [...] flavours: [...].

4. [...]. [listing of the Product's ingredients]
5. [...]. [listing of the Product's ingredients]

6. You also provided a link to [the Company's] Web site [...] which shows the Product's images and ingredients. This site contained the following additional information: [...].

7. A sample box of the [...] flavour of the Product was purchased from [...] a local grocery store to examine the Product and its packaging. The front of the box shows [...]. It contains the wording [...].

8. The back of the box has the name of the Product and the following wording: [...].

9. The remainder of the back of the package promotes [...] products with the following wording: [...].

10. The nutrition facts and ingredients were given on a [...].

11. [...]. [description of the Product's shape, size and flavour]
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 taxable at 5% GST or 12%, 13% or 15% HST pursuant to section 165.

Explanation

Generally, every recipient of a taxable supply made in Canada shall pay tax calculated at the rate of 5% on the value of the consideration for the supply (15% in Nova Scotia, 13% in Ontario, New Brunswick, and Newfoundland and Labrador and 12% in British Columbia) unless the supply is zero-rated. Pursuant to subsection 165(3), the tax rate in respect of a zero-rated supply (i.e., a supply included in Schedule VI) is 0%.

Paragraph 1(l) of Part III of Schedule VI excludes the following products from zero-rating:

"fruit bars, rolls or drops or similar fruit-based snack foods."

"Fruit-based" implies a mixture of fruit and at least one other ingredient. Products having fruit as an important ingredient, such that the product is represented to consumers as being fruit-based, will be within this exclusion. It may also mean that a product is not dominantly composed of fruits and may refer to the use of fruit for flavouring purposes.

As the Product has fruit as an important ingredient and is marketed as being fruit based, it is considered to be a fruit based snack food for the purposes of the above provision. Therefore, supplies of the Product are excluded from zero-rating pursuant to paragraph 1(l) of Part III of Schedule VI and are taxable at the rate of 5% GST or 15%, 13% or 12% HST, as applicable.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (902) 426-6940. 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,
Nancy Jardine
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

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ETA 165, ETA Sch VI, Part III, 1(f)

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[Addressee]
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5

Case Number: 129177

Business Number: [...]

November 29, 2010

Dear [Client]:

Subject:

GST/HST RULING
[...] [Snack Foods]

Thank you for your letter of October 6, 2010, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to [...] [Snack Foods] (the Product).

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

Statement of Facts

Our understanding of the facts is as follows:

1. The Product is sold by [...] [the Company].

2. The Product is baked and [...]. It is labeled as a [...] and is packaged in a [...]. Each package weighs [...]g. The Product is marketed as [...].

3. The Product is currently available in [...] flavours: [...].

4. [...]. [listing of the Product's ingredients]
5. [...]. [listing of the Product's ingredients]
6. [...]. [listing of the Product's ingredients]

7. You also provided a link to [the Company's] Web site [...] which shows the Product's images and ingredients. This site contained the following additional information: [...].

8. A sample box of the [...] flavour was located in [...] section of a local grocery store and was purchased to examine the Product and its packaging. The front of the container has [...] and the following wording [...].

9. The back of the container lists the nutrition facts and ingredients.

10. [...]. [description of the Product's texture, shape and flavour]
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 taxable at 5% GST or 12%, 13% or 15% HST pursuant to section 165.

Explanation

In particular, paragraph 1(f) of Part III of Schedule VI excludes from zero-rating the following:

"chips, crisps, puffs, curls or sticks (such as potato chips, corn chips, cheese puffs, potato sticks, bacon crisps and cheese curls), other similar snack foods or popcorn and brittle pretzels, but not including any product that is sold primarily as a breakfast cereal."

GST/HST Memoranda Series 4.3, Basic Groceries outlines factors that are used to determine if a particular product is similar to a chip, crisp, puff, curl or stick as described under paragraph 1(f) of Part III of Schedule VI. These factors include the properties of the product (ingredients, flavours, texture, cooking process and appearance), its labelling, its packaging, and its marketing.

In this case, the Product has [...] as its main ingredient, which is consistent with the snack foods enumerated in paragraph 1(f). In addition, the Products' flavours [...] are those which is typically associated with these snack foods. Furthermore, the appearance [...], shape [...] and the texture [...] are similar to those enumerated under paragraph 1(f). The Products are packaged loosely in a [...] container.

The Product in this case is therefore considered to be "similar snack foods" for purposes of paragraph 1(f) of Part III of Schedule VI. As such, the Product is excluded from section 1 of Part III of Schedule VI and supplies of the Product are subject to the GST or HST as applicable.

In December 2008, the Canada Revenue Agency provided rulings on [...].

It should be noted that no one factor is determinative of the tax status of a product and changes in the labelling, packaging and/or marketing (e.g., a change in the product name or varieties offered) would not necessarily result in a different tax status. All factors must be considered in determining whether a product falls within paragraph 1(f) of Part III of Schedule VI.

Yours truly,
Nancy Jardine
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

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ETA 123(1) mobile home, ETA 123(1) non-profit organization, ETA 123(1) residential trailer park, ETA 123(1) residential unit, ETA 136(1), ETA 165(1), ETA Sch V, Part VI, 25

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[Addressee]
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5

Case Number: 81896

Business Number: [...]

November 23, 2010

Dear [Client]:

Subject:

GST/HST RULING
Supply by [the] [...] Association

Thank you for your fax (with attachments) of July 14, 2006, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to a supply of a "membership" in the [...] Association. We apologize for the delay in responding to your enquiry.

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

Statement of Facts

We understand as follows:

1. The [...] Association (the Association) was incorporated without share capital on [mm/dd/yyyy], under the laws of the province of Ontario.

2. The Association is a "non-profit organization" as that term is defined in subsection 123(1) and is not registered for purposes of the GST/HST.

3. The Association owns and operates a recreational vehicle park (the Park) that is located in the Township of [...] (the Municipality). The Association is licenced by the Municipality to operate the Park for six months per year, from May 1 to October 31. The Association pays licence fees to the Municipality in respect of the Park.

4. The Park is not covered by condominium property legislation in Ontario.

5. The Park is not a "residential trailer park" as that term is defined in subsection 123(1).

6. The Association's purpose is to operate and maintain the Park and its facilities for the benefit of its members.

7. A sample membership agreement [...] (the Agreement) was included with your submission. When a person acquires a membership in the Association they pay a fee for which they obtain the exclusive right to occupy and use a designated site within the Park and the right to use the common areas of the Park. However, a member does not own the site as ownership of the Park remains with the Association. Members have a right to a share of the assets of the Association, including the real property (i.e., the Park), if it is dissolved and members have the right to vote at Association meetings. There are no other entitlements or rights associated with a membership.

8. The Agreement provides that an annual maintenance fee is also payable by members to the Association. This fee covers the operation of the Park (e.g., water, sewage, hydro, property taxes, wages and routine repairs and maintenance of the Park) and a portion of this fee goes to the reserve fund set up for the purchase and replacement of capital items required to service the Park. Members also pay the Association amounts in respect of the licence fees that are payable by the Association to the Municipality.

9. Under the Agreement, members have the right to bequeath their membership to their heirs or successors.

10. A member may place a recreational vehicle trailer or park model trailer (an RV) on their designated site within the Park. Mobile homes are not permitted on the sites in the Park. However, the Agreement does not require a member to place an RV on their site. A member may choose to camp on the site using a tent or use the site only during the day.

11. Any RV that occupies a site is not permanently affixed to the land. The RVs rests on gravel or on patio slabs and the wheels must remain on each RV. In addition, the hauling tongue, an attachment that is required to move the RV, must remain on the site. Some of the RVs are skirted and some have had decks added.

12. While the Park is open, the RVs are connected to the utilities (i.e., hydro, water and sewer). From November 1 to April 30 (the Off-Season), the RVs must be disconnected from the utilities. During the Off-Season, some members continue to come to the Park for a day or weekend, however, the member's RV cannot be reconnected to the utilities during the OffSeason.

13. During the Off-Season, the majority of the RVs, while unconnected from utilities, are left on their sites in the Park, however, a few RVs are removed during the Off-Season and are returned to a member's site the next year.

14. In accordance with the Agreement, a member may rent their site to a tenant, provided the member notifies the Association in writing. While the site is rented to a tenant, the tenant may use the facilities and services of the Association as if the tenant was a member and the member gives up their right to use the facilities and services of the Association during the rental period. However, a tenant does not have voting rights during the period of rental and the member is responsible for the conduct of the tenant and will be responsible for any damage to the Park, or other members' property, as a result of the tenant's conduct. Additionally, members are not relieved of their obligations under the Agreement by renting out their site.

15. In [yyyy], in addition to sites supplied to members, there were [...] seasonal tenants in the Park who were paying amounts on a monthly or annual basis to the Association for the use of a site in the Park.

16. The Association has not filed an election under section 211 in respect of the real property included in the Park.

Ruling Requested

You would like to know the GST/HST status of the Association's supply made under an Agreement.

Ruling Given

Based on the facts set out above, we rule that the Association's supply made under an Agreement is a supply of the exclusive right to use and occupy a designated site in the Park, which is a supply of real property made by way of lease or similar arrangement. We also rule that this supply is an exempt supply pursuant to section 25 of Part VI of Schedule V to the ETA.

We further rule that the annual amount payable to the Association by a member for site licence fees and the maintenance of common amenities is consideration for the exempt supply referred to above.

These rulings are subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by these rulings 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

Under the Agreement, the Association provides a member with the exclusive right to use and occupy a designated site in the Park, as well as the right to use, in common with others, the common areas in the Park for their lifetime subject to the limitations. For GST/HST purposes, the nature of the supply made by the Association under the Agreement is the exclusive right to use and occupy a designated site in the Park for the lifetime of the recipient (and their heirs or successors) which is a supply of a right to use real property made by way of lease or similar arrangement. A supply of a right to use real property by way of lease, licence or similar arrangement is a supply of real property in accordance with subsection 136(1).

Section 25 of Part VI of Schedule V to the ETA provides that a supply of real property made by a public service body (other than a financial institution, municipality or a government) is exempt unless one of the exceptions listed in that section applies. You have indicated that the Association is a non-profit organization for GST/HST purposes. As such, the Association is a public service body and section 25 applies to exempt the supply of real property made by the Association under the Agreement. None of the exclusions in that section apply in this case.

The amount payable upon entering the Agreement and the annual amounts payable to the Association by a member for site licence fees and the maintenance of common amenities is consideration for the exempt supply referred to above.

A "non-profit organization" is defined in subsection 123(1) of the ETA to be a "person (other than an individual, an estate, a trust, a charity, a public institution, a municipality or a government) that was organized and is operated solely for a purpose other than profit, no part of the income of which is payable to, or otherwise available for the personal benefit of, any proprietor, member or shareholder thereof unless the proprietor, member or shareholder is a club, a society or an association the primary purpose and function of which is the promotion of amateur athletics in Canada."

As indicated in GST/HST Policy Statement P-215, Determination of Whether an Entity is a "Non-Profit Organization" for Purpose of the Excise Tax Act ("ETA"), we look at the governing documents to determine whether an entity was organized solely for a purpose other than profit. Where the governing documents of the Association indicate that it was established solely for a purpose other than profit, it must be established whether the Association is operated solely for a purpose other than profit, no part of the income of which is payable to, or otherwise available for the personal benefit of, any member/shareholder.

The determination of whether an entity is operated solely for non-profit purposes is a question of fact at any given time. Therefore any determination of whether an entity is a non-profit organization for purposes of the ETA is specific to the time the determination is made.

If it is determined that the Association is not a non-profit organization at a particular time, any supply of real property made at that time under an Agreement would not be exempt under section 25 of Part VI of Schedule V to the ETA. If the Association is not a non-profit organization, the supply of real property may be subject to the GST/HST or may be exempt under another provision. If this is the case, you can contact us for additional information on the application of the GST/HST.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-8852. 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,
Hugh Dorward
Real Property Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate

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ETA 181.2

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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.

XXXXX
XXXXX
XXXXX
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5

Case Number: 83185

Business Number: XXXXX
Attention: XXXXX
July 2, 2010

Dear XXXXX:

Subject:

GST/HST RULING
Tax status of music cards

Thank you for your XXXXX of XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the sale of various music cards.

HST currently applies at the rate of 13% in Nova Scotia, New Brunswick, and Newfoundland and Labrador. Effective July 1, 2010, HST will apply at the rate of 15% in Nova Scotia, 13% in New Brunswick, Newfoundland and Labrador, and Ontario, and 12% in British Columbia. GST will continue to apply at the rate of 5% in the remaining provinces and territories.

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

Statement of Facts

We understand from your XXXXX and information from specific websites and contacts, the following facts:

1. XXXXX (the "retailer") sells to its customers music cards in various denominations (e.g. $10, $20) or for a specified number of, or period for, music downloads from the Internet (e.g. download 12 songs or unlimited downloading for a 3-month subscription). After purchasing a music card from the retailer the customer, subsequent to using the card, can download music from the specified website as per the information found on the music card. The characteristics of each card are provided below.

2. The music cards are sold to the retailer by XXXXX (the "vendor"). The vendor, a registrant, has not charged GST/HST for any music cards sold to the retailer.

3. The music cards sold by the retailer include the XXXXX (Unless specified, "Card" means any one of these cards and "Cards" means all the cards collectively.)

4. The Cards are plastic cards and on the back of the Cards is a serial number, a hidden PIN or activation code on the Cards or packaging and a bar code. The Cards either refer the bearer to the specified website for the full Terms and Conditions or make no reference to any terms and conditions: but in all cases the Cards refer the bearer to a specific website. In addition, certain websites provide a Card in an electronic format.

5. When supplied to a customer a Card is activated by the retailer swiping the Card through its point-of-sale terminal. The information is transmitted to the vendor for validation and authorization. Once approved, the Card is ready for use online as stated on the back of the Card.

6. The vendor tracks the inventories of the Cards and funds payable to the vendor from the various retailer locations. The vendor then sends a request to the retailer's financial institution, as pre-authorized by the retailer, to transfer the funds due to the vendor. The vendor also performs reconciliation with the retailer and the specified website owners for the Cards. The Card is now ready for use and the retailer's role has ended.

7. The Card may be transferred to another person by the customer. In this ruling, the person who uses the Card and downloads the music on the specified website is referred to as the "recipient".

XXXXX Card:

8. Subsequent to a customer purchasing XXXXX Card, the recipient is eligible for the same monetary value online for music downloads from the XXXXX website, XXXXX.

9. After the recipient enters the PIN or activation code, the value of the XXXXX Card is transferred to an online XXXXX account with the same monetary value as the stated value on the XXXXX Card; the Card itself cannot be used again for any future use. Each download exercised by the account holder (i.e. the recipient) reduces the balance in the online account. Any remaining value is held in the XXXXX account in favour of the recipient. Music downloads are available until the value of the account has been depleted by music downloads requiring payment.

10. The tax-included costs for each music download are deducted from the value in the XXXXX account until depleted.

11. The online XXXXX account, if not depleted, expires after XXXXX after the later of the date of issuance or last activity, regardless of any remaining value in the account.

12. According to the terms of agreement or privacy policies of the XXXXX website, the prices quoted clearly include the price of the music download including any taxes.

13. The Terms and Conditions are not on the XXXXX Card but on the website read, in part, XXXXX.

14. The terms of agreement or privacy policies state that the agreement is governed and construed in accordance with the laws of Canada and the Province of XXXXX.

XXXXX Card:

15. Similar to the XXXXX Card, after a customer purchases a XXXXX Card, the recipient is eligible for the same monetary value online for music downloads from the XXXXX website, XXXXX.

16. After the recipient enters the PIN or activation code, the value of the XXXXX Card is transferred to an online XXXXX account with the same monetary value as the stated value on the XXXXX Card; the Card itself cannot be used again for any future use. Each download exercised by the account holder (i.e. the recipient) reduces the balance in the online account. After downloading music, any remaining value is held in the XXXXX account in favour of the recipient. Music downloads are available until the value has been depleted by music downloads requiring payment.

17. The tax-included costs for each music download are deducted from the value in the XXXXX account until depleted.

18. The XXXXX account, if not depleted, expires after XXXXX of purchase of the XXXXX Card, regardless of any remaining value in the account.

19. According to the terms of agreement or privacy policies of the XXXXX website, the prices quoted clearly include the price of the music download including any taxes.

20. The Terms and Conditions are not on the XXXXX Card but, the bearer is required to open a XXXXX account and, from the website, read, in part, XXXXX.

21. The terms of agreement or privacy policies state that the agreement is governed and construed in accordance with the laws of Canada and the Province of XXXXX.

XXXXX Card:

22. After a customer purchases a XXXXX Card the recipient is XXXXX from XXXXX. In addition to a stated price, the length of time is stated on the front of the XXXXX Card.

23. After the recipient enters the PIN or activation code from the XXXXX Card, the XXXXX Card is redundant, cannot be used again for any future use and the recipient XXXXX website as stated on the XXXXX Card. After downloading music additional music downloading is still permitted by the recipient until the XXXXX.

24. The online XXXXX account will become invalid once the time XXXXX expires, regardless of the number or frequency of music downloads.

25. XXXXX has granted to the vendor the right to promote, market and supply XXXXX Cards and certain rights associated with the XXXXX Cards. The vendor, a registrant, is the first person to make any supply in Canada with respect to the XXXXX Cards.

26. The Terms and Conditions are not on the XXXXX Card but the bearer is required to open a XXXXX account where the following terms are stated:

• XXXXX.

27. The terms of agreement of the XXXXX website concerning taxes state, XXXXX The retailer has advised that XXXXX does not charge or collect any taxes, including GST/HST, when the XXXXX Cards are used-this fact was confirmed by XXXXX. Furthermore, XXXXX advises the retailer that it must collect such applicable taxes, including GST/HST, at the time of sale of the XXXXX Cards.

28. The terms of agreement or privacy policies of the XXXXX website state that the agreement is governed by laws outside Canada; specifically they are governed by the laws of XXXXX.

XXXXX Card:

29. After a customer purchases a XXXXX Card the recipient is eligible for the number of music downloads indicated on the XXXXX Card from the XXXXX website, XXXXX.

30. After the recipient enters the PIN or activation code from the XXXXX Card, the XXXXX Card is redundant, cannot be used again for any future use and the recipient now has online access to the limited number of downloads as stated on the XXXXX Card.

31. The online XXXXX access expires after the earlier of the maximum number of downloads XXXXX has occurred or XXXXX after validation of the XXXXX Card.

32. XXXXX has granted to the vendor the right to promote, market and supply XXXXX Cards and certain rights associated with the XXXXX Cards. The vendor, a registrant, is the first person to make any supply in Canada with respect to the XXXXX Cards.

33. The Terms and Conditions are not on the XXXXX-Card but, the bearer is required to open a XXXXX account where the following terms are stated:

• XXXXX.

34. According to the terms of agreement of the XXXXX website concerning taxes, XXXXX The retailer has advised that XXXXX does not charge or collect any taxes, including GST/HST, when the XXXXX Cards are used-this fact was confirmed by XXXXX. Furthermore, XXXXX advises the retailer that it must collect such applicable taxes, including GST/HST, at the time of sale of the XXXXX Cards.

35. The terms of agreement or privacy policies of the XXXXX website state that the agreement is governed by laws outside Canada; specifically they are governed by the laws of the XXXXX.

Ruling Requested

You would like to know the tax status of a supply of:

1. an XXXXX Music Card (sometimes called the XXXXX Gift Card; referred to as the "XXXXX Card");
2. a XXXXX Music Card (referred to as the "XXXXX Card");
3. a XXXXX Music Subscription Gift Card (referred to as the "XXXXX Card"); and
4. a XXXXX Music Download Card (referred to as the "XXXXX Card").

Ruling Given

This ruling applies only to the physical form of the Cards sold by the retailer. Based on the facts set out above, we rule that the supply of:

1. an XXXXX Music Card (sometimes called the XXXXX Gift Card; referred to as the "XXXXX Card") as described above is a gift certificate for GST/HST purposes subject to section 181.2 and, accordingly, is not subject to GST/HST at the time of sale;
2. a XXXXX Music Card (referred to as the "XXXXX Card") as described above is a gift certificate for GST/HST purposes subject to section 181.2 and, accordingly, is not subject to GST/HST at the time of sale;
3. a XXXXX Gift Card (referred to as the "XXXXX Card") as described above is a gift certificate for GST/HST purposes subject to section 181.2 and, accordingly, is not subject to GST/HST at the time of sale; and
4. a XXXXX Card (referred to as the "XXXXX Card") as described above is a gift certificate for GST/HST purposes subject to section 181.2 and, accordingly, is not subject to GST/HST at the time of sale.

Explanation

For purposes of section 181.2, gift certificates may include plastic gift cards that can be read electronically that are issued by a vendor. To be a gift certificate, the gift card must entitle the bearer to a particular supply of goods or services or to a reduction of the total amount of money payable (i.e. consideration plus applicable taxes including GST/HST) for any supply of goods or services supplied by the issuing vendor. Furthermore, a gift card must have the characteristics of a gift certificate as described in GST/HST Policy Statement P-202, Gift Certificates, to be considered a gift certificate within section 181.2; in other words, for a gift card to be considered a gift certificate, the gift card:

a) must have a value or be for a particular supply of property or services;
b) be redeemable for the purchase of property or services;
c) consideration must have been given; and
d) have no intrinsic value.

In the situation presented, the retailer has acquired the Cards for supply from the vendor. The retailer sells the Cards for the amount printed on the Cards to its customers. The Cards may be kept by the customer or transferred to another person before accessing the specific website referred to on the Cards.

Music cards, in many cases, have similar characteristics as gift certificates that fall within the provision of section 181.2. The XXXXX Cards, the XXXXX Cards, the XXXXX Cards, and the XXXXX Cards are gift cards that are gift certificates within section 181.2.

XXXXX Cards and XXXXX Cards have a stated value. Through the appropriate website, the values of the XXXXX Cards and XXXXX Cards are transferred to online accounts with the same values as the stated values. XXXXX Cards and XXXXX Cards once processed and activated by the vendor through the retailer and after the recipient enters the PIN or activation code are redundant and the recipients then access their online accounts. The recipients' accounts are subsequently used for the purchase of property, in this case, music. Therefore, XXXXX Cards and XXXXX Cards are gift certificates for GST/HST purposes subject to section 181.2 as XXXXX Cards and XXXXX Cards have value, are redeemed for the purchase of property or services, consideration has been paid, and they have no intrinsic value.

In the case of XXXXX Cards and XXXXX Cards, the terms of agreement state that any applicable taxes and provincial sales taxes are included in the total price charged to a recipient at the time of downloading music. When downloading music, the value of the recipient's account is reduced by the consideration and taxes. Therefore, GST/HST is charged to the recipient's account at the time XXXXX or XXXXX, as the case may be, makes a supply of the music to the recipient and deducts the tax-included costs from the online account.

However, in the case of XXXXX Cards and XXXXX Cards, XXXXX handles the downloading of music differently. XXXXX Cards and XXXXX Cards once activated provide a period of unlimited access to music downloads or a specified number of downloads respectively. It is also noted that XXXXX is a non-resident and, suffice it to say, XXXXX is not registered for GST/HST purposes.

After entering the PIN or activation code from the XXXXX Card, the recipient has access to a XXXXX website account providing limitless music downloading for the specific time stated on the XXXXX Card. Unlike XXXXX Cards and XXXXX Cards, the XXXXX Cards once activated provide the recipient with a subscription of unlimited music and do not result in the opening or crediting of a money account. XXXXX Cards provide, in general terms, a subscription comprised of the right to unlimited music downloads available through XXXXX website accounts (similar to signing or logging on to a company computer system). XXXXX Cards are exchanged for a supply of a period of unlimited property. XXXXX Cards is for the supply of a subscription and is redeemable for the subscription. Accordingly, XXXXX Cards are gift certificates for GST/HST purposes subject to section 181.2 as XXXXX Cards are for a particular supply of property (in this case, a selection of music), are redeemed for the purchase of property, consideration has been paid, and they have no intrinsic value.

In the case of the XXXXX Card the purchaser may keep the card or transfer it to another person. Upon redemption of the XXXXX Card, by entering the activation code on the XXXXX website, the XXXXX Card is exchanged for a specific number of music downloads. Although GST/HST does not appear to be collected at the time of purchasing the XXXXX Card or downloading music, XXXXX, if a registrant, would be required to collect and account for the GST/HST. If XXXXX is not a registrant, the recipient is liable to self-remit for the applicable GST/HST on the value of consideration of the XXXXX Card at the time it is redeemed since the recipient has acquired the property for use in Canada but XXXXX is considered to make its supply outside Canada.

The PIN or activation code on the XXXXX Card provides access to the XXXXX website that, within XXXXX after validation, permits the number of music downloads stated on the XXXXX Card. Unlike XXXXX Cards, XXXXX Cards and the XXXXX Cards, XXXXX Cards are neither exchanged for an online money account nor a subscription. XXXXX Cards directly provide, in general terms, a specific number of rights (called "credits") to music downloads available through the XXXXX website.

Therefore, XXXXX Cards are considered gift certificates within section 181.2: The XXXXX Cards have value; they can be redeemed for the purchase of any property (in this case, a selection of music); consideration has been given for the XXXXX Cards; and the XXXXX Cards have no intrinsic value. Furthermore, it is also transferable. Accordingly, the supply of XXXXX Cards is not subject to GST/HST at the time of sale to or from the retailer.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-952-8811 or Ken Syer, Manager, at 613-952-9219.

Yours truly,
William Parker
Specialty Tax Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate

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XXXXX
XXXXX
XXXXX
XXXXX
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5

Case Number: 122709
Attention: XXXXX XXXXX

Dear XXXXX:

Subject:

GST/HST RULING
XXXXX

Thank you for your XXXXX of 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) unless otherwise specified.

Statement of Facts

Our understanding of the facts is as follows:

1. The Product comes in the form of thin sticks that are approximately XXXXX long and XXXXX in diameter and are brittle and crispy in texture.

2. The Product is sold in cardboard boxes containing XXXXX packages of sticks each weighing XXXXX grams, for a total of XXXXX grams.

3. The ingredients of the Product are: XXXXX.

4. Labelling on the Product cartons describe the Product as "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.

Explanation

Generally, every recipient of a taxable supply made in Canada shall pay tax calculated at the rate of 5% on the value of the consideration for the supply (13% in the participating provinces of Nova Scotia, New Brunswick, and Newfoundland and Labrador) unless the supply is zero-rated. The tax rate in respect of a zero-rated supply is 0%. A zero-rated supply is a supply that is included in Schedule VI.

Under Part III of Schedule VI, certain supplies of basic groceries are zero-rated. Section 1 of Part III of Schedule VI, zero-rates supplies of food or beverages for human consumption, including sweetening agents, seasonings and other ingredients mixed with or used in the preparation of such food or beverages, other than supplies included in paragraphs (a) to (r) of that section.

The terms "food" and "beverage" are not defined in the ETA. However, the Canada Revenue Agency considers a product to be a food or beverage if an average consumer would recognize and purchase the product as such in the ordinary course of buying basic groceries. Consumers usually consume food and beverages to allay hunger or quench thirst, or for enjoyment rather than for therapeutic or preventative effects.

As none of the exclusions under section 1 of Part III of Schedule VI apply, supplies of the Product are zero-rated.

The Government of Ontario and the Government of British Columbia have each proposed a harmonized sales tax (HST) which would come into effect on July 1, 2010. The HST rate in Ontario will be 13% of which 5% will represent the federal part and 8% the provincial part. The Government of British Columbia has proposed that the HST rate would be 12% of which 5% would represent the federal part and 7% the provincial part.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-952-9585. 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,
Ben Boboski
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

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XXXXX
XXXXX
XXXXX
XXXXX
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5

Case Number: 122786

Business Number: XXXXX

June 28, 2010

Dear XXXXX:

Subject:

GST/HST RULING
XXXXX

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

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

Statement of Facts

Our understanding of the facts is as follows:

1. You are requesting a ruling on behalf of your client XXXXX, which is a company located in XXXXX, that imports the Products into Canada. XXXXX has been assigned Business Number XXXXX.

2. In XXXXX you requested a ruling on the Products from the XXXXX GST/HST Rulings Centre. You received the ruling in XXXXX that supplies of the Products are subject to GST at 5% as they are excluded from zero-rating by paragraph 1(h) of Part III of Schedule VI. The letter went on to state that supplies of the Products may also be excluded under paragraphs 1(e) or (l) and explained these provisions.

3. The ruling provided in XXXXX was based upon XXXXX sample Products, ingredients and packaging. The Products now have Canadian packaging and you are therefore requesting a ruling on the Canadian samples and packaging.

4. You state in your submission that prior to XXXXX importing the Products into Canada, Canadian retailers imported the Products into Canada with the XXXXX packaging and sold the Products as meal replacement bars. XXXXX.

5. You state, that since the above ruling was received, XXXXX has been sold in Canada in the new Canadian packaging. The Products are designed to be meal replacements and continue to be marketed this way to retailers.

6. You initially provided the XXXXX and the Canadian Product samples and packaging for XXXXX flavours and in a XXXXX submission included a further XXXXX Canadian samples. A complete listing of the Products follows, using the information from the Canadian packaging of the Products.

7. The packaging is made of a XXXXX. All labels are XXXXX. The front of the packaging for all Products contains the name of the Product and the wording XXXXX. XXXXX of the Products contain the additional wording XXXXX. The back of each package contains the Nutrition Facts for the specific Product and XXXXX. All labelling is in both English and French.

8. The ingredients for XXXXX (Product A) are XXXXX.

9. The ingredients for XXXXX (Product B) are XXXXX.

10. The ingredients for XXXXX (Product C) are XXXXX.

11. The ingredients for XXXXX (Product D) are XXXXX.

12. The ingredients for XXXXX (Product E) are XXXXX.

13. The ingredients for XXXXX (Product F) are XXXXX.

14. The ingredients for XXXXX (Product G) are XXXXX.

15. The ingredients for XXXXX (Product H) are XXXXX.

16. The ingredients for XXXXX (Product I) are XXXXX.

17. The ingredients for XXXXX (Product J) are XXXXX.

18. The Nutrition Facts per 1 bar for each Product are on the back of each package. The nutrition amounts for all of the Products are similar and following is the range indicating the XXXXX and XXXXX amounts for the Products:

XXXXX
XXXXX
XXXXX

19. With your submission, you also included a promotional poster for the Products which shows a picture of one of the Products XXXXX and contains the following wording:

XXXXX
XXXXX
XXXXX

20. The submission also included a marketing page that showed awards that the Products have won and XXXXX magazines which have featured the Products. XXXXX:

XXXXX
XXXXX

21. With your second submission you included copies of XXXXX ads for the Products. XXXXX:

• XXXXX.

22. The web site for the Products (www. theprobar.com) was reviewed. This site had a brief description of each of the Product flavours. A description of those not included in bullet 21 above is as follows:

• XXXXX.

23. There are XXXXX different XXXXX product types listed on the web site as follows:

• XXXXX.

24. The individual Product labelling for each variety does not state that it is a "meal replacement" or "nutritional supplement".

25. The Products are not sold primarily as breakfast cereals.

26. The sample Products were opened and tasted. All products appeared somewhat similar to a traditional granola bar, with the individual ingredients identifiable XXXXX. XXXXX.

Ruling Requested

You would like to know whether supplies of the Products are zero-rated under section 1 of Part III of Schedule VI as meal replacement products.

Ruling Given

Based on the facts set out above, we rule that supplies of the Products are taxable at 5% GST or 13% HST pursuant to section 165.

Explanation

Generally, every recipient of a taxable supply made in Canada shall pay tax calculated at the rate of 5% on the value of the consideration for the supply (13% in the participating provinces of Nova Scotia, New Brunswick, and Newfoundland and Labrador) unless the supply is zero-rated, pursuant to subsection 165(3). The tax rate in respect of a zero-rated supply that is included in Schedule VI is 0%.

Products that qualify and are labeled as "nutritional supplements" or "meal replacements" pursuant to the Food and Drugs Act and Regulations are considered food or beverages for purposes of section 1 of Part III of Schedule VI. Moreover, they are not subject to the exclusions under paragraphs 1(a) to 1(r) of Part III and, therefore, are zero-rated. In addition, if a product is represented as being a meal replacement or nutritional supplement as evidenced by the label, the Canada Revenue Agency will accept this information as fact in determining its tax status.

The Food and Drug Regulations set out the conditions related to energy and essential nutrients that must be met for products to qualify as nutritional supplements and meal replacements. The products must provide a minimum calorie content, meet specific protein and fat guidelines and they must contain the quantities of vitamins and minerals as listed in the Regulations for nutritional supplements or meal replacements, within certain minimal and maximal ranges.

Although some of the promotional material you submitted refers to the Products as meal replacements, the Products' labels themselves do not advertise them as either meal replacements or nutritional supplements. This indicates that the Products do not meet the requirements, outlined in the Food and Drug Regulations, to be considered either meal replacements or nutritional supplements.

Under paragraph 1(h) of Part III of Schedule VI, the following products are excluded from
zero-rating:

"granola products, but not including any product that is sold primarily as a breakfast cereal."

Granola products may be sold loose or pressed into bars. Granola bars generally have a mixture of cereals (e.g., rolled oats, rice or other whole grains) and honey and/or syrup as the main ingredients, and may include nuts and fruit. The ingredients in granola bars are not processed to a great extent, and the distinct character of each ingredient is retained. Granola bars may have a chocolate or sweetened coating.

Based upon the Products' composition, a number of the flavours are considered to be a granola product. As the Products are considered to be a granola product that is not sold primarily as a breakfast cereal, they fall under the exclusion pursuant to paragraph 1(h) of Part III of Schedule VI, and are taxable at 5% GST or 13% HST, as applicable. The specific Products which will be excluded from zero-rating under this paragraph are:

• Product A - XXXXX
• Product E - XXXXX
• Product G - XXXXX
• Product H - XXXXX
• Product I - XXXXX

Paragraph 1(l) of Part III of Schedule VI excludes supplies of "fruit bars, rolls or drops or similar fruit-based snack foods" from zero-rating. GST/HST Info Sheet GI-020, Bars, states that fruit bars include bars that are 100% fruit such as fruit leathers as well as bars that have fruit as a significant ingredient. Fruit bars may include fruit in combination with vegetables, grains, nuts or seeds. A bar that has fruit flavouring may also be considered to fall within this category.

As a number of the Products have fruit as a significant ingredient and the marketing of the Products emphasises the fruit content, these Products will be excluded from zero-rating by paragraph 1(l) of Part III of Schedule VI. The specific Products which will be excluded by this paragraph are:

• Product B - XXXXX
• Product C - XXXXX
• Product D - XXXXX
• Product F - XXXXX
• Project J - XXXXX

As supplies of the Products are excluded by either paragraph 1(h) or 1(l) of Part III of Schedule VI, supplies of the Products are taxable at 5% GST or 13% HST, as applicable.

Yours truly,
Nancy Jardine
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

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XXXXX
XXXXX
XXXXX
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5

Case Number: 123488

Business Number: XXXXX
Attention: XXXXX
October 26, 2010

Dear XXXXX

Subject:

GST/HST RULING
Custom grazing

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

HST applies at the rate of 15% in Nova Scotia, 13% in Ontario, New Brunswick and Newfoundland and Labrador, and 12% in British Columbia. GST applies at the rate of 5% in the remaining provinces and territories.

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

Statement of Facts

Our understanding of the facts is as follows:

1. XXXXX provides custom grazing services and is registered for GST purposes with Business Number XXXXX

2. XXXXX.

3. XXXXX.

4. XXXXX.

5. XXXXX.

6. XXXXX.

7. XXXXX.

8. XXXXX.

9. XXXXX.

10. XXXXX invoices were supplied for our review. The invoices have XXXXX columns:

• XXXXX
• XXXXX
• XXXXX

XXXXX.

11. XXXXX.

Ruling Requested

You would like to know if the operations of XXXXX are a feedlot operation which falls under section 164.1 or if the entire amount of the grazing fee is subject to GST.

Ruling Given

Based on the facts set out above, we rule that XXXXX is not operating a feedlot for the purposes of section 164.1. XXXXX is providing custom grazing services which are subject to GST pursuant to subsection 165(1).

Explanation

As you are aware, there is specific legislation in regards to feedlot operations. Section 164.1, in combination with section 2.1 of Part IV of Schedule VI, allows that a portion (up to 90%) of a feedlot's total charge for taxable services that is reasonably "attributable to feed", be zero-rated.

In particular, pursuant to subsection 164.1(2), where, in the course of operating a feedlot that is a farming business within the meaning of the Income Tax Act, a person makes a supply of a service and the consideration for the supply (in this subsection referred to as the "total charge") includes a particular amount that is identified in the invoice or agreement in writing for the supply as being attributable to feed,
(a) the provision of the feed shall be deemed to be a supply separate from the supply of the service and not to be incidental to the provision of any other property or service;
(b) the portion, not exceeding 90%, of the total charge that is reasonably attributable to the feed and is included in the particular amount shall be deemed to be the consideration for the supply of the feed; and
(c) the difference between the total charge and the consideration for the supply of the feed shall be deemed to be the consideration for the supply of the service.

In order to qualify for the zero-rating of the feed provided to its customers under section 164.1, the business activities of XXXXX must meet three conditions:

1. it must be a farming business for income tax purposes;
2. it must be a feedlot; and
3. the feed provided must meet the definition of feed for this section.

Although XXXXX is a farming business for purposes of the Income Tax Act, it does not meet the two other conditions, as explained below.

For GST/HST purposes, a feedlot is considered to be a confined space (such as a pen, corral or a barn) where livestock are fed a concentrated diet for the purposes of producing a marketable animal. Where the intent of the boarding is for a different purpose than producing a marketable animal, and, where livestock are free to roam on pastureland and graze, the supply is not considered a feedlot operation for GST/HST purposes.

XXXXX is not a feedlot for GST/HST purposes for the following reasons:

• Although the animals are in a restricted area, they are not contained in pens and are free to roam.

• The animals are not fed a concentrated diet with the aim of producing a marketable animal.

• The animals are fed grass by grazing.

• After leaving XXXXX, the cattle go to a feedlot (finishing operation) prior to slaughter.

In order to be a feedlot, the feed supplied must meet the definition of feed for purposes of section 164.1, which is as follows:

a) grain, seed or fodder that is described in section 2 of Part IV of Schedule VI and used as feed for farm livestock that is ordinarily raised or kept to produce, or to be used as, food for human consumption or to produce wool;
b) feed that is a complete feed, supplement, macro-premix, micro-premix or mineral feed (other than a trace mineral salt feed), the supply of which in bulk quantities of at least 20 kg would be a zero-rated supply included in Part IV of Schedule VI, and
c) by-products of the food processing industry and plant or animal products, the supply of which in bulk quantities of at least 20 kg would be a zero-rated supply included in Part IV of Schedule VI.

Section 2 of Part IV of Schedule VI, zero-rates a supply of:

(a) grains or seeds in their natural state, treated for seeding purposes or irradiated for storage purposes,
(b) hay or silage, or
(c) other fodder crops,

that are ordinarily used as, or to produce, food for human consumption or feed for farm livestock or poultry, when supplied in a quantity that is larger than the quantity that is ordinarily sold or offered for sale to consumers, but not including grains, seeds or mixtures thereof that are packaged, prepared or sold for use as feed for wild birds or as pet food.

The above definitions of feed for purposes of section 164.1 and for purposes of section 2 of Part IV of Schedule VI do not include standing grass. Therefore, when standing grass is provided for nourishment to animals, it will not meet the definition of feed for purposes of operating a feedlot.

Therefore, the provision of XXXXX grazing system is not a feedlot operation and standing grass does not meet the definition of feed for feedlot purposes. The services provided by XXXXX are thus not applicable to the legislation regarding feedlots. The custom grazing services supplied by XXXXX are subject to GST calculated on the total charge for the supply, under the provisions of subsection 165(1).

Yours truly,
Nancy Jardine
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
XXXXX
XXXXX
XXXXX

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XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
Excise and GST/HST Rulings Directorate

14th Floor, 320 Queen St.

Ottawa, ON K1A 0L5
Attention: XXXXX
Case Number: 12486

Business Number: XXXXX

July 21, 2010

Dear XXXXX

Subject:

GST/HST RULING
XXXXX Request for GST Ruling on Gift Certificate Product

Thank you for your letter of XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the supply of a voucher that will be marketed across Canada by XXXXX (the Registrant) XXXXX under the name XXXXX.

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

Statement of Facts

Our understanding of the facts is as follows:

1. The Registrant is incorporated under the laws of XXXXX to market XXXXX products in Canada.

2. The Registrant's vouchers will be sold to consumers XXXXX through retailers or by the Registrant directly through the internet.

3. The Registrant's products are in the form of vouchers that are redeemable by a purchaser (or any person to whom the purchaser gives the voucher) XXXXX.

4. The XXXXX vouchers do not bear a clear stated monetary value on the face of the product but are sold at predetermined prices.

5. XXXXX vouchers will be sold for specific categories of leisure activities XXXXX.

6. For each category of voucher, the Registrant arranges with third party service suppliers (the "Supplier") to provide the specific type of supply. The voucher is redeemable by the voucher holder for the specific type of service and no additional amount is payable for the service. Each voucher can be redeemed at more than one supplier.

7. Each voucher will be sold for a specified price. The price will vary depending on the category of leisure activity that a particular voucher is redeemable for. The voucher price is calculated to equate to the tax-inclusive price of the particular leisure activity when supplied by the Supplier. The tax disclosure requirements found in section 223 of the ETA will be met. The Supplier will then account for the GST amount in its return for the applicable reporting period.

8. The Registrant markets the voucher and administers the operation of the program. When a person buys a voucher from a retailer for the specified value of the particular voucher, e.g., the $100.00 activity card, the retailer activates the card and is paid a commission out of the sale proceeds plus applicable GST. The Registrant receives the balance of the sale proceeds and claims an input tax credit for the GST applicable to the retailer commission. When the voucher is redeemed by a voucher holder with a Supplier, the Supplier then tenders the voucher to the Registrant. In the example given above, the Registrant then pays the $100.00 to the Supplier. Concurrently, the Registrant charges the Supplier a commission for its services plus applicable GST/HST.

9. Under the agreement entered into with the Suppliers, the Registrant provides marketing and administrative services only. The Registrant does not act as agent for the Suppliers.

Ruling Requested

You would like a ruling confirming that the XXXXX voucher redeemable for specific services will be treated as a gift certificates under section 181.2 of the ETA and, accordingly, will not be subject to GST/HST at the time of sale to purchasers regardless of the sales channel used (retailer or directly through the internet).

Ruling Given

Based on the facts set out above, we rule that the sale of the XXXXX vouchers is not subject to GST/HST as they are considered to be gift certificates for purposes of section 181.2 of the ETA.

Explanation

Section 181.2 provides that the issuance or sale of a gift certificate is deemed not to be a supply for GST/HST purposes. Consequently, GST/HST is not payable on the consideration paid for the gift certificate. This section further provides that when the recipient redeems the gift certificate it is to be treated as money. That is, where the gift certificate is redeemed for a taxable supply of property or service (other than a zero-rated supply), GST/HST is applicable on the total consideration payable to the Supplier XXXXX.

Although, section 181.2 deems the sale of the gift certificate not to be a supply for GST/HST purposes, a person who makes that supply is still considered to be engaged in a commercial activity. Consequently, if registered for GST/HST purposes the person is entitled to claim input tax credits for GST/HST paid on its expenses related to this commercial activity provided the requirements under section 169 of the ETA are met.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613 952 9220. 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,
Larry Springstead
Industry Sector Specialist
Specialty Tax Unit
Excise and GST/HST Rulings Directorate

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XXXXX
XXXXX
XXXXX
XXXXX
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5

Case Number: 124915
Attention: XXXXX XXXXX
August 6, 2010

Dear XXXXX:

Subject:

GST/HST RULING
Recapture of Input Tax Credits and Para-municipal Organizations

Thank you for your letter of XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to para-municipal organizations.

HST applies at the rate of 15% in Nova Scotia, 13% in New Brunswick, Newfoundland and Labrador, and Ontario, and 12% in British Columbia. GST applies at the rate of 5% in the remaining provinces and territories.

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

Ruling Requested

You would like to know if a para-municipal organization, such as XXXXX is deemed to be a public service body and therefore excluded from the definition of large business for purposes of the recapture of input tax credits (RITC) requirement in British Columbia and Ontario.

Ruling Given

We rule that there is no provision in the ETA that 'deems' a para-municipal organization to be a public service body for GST/HST purposes in general or for purposes of the definition of "large business" found in subsection 236.01(1).

Explanation

Effective July 1, 2010, with the introduction of the HST in Ontario and British Columbia, a person that is a large business is required to repay or 'recapture' the portion of any available input tax credits that is attributable to the provincial part of the HST in respect of a specified property or service that is acquired, or brought into one of these provinces, by the large business for consumption or use by that business in those provinces.

For purposes of the RITC requirement, a "large business" is defined in subsection 236.01(1) to mean a prescribed person or a person of a prescribed class.

In general terms, the New Harmonized Value-Added Tax System Regulations No. 2 (Regulations) provide that, for purposes of the definition of large business in subsection 236.01(1), a person is a prescribed person for a recapture period if the person is a GST/HST registrant and:

• the person's 'recapture input tax credit threshold amount', determined in accordance with subsection 27(3) of the Regulations, exceeds $10 million; or
• the person is one of the following financial institutions iFootnote 1, or a person that is related to one of the following financial institutions: a bank; a corporation that is licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada the business of offering to the public its services as a trustee; a credit union; an insurer or any other person whose principal business is providing insurance under insurance policies; a segregated fund of an insurer; an investment plan or the Canada Deposit Insurance Corporation.

However, pursuant to subsection 27(13) of the Regulations, a person is not a prescribed person for purposes of the definition of "large business" in subsection 236.01(1) at any time if, at that time, the person is a public service body. In other words, a public service body is not considered to be a large business for purposes of the RITC requirement.

The term "public service body" is defined in subsection 123(1) to mean "a non-profit organization, a charity, a municipality, a school authority, a hospital authority, a public college or a university".

The definition of public service body in subsection 123(1) does not list a para-municipal organization; therefore, in order for a para-municipal organization to be a public service body, the organization must be a "non-profit organization", a "charity", a "municipality", a "school authority", a "hospital authority", a "public college" or a "university", as each of these terms are defined in subsection 123(1). This is notwithstanding the fact that "para-municipal organization" is separately defined in section 1 of Part VI of Schedule V for purposes of Part VI of Schedule V.

Subsection 123(1) defines a "municipality" to mean:

(a) an incorporated city, town, village, metropolitan authority, township, district, county or rural municipality or other incorporated municipal body however designated, and
(b) such other local authority as the Minister may determine to be a municipality for the purposes of this Part;

Generally, a para-municipal organization must be determined to be a municipality by the Minister of National Revenue under paragraph (b) of the definition of "municipality" in subsection 123(1) in order to be a municipality and therefore a public service body. A para-municipal organization may also be a public service body if it is a charity or a non-profit organization.

It should also be noted that a person designated by the Minister of National Revenue to be a municipality in respect of activities specified in the designation is a municipality only for purposes of section 259 or, in certain circumstances, a specific exempting provision in Part VI of Schedule V. In such cases, the person is not a "municipality" as defined in subsection 123(1) and therefore is not a municipality for purposes of the definition of "public service body" in subsection 123(1). Accordingly, a person that is designated by the Minister of National Revenue to be a municipality in respect of activities specified in the designation is not a public service body, unless that person is otherwise included in the definition of "public service body" in subsection 123(1).

There is no provision in the ETA that 'deems' a para-municipal organization to be a public service body for purposes of the GST/HST in general or for purposes of the definition of "large business" in subsection 236.01(1). Therefore, a para-municipal organization, such as XXXXX, that does not otherwise meet the definition of "public service body" in subsection 123(1), can be a large business for purposes of the RITC requirement in British Columbia and Ontario.

Additional information concerning the application of the RITC requirement can be found in GST/HST Technical Information Bulletin B-104 Harmonized Sales Tax - Temporary Recapture of Input Tax Credits in Ontario and British Columbia (available on the CRA website).

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 954-4289. 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,
Brian Olsen, CGA
Municipalities and Health Care Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate

i 1. We note that, in accordance with subsection 27(13) of the Regulations, a "selected listed financial institution" is not a prescribed person for purposes of the definition of "large business" in subsection 236.01(1).

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XXXXX
XXXXX
XXXXX
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5

Case Number: 124920

Business Number: XXXXX
Attention: XXXXX XXXXX
September 23, 2010

Dear XXXXX:

Subject:

GST/HST RULING
Section 2 of Part V of Schedule VI

Thank you for your XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to supplies made by XXXXX.

Effective July 1, 2010, HST applies at the rate of 15% in Nova Scotia, 13% in New Brunswick, Newfoundland and Labrador, and Ontario, and 12% in British Columbia. The GST continues to apply at the rate of 5% in the remaining provinces and territories.

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

Statement of Facts

We understand the following:

1. XXXXX is a Canadian corporation based in XXXXX and is registered for purposes of the GST/HST XXXXX.

2. XXXXX packages and supplies local land based tours ("shore excursions") to cruise ships that stop in XXXXX. The operators of the cruise ships (i.e., the cruise lines) are non-residents of Canada that are not registered for purposes of the GST/HST.

3. The shore excursions include transportation to and from local events and attractions, admission to the events and attractions and the services of a tour guide.

4. The cruise lines acquire the land based tours for re-supply to their passengers.

5. Passengers may reserve a shore excursion at the same time a cruise is booked or at any time afterwards up until the time of the excursion. Passengers pay the cruise lines for the shore excursions.

6. XXXXX invoices and receives payment from the cruise lines for the supply of the shore excursions.

Ruling Requested

In a letter dated XXXXX from Excise and GST/HST Rulings - XXXXX, we concluded based on a similar factual scenario that the supply of a tour excursion made to a cruise line was a supply of a tour package that did not include any non-taxable portion that would be zero-rated under Part VI of Schedule VI.

In your submission, you state that you "XXXXX." Further in your letter you state "XXXXX."

However, you ask that we reconsider the zero-rates status of the supply by XXXXX on the grounds that section 2 of Part V of Schedule VI would zero-rate the supply of the tour packages to the cruise lines.

Ruling Given

Based on the facts set out above, we rule that the supply of the tour packages (i.e., shore excursions) by XXXXX to the non-resident non-registrant cruise lines is not a zero-rated supply under section 2 of Part V of Schedule VI.

Explanation
Section 2 of Part V of Schedule VI zero-rates a supply of property or service made to a non-resident person who is not registered for purposes of the GST/HST, where the property or service is acquired by the person for consumption, use or supply by the person
(a) where the person carries on a business of transporting passenger or property to or from Canada or between places outside of Canada by ship, aircraft or railway, in the course of so transporting passengers or property. ...

The CRA considers that in order for a supply of property or service to be zero-rated under this provision the person must be transporting passengers or property to or from Canada or between places outside of Canada at the time the person consumes, uses or supplies the property or service; and consumption, use, or supply of the property or service by the person must be connected with or arise from the service of transporting the passengers or property.

Section 2 of Part V of Schedule VI does not zero-rate a supply of a tour package or any elements therein, as described in the aforementioned facts, when made to a cruise line. Neither the tour package nor its composite elements have a direct relationship with, or arise from, the transportation of passengers to or from Canada or between places outside of Canada.

The tour packages (i.e., shore excursions) are acquired by cruise lines for resupply to their passengers. While shore excursions may serve to allow the cruise lines to offer an additional entertainment product to passengers, and may also provide an additional source of revenue for the cruise line, as you have indicated, it is our position that regardless of whether the excursions are purchased in advanced or not, the excursions do not have a direct relationship with, nor do they arise from (i.e., are not required for) the transportation of passengers to or from Canada, or between places outside of Canada. Similarly, the elements of the tour package (see description in Fact #3) if considered separately, would not be zero-rated under section 2 as they too do not have a direct relationship with, or arise from transporting passengers to or from Canada, or between places outside of Canada.

We would also like to confirm that our position regarding the application of section 2 of Part V of Schedule VI with respect to the situation described in example (c) of obsolete GST/HST Policy Statement P-076 Meaning of the words "in the course of so transporting passengers or property" continues to be that section 2 of Part V of Schedule VI would not zero-rate the supplies described in the example.

In addition to the above, we would like to confirm that it is our position that section 2 of Part V of Schedule VI does not zero-rate a supply of the part of a tour package that is the taxable portion of the package.

The supply of a part of a tour package may be zero-rated under section 1 of Part VI of Schedule VI which zero-rates the part of a tour package that is not the taxable portion of the package. By definition, the non-taxable portion of a tour package means all property or services included in the tour package and in respect of which tax under Division II would not be payable if the property or service were supplied otherwise than as part of a tour package. If, as in this case, a tour package consists of only taxable portions (as we all agree), then section 1 of Part VI does not apply to zero-rate any part of that tour package.

If you require clarification with respect to any of the issues discussed in this letter, please call me at (613) 957-7841. 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,
Dwayne Moore
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
XXXXX

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XXXXX
XXXXX
XXXXX
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5

Case Number: 125336

Business Number: XXXXX
Attention: XXXXX XXXXX
August 27, 2010

Dear XXXXX:

Subject:

GST/HST RULING
Application of GST/HST to services provided for a finder's fee

Thank you for your letter of XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to services provided for a finder's fee. We apologize for the delay in responding to your enquiry.

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

Statement of Facts

We understand the facts to be as follows based on the copy of a standard agreement you provided, information contained in your letter, our records and our telephone conversation of XXXXX.

1. XXXXX is a corporation incorporated under the laws of XXXXX and is registered for GST/HST purposes.

2. XXXXX works with clients that are publicly traded companies.

3. Once a client is signed up with XXXXX, XXXXX will market the financing to its contacts. XXXXX sets up meetings and conference calls with potential investors and the client and follows up with investors to see if they like the deal and if they want to invest in the client.

4. You provided a standard agreement that XXXXX enters into with a client (the Agreement).

5. Based on XXXXX of the Agreement, the scope of work is described as identifying XXXXX (collectively the "Investors" or "Investor") to invest in the client and introducing the client to the Investors.

6. Based on XXXXX of the Agreement the client shall pay XXXXX the following fees in consideration for the services described in 5 above:

• A finder's fee in cash equal to XXXXX;
• A finder's fee in cash equal to XXXXX; and
• A one-time XXXXX fee of $XXXXX (plus GST) upon the signing of the Agreement.

7. XXXXX.

8. As stated in your letter, in some cases XXXXX may bring in a stock broker that would place some of the financing and XXXXX would share the finder's fee with the stock broker.

Ruling Requested

You would like to know whether the supply of services provided by XXXXX of identifying Investors to invest in a client and introducing the client to Investors is an exempt supply.

Based on our telephone conversation you also wanted us to address specifically whether the proposed amendments mentioned in GST/HST Notice 250 - Proposed Change to the Definition of Financial Service would affect the supply made by XXXXX to clients.

Ruling Given

Based on the facts set out above, we rule that the services as described in the Agreement provided by XXXXX to a client of identifying Investors to invest in the client and introducing the client to Investors is a single taxable supply.

Explanation

The GST/HST is a transaction based tax and for each transaction the supplier must determine whether GST/HST is applicable. Under the ETA, supplies are taxable unless they are specifically exempt.

In order to determine the tax status of a particular supply, it is necessary to consider what the supplier provided for the consideration received. Where a supply and the obligations and entitlements related to the transaction are provided for under a written agreement between the parties to the particular transaction, the tax status of the supply will be determined for purposes of issuing a ruling based on that agreement.

Services provided by XXXXX to a client are provided for under a written agreement.

Under the Agreement XXXXX agrees to identify Investors to invest in a particular client and introduce the client to the Investors. In connection with the Investors introduced by XXXXX who invest in the client's XXXXX, the client agrees to pay XXXXX in cash and XXXXX as part of its compensation. The client also agrees to pay XXXXX a one-time XXXXX fee of $XXXXX (plus GST) upon the signing of the Agreement.

The services provided by XXXXX, as provided under the Agreement, of identifying Investors to invest in clients and introducing clients to Investors is a single taxable supply.

Generally, the value of the consideration for a supply will be expressed in money. Paragraph 153(1)(a) provides that where the consideration, or any part of the consideration for a supply, is expressed in money, the value of the consideration or that part of the consideration is deemed to be equal to the amount of money.

Paragraph 153(1)(b) provides that where the consideration, or part of the consideration for a supply is not money (i.e., it is property or a service), the value of the consideration, or that part, is the fair market value of the property or service determined at the time the supply is made.

For example, where the consideration for XXXXX supply to a client consists of money and XXXXX, the XXXXX will be characterized as partial non-monetary consideration for the supply. Thus, the consideration for the supply will be the total of the fair market value of the XXXXX at the time of supply, plus the amount of monetary consideration for the supply.

Tax rate applicable to the supply of a service

As we have determined that the supply provided by XXXXX under the Agreement is a single taxable supply we are providing further clarification on whether GST or HST would apply on XXXXX taxable supplies for periods before and after July 1, 2010.

There are two important steps involved in the determination of whether GST or HST will apply to a taxable supply of a service.

The new rules for determining the place of supply for services generally rely on where the consumer of the supply is located rather than on the location of the supplier.

Under these rules, a supply of a service will generally be regarded as made in a province where the supplier obtains a single home or business address of the recipient in the ordinary course of its business and that address is situated in that province. Where the supplier does not obtain any home or business address of the recipient in the ordinary course of its business, but obtains another single address in Canada of the recipient, that address will be used in determining the place of supply.

Additional information can be found on pages 25-31 of Technical Information Bulletin B-103, Harmonized Sales Tax Place of supply rules for determining whether a supply is made in a province.

The second step is to determine when the service is performed. For example, where 90% or more of the service is performed before July 2010 and the place of supply of the service is XXXXX, only the GST would apply to any amount that becomes due or is paid without having become due for the service.

On the other hand where more than 10% of a service is performed on or after July 1, 2010, and the place of supply of the service is XXXXX generally:

- GST applies to any amount that relates to the portion of the service performed before July 2010; and
- HST applies to any amount that relates to the portion of the service performed on or after July 1, 2010.

Additional Information

You wanted to know if GST/HST was applicable to services provided by a stock broker that places some of the financing. We do not have sufficient information on the sharing arrangements between XXXXX and stock brokers to be able to determine whether the fee paid to a stock broker is consideration for a taxable or exempt supply.

As you requested that we examine the supply provided by XXXXX in light of the changes to the definition of financial service, we are providing the following additional information.

Generally, most supplies of financial services are exempt supplies under Part VII of Schedule V. A service will be a financial service where it is included in any of paragraphs (a) to (m) of the definition of financial service in subsection 123(1) and is not otherwise excluded by any of paragraphs (n) to (t) of that same definition. This would include for example, in paragraph (l) of the definition of financial service the arranging for a service referred to in any of paragraphs (a) to (i) and not referred to in any of paragraphs (n) to (t).

Where an agreement provides for the provision of a number of services or property and services, it must first be determined whether a single supply or multiple supplies are being provided under the agreement. This distinction is important in cases where a combination of services and or property is supplied by a person under an agreement, some of which would be taxable and some of which would be exempt if supplied separately. Whether the person is making a single supply or multiple supplies is a question of fact. GST/HST Policy Statement P-077R2, Single and Multiple Supplies, provides additional information on determining whether a single supply or multiple supplies are being provided.

Where it is determined that a single supply is being provided, then the predominant element of that supply must be established to determine the nature of the supply. If the predominant element of the single supply is determined to be a financial service, then the supply as a whole will be considered a financial service. This determination will be generally based on written agreements, between the person providing the service and the person's client, detailing the actions, responsibilities and obligations of the person in connection with the supply.

In determining if an intermediary's service is included in paragraph (l), all the facts surrounding the transaction, including the following factors, must be considered:

Where an intermediary provides a number of services including services described by any of paragraphs (n) to (t) as part of an agreement to arrange for a supply of a financial service, the single supply of the bundled services may be a supply of a financial service of arranging for, depending on the facts surrounding the transaction, the above listed factors, and the predominant element of the supply.

Although the services provided by XXXXX may result in an Investor investing in a client, the services provided by XXXXX are not themselves financial services. XXXXX services consist of activities of identifying Investors to invest in clients and introducing clients to Investors, and as such, are not included in paragraph (l) of the definition of financial service.

Even if it could be argued that the services provided by XXXXX to clients is a service of "arranging for" in paragraph (l), it would be necessary to consider the exclusionary paragraphs in (n) to (t) of the definition of financial service in subsection 123(1). Bill C-9, the Jobs and Economic Growth Act introduced new additional exclusionary paragraphs which received royal assent on July 12, 2010.

New paragraph (r.4) is added to clarify that certain services that are preparatory to or provided in conjunction with a financial service are excluded from that definition.

Specifically, paragraph (r.4) excludes from the definition of financial service, a service (other than a prescribed service) that is preparatory to the provision or the potential provision of a service referred to in any of paragraphs (a) to (i) and (l) of the definition of "financial service", or that is provided in conjunction with a service referred to in any of those paragraphs, that is:

Currently, no services are prescribed for the purposes of paragraph (r.4).

As clarified by paragraph (r.4), even if it could be argued that the service provided by XXXXX is in paragraph (l) of the definition of financial service such services would be excluded from that definition.

Yours truly,
Hélène Bustamante
Financial Institutions Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate

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XXXXX
XXXXX
XXXXX
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5

Case Number: 122313

Business Number: XXXXX
Attention: XXXXX
May 6, 2010

Dear XXXXX:

Subject:

GST/HST RULING
Dried fruit products

Thank you for your letter of XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to XXXXX flavours of dried fruit XXXXX (the Products).

HST applies at the rate of 13% in the participating provinces of Nova Scotia, New Brunswick, and Newfoundland and Labrador. GST applies at the rate of 5% in the remaining provinces and territories.

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

Statement of Facts

Our understanding of the facts is as follows:

1. You are requesting a ruling on XXXXX food products XXXXX.

2. XXXXX intends to import the Products into Canada. Your submission included sample Products and you provided the web site for XXXXX which contains additional Product and marketing information.

3. The XXXXX web site states that XXXXX.

4. The submission listed the specific Products for which rulings have been requested. The Products are as follows:

• XXXXX
• XXXXX
• XXXXX

5. All Products are packaged in a XXXXX plastic bag with XXXXX which allows the contents to be seen. XXXXX.

6. The descriptions and ingredients of the Products, as obtained from each of the Product's packaging, are as follows:

• XXXXX. XXXXX.

• XXXXX! XXXXX.

• XXXXX. XXXXX.

7. The Nutrition Facts give the serving size for each of the Product flavours and the servings per container. The recommended serving size is XXXXX g for all flavours. XXXXX.

8. The submission states that the Products are XXXXX.

9. The web site, under the link for products, states that XXXXX.

Ruling Requested

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

Ruling Given

Based on the facts set out above, we rule that supplies of the Products are taxable at 5% GST or 13% HST, pursuant to section 165.

Explanation

Generally, every recipient of a taxable supply made in Canada shall pay tax calculated at the rate of 5% on the value of the consideration for the supply (13% in the participating provinces of Nova Scotia, New Brunswick, and Newfoundland and Labrador) unless the supply is zero-rated. Pursuant to subsection 165(3), the tax rate in respect of a zero-rated supply (i.e., a supply included in Schedule VI) is 0%.

Under Part III of Schedule VI, certain supplies of basic groceries are zero-rated. Section 1 of Part III of Schedule VI zero-rates supplies of food or beverages for human consumption, including sweetening agents, seasonings and other ingredients mixed with or used in the preparation of such food or beverages, other than supplies included in paragraphs (a) to (r) of that section. Generally, a product that is represented (i.e., labelled and marketed) solely for use as an ingredient would not fall within the exceptions as the product would not fall within the meaning of certain words and phrases included in the exceptions. However, where a product can be purchased as both an ingredient and a snack food, that product may fall within the exceptions if other requirements included in the paragraph are met.

Paragraph 1(i) of Part III of Schedule VI excludes the following from zero-rating:

"Snack mixtures that contain cereals, nuts, seeds, dried fruit or any other edible product, but not including any mixture that is sold primarily as a breakfast cereal."

A "snack mixture" is described in GST/HST Info Sheet GI-021, Snack Foods, as a mixture of two or more of the ingredients noted in paragraph 1(i) of Part III of Schedule VI. A product containing two or more types of the same kind of ingredient, such as two or more kinds of dried fruit (e.g., dried bananas and strawberries), would be considered a snack mixture and, therefore, taxable at 5% GST or 13% HST, as applicable. Products which contain a single fruit are not considered to be snack mixtures.

Therefore, the packages of dried fruit that contain two or more types of fruit are considered to be a snack mixture. Supplies of such packages would thus be excluded from zero-rating under paragraph 1(i) of Part III of Schedule VI. The specific Products which will be excluded under this paragraph are:

• XXXXX
• XXXXX
• XXXXX

Paragraph 1(l) of Part III of Schedule VI excludes supplies of "fruit bars, rolls or drops or similar fruit-based snack foods" from zero-rating. It is the view of the Canada Revenue Agency that a good that consists of fruit and at least one other ingredient (such as fruit flavouring), and that can be purchased as a snack, falls within paragraph 1(l). As a number of the Products consist of fruit with other ingredients and they can be purchased as a snack, these Products will be excluded from zero-rating by paragraph 1(l) of Part III of Schedule VI. The specific Products which will be excluded by this paragraph are:

• XXXXX
• XXXXX
• XXXXX

As supplies of the Products are excluded by either paragraphs 1(i) or 1(l) of Part III of Schedule VI, supplies of the Products are taxable at 5% GST or 13% HST, as applicable.

Yours truly,
Nancy Jardine
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

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XXXXX
XXXXX
XXXXX
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5

Case Number: 120912
Attention: XXXXX XXXXX
May 11, 2010

Dear XXXXX:

Subject:

GST/HST RULING
GST on Supplies of Intangible Personal Property

Thank you for your XXXXX of XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to license fees payable for rights to XXXXX.

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

Statement of Facts

We understand from your incoming XXXXX and subsequent telephone conversation the following:

XXXXX. (the "Company") is a non-resident XXXXX. The Company enters into arrangements with XXXXX for the administration of their copyrights. The Company acquires the rights to market the works by the XXXXX. Clients (occasionally including those in Canada) enter into licensing agreements with the Company whereby consideration is paid (license fees) for the right to XXXXX.

The Company is not registered for the GST/HST.

The Company does not have any fixed place in Canada through which the Company makes supplies.

The Company has no employees or agents in Canada.

The Company has no bank accounts in Canada.

Solicitation is mainly via the internet. The Company website does not direct any solicitation specifically to the Canadian market.

Payments from recipients in Canada are made to the Company through XXXXX.

All contact with clients in Canada is made through XXXXX.

The Company is not making supplies in Canada as agent of a principal. The Company enters into licensing arrangements on its own account and is not arranging transactions for a principal.

Ruling Requested

You would like to know whether the GST/HST is exigible on the consideration for the supply of intangible personal property under the licensing agreements made by the unregistered Company..

Ruling Given

Based on the facts set out above, we rule that the Company is deemed to be making the supplies of the intangible personal property (IPP) outside Canada pursuant to subsection 143(1) of the ETA and hence, they do not have to charge or collect the GST/HST on those supplies.

For your convenience, find enclosed a copy of GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service.

Explanation

Subsection 143(1) provides that a supply of personal property or a service made in Canada by a non-resident person is deemed to be made outside Canada, unless the supply is made in the course of a business carried on in Canada or the person is registered when the supply is made.

The supplies of intangible personal property by the Company that may be used in Canada are deemed to be made outside Canada under subsection 143(1).

Based on the facts, the Company is not considered to be carrying on business in Canada for purposes of the ETA. A non-resident person must have a significant presence in Canada to be considered to be carrying on business in Canada.

As set out in the enclosed GST/HST Policy Statement P-051R2: Carrying on Business in Canada, whether a non-resident is carrying on business in Canada for GST/HST purposes is a question that requires consideration of all relevant facts. The factors to consider in determining whether, for GST/HST purposes, a non-resident person is carrying on business in Canada in a particular situation include:

• the place where agents or employees of the non-resident are located;
• the place of delivery;
• the place of payment;
• the place where purchases are made or assets are acquired;
• the place from which transactions are solicited;
• the location of assets or an inventory of goods;
• the place where the business contracts are made;
• the location of a bank account;
• the place where the non-resident's name and business are listed in a directory;
• the location of a branch or office;
• the place where the service is performed; and
• the place of manufacture or production.

The importance or relevance of a given factor in a specific case depends upon the nature of the business activity under review, and, as always, the particular facts and circumstances of each case. Based on the facts, there are insufficient factors present in Canada to conclude that the Company is carrying on business in Canada for GST/HST purposes.

Please note that even if a non-resident person is not carrying on business in Canada, the non-resident may register voluntarily for GST/HST if in the ordinary course of carrying on business outside Canada, the non-resident regularly solicits orders for the supply by the non-resident of tangible personal property for export to, or delivery in, Canada, or has entered into an agreement for the supply by the person of services to be performed in Canada or of intangible personal property to be used in Canada.

In this case, as the Company is not carrying on business in Canada and has not elected to register, then pursuant to subsection 143(1) of the ETA, the supply of intangible personal property by the Company is deemed to be made outside of Canada and is not subject to tax imposed under Division II of the ETA.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-957-8220.

Yours truly,
Kevin W. Smith
613-957-8220/fax. 613-990-1233/TTY 1-800-665-0354
Senior Rulings Officer,
General Operations and Border Issues Division (GOBI),
Excise & GST/HST Rulings Directorate
Canada Revenue Agency (CRA), 320 Queen Street, Ottawa, ON, K1A 0L5
XXXXX

Enc. GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service

GST/HST Policy Statement P-051R2: Carrying on Business in Canada

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XXXXX
XXXXX
XXXXX
XXXXX
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5

Case Number: 120952
Attention: XXXXX XXXXX
September 30,2010

Dear XXXXX:

Subject:

GST/HST RULING
GST on Legal Services provided to an Indian Band

Thank you for your correspondence of XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to legal services provided to an Indian band. You provided us with a signed copy of the agreement made between the Indian band and the lawyer, and a signed copy of the Settlement Agreement made between the Indian band and Her Majesty the Queen in Right of Canada.

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

Statement of Facts

From the information provided in your letter of XXXXX, we understand the facts are as follows:

1. The XXXXX Indian band is a "band" within the meaning of that term in subsection 2(1) of the Indian Act.

2. XXXXX, entered into a written agreement (the "Fee Agreement") with the XXXXX Indian band to pursue an Action XXXXX.

3. The Free Agreement provides for a contingency fee whereby the band would pay a fee to XXXXX equal to XXXXX % of the total settlement if and when received from Her Majesty as a result of the claim made [XXXXX].

4. XXXXX.

5. XXXXX.

6. XXXXX diligently pursued the Action and the Specific Claim from XXXXX, without payment of any fees made by the band in accordance with the Fee Agreement.

7. On XXXXX, a Settlement Agreement was reached between the band and Her Majesty. The Settlement Agreement provided for XXXXX as a full and final settlement of the Action and Specific Claim.

8. In XXXXX, XXXXX received a fee from the band in the amount of $XXXXX in accordance with the provisions of the Fee Agreement.

9. XXXXX obtained a certificate from the band certifying that the services obtained from him pursuant to the Fee Agreement were for band management activities in accordance with the CRA's administrative policy as outlined in GST/HST Technical Information Bulletin, B-039, GST/HST Administrative Policy - Application of GST/HST to Indians.

Ruling Requested

You would like to know if XXXXX contingency fee paid by the XXXXX Indian band under the Fee Agreement is relieved of GST/HST.

Ruling Given

Based on the facts set out above, we rule that XXXXX contingency fee paid by the XXXXX Indian band under the Fee Agreement is relieved of GST/HST, as it is considered to be acquired by the band for band management activities.

Explanation

Legal services acquired by an Indian band that relate to land claims and/or treaty or aboriginal rights are considered by the CRA to be acquired for band management activities.

Should you have further questions or require clarification of the matter above, please do not hesitate to contact me at 613-957-1175.

Yours truly,
Dwight Kostjuk
Senior Rulings Officer
Aboriginal Affairs Unit
PSBs and Governments Division
Excise and GST/HST Rulings Directorate

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ETA 212, ETA 213, ETA Sch VII, 8, SOR/91-31 3(i)(ii)

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Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
XXXXX
XXXXX
XXXXX
Case Number: 121023
Attention: XXXXX
XXXXX
February 9, 2010

Dear XXXXX:

Subject:

GST/HST RULING
Temporary Importation - Racing Vehicles and Related Equipment

Thank you for your letter of XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the temporary importation of racing vehicles and related equipment.

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

Statement of Facts

We understand the facts to be as follows:

1. The XXXXX is a non-resident located in XXXXX. XXXXX.

2. The XXXXX and XXXXX will each be holding XXXXX events in Canada, to be held in XXXXX.

3. In order to hold the events, the XXXXX intends to temporarily import racing vehicles, trailers and conveyances for moving racing vehicles, repair parts and repair equipment, tools and portable shop equipment required to maintain the racing vehicles, mobile accommodations and related equipment for support staff, safety vehicles and up to XXXXX full fuel tanker trucks for the races in XXXXX. Following each race, any fuel remaining in the tanker trucks will be exported.

4. The racing vehicles and related equipment are not for sale, for lease or for further manufacturing or further processing while in Canada.

5. The Canada Border Services Agency has determined that the conditions of items 38 and 41 of the schedule to the Temporary Importation (Excise Levies and Additional Duties) Regulations are met for the temporary importation of the racing vehicles and related equipment.

Ruling Requested

You would like to know whether the temporary importation of the racing vehicles and related equipment is a non-taxable importation for GST/HST purposes.

Ruling Given

Based on the facts set out above, we rule that the temporary importation of the racing vehicles and related equipment is a non-taxable importation for GST/HST purposes.

Explanation

Generally, all goods imported into Canada are taxable for GST/HST purposes unless specifically relieved under section 213 of the ETA. Importations of goods relieved of tax under section 213 of the ETA are set out in Schedule VII to the ETA. Section 8 of Schedule VII to the ETA deems prescribed goods that are imported in prescribed circumstances into Canada to be non-taxable for GST/HST purposes. Paragraph 3(i) of the Non-Taxable Imported Goods (GST/HST) Regulations includes goods described in items 38 and 41 of the schedule to the Temporary Importation (Excise Levies and Additional Duties) Regulations when a non-resident imports the goods in circumstances where the terms and conditions of the regulations have been met.

For your convenience, please find enclosed a copy of GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-952-8530. 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,
Carolle Mercier
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

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ETA Part IX

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Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
XXXXX
XXXXX
XXXXX
Case Number: 121057
Attention: XXXXX
XXXXX
January 27, 2010

Dear XXXXX:

Subject:

GST/HST RULING
Importation of Souvenirs for XXXXX

Thank you for your XXXXX of XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to souvenirs that are being imported for free distribution at an XXXXX event.

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

Statement of Facts

We understand the facts to be as follows:

1. The XXXXX is a non-resident XXXXX in the XXXXX.

2. XXXXX, XXXXX will be holding an XXXXX event in XXXXX for its employees XXXXX and their families. XXXXX anticipates approximately XXXXX people to be in attendance.

3. Because it is an XXXXX event, XXXXX will be providing souvenirs that will be distributed for free to the attendees. These items are: XXXXX.

4. The Canada Border Services Agency (CBSA) has determined that when the souvenirs are imported, they may be classified under tariff item 9830.00.00 of the Customs Tariff, and that the requirements of the Foreign Organizations Remission Order, 1983 are met. In addition, the CBSA states that the event must not be open to the Canadian public at large, and that all undistributed souvenirs must be exported from Canada.

Ruling Requested

You would like to know whether the importation of the souvenirs is a non-taxable importation for GST/HST purposes.

Ruling Given

Based on the facts set out above, we rule that the importation of the souvenirs is a non-taxable importation for GST/HST purposes.

Explanation

Generally, all goods imported into Canada are taxable for GST/HST purposes unless specifically relieved under the ETA and its regulations. There are, however, also a number of remission orders administered by the CBSA that provide full or partial GST/HST relief on imported goods where the conditions of those orders have been met. Because the CBSA has determined that the requirements of the Foreign Organizations Remission Order, 1983, are met in respect of the imported souvenirs, the goods are fully relieved of GST/HST.

For your convenience, find enclosed a copy of GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-4291. 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,
Geoff Macmillan
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

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ETA 123(1) service, ETA 142(1)(g), ETA 143(1), ETA 165, ETA 169(1), ETA 221(1), ETA 240(1)

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Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
XXXXX
XXXXX
XXXXX
Case Number: 121400

February 23, 2010

Dear XXXXX:

Subject:

GST/HST RULING
Non-resident Registration

Thank you for your XXXXX of XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to consulting services supplied in Canada by you, a non-resident sole proprietor.

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

Statement of Facts

Based on the information in the letter we understand the following:

1. You are a non-resident XXXXX service consultant operating primarily in XXXXX.

2. In XXXXX of 2009 you entered into an agreement with a Canadian company, XXXXX, to provide services to a client of the company (XXXXX) located in XXXXX, XXXXX.

3. The contract for the supply of the service was signed by you in XXXXX.

4. The consulting service was provided from XXXXX 2009 to XXXXX 2009; a period of less than 183 days.

5. A large portion of the service was performed at the office of XXXXX in XXXXX, where you were granted space to perform the work and where you were given access to XXXXX computer network and from where you could take part in meetings for a specific project. In addition, some work was performed at your temporary accommodations in Canada and some work was performed in XXXXX, where you were required to travel as part of the service provided to XXXXX.

Ruling Requested

You would like to know whether you were required to register for purposes of the GST/HST and to collect and remit tax on the supply of your service.

Ruling Given

Based on the facts set out above, we rule that you were carrying on business in Canada for GST/HST purposes as a result of entering the contract for the service. Therefore, you were required to register for purposes of the GST/HST and as a registrant, you were required to collect and remit tax on the supply of the service made in Canada.

Explanation

Pursuant to paragraph 142(1)(g), a supply of a service is deemed to be made in Canada if "the service is, or is to be, performed in whole or in part in Canada." A supply of a service that is made in Canada by a non-resident person is deemed to be made outside of Canada pursuant to subsection 143(1) unless the non-resident person is registered for purposes of the GST/HST or is supplying the service in the course of a business carried on in Canada.

Whether a non-resident person is carrying on business in Canada for GST/HST purposes is a question of fact that requires consideration of all relevant facts. GST/HST Policy Statement P-051R2: Carrying on Business in Canada (available on the CRA website: (http://www.cra-arc.gc.ca/E/pub/gl/p-051r2) identifies various factors that are considered when determining whether a non-resident person is carrying on business in Canada for GST/HST purposes in a particular situation.

The importance or relevance of a given factor in a specific case depends upon the nature of the business activity under review and the particular facts and circumstances of each case. With respect to the supply of a service, factors that are of particular relevance are whether the service is performed in Canada, and whether the service is being performed by the supplier in Canada including through agents or employees of the supplier. Based on the application of the relevant factors set out in the policy to the facts, you were considered to be carrying on business in Canada for GST/HST purposes as a result of the service that you performed in Canada as described in the facts.

Pursuant to subsection 240(1), every person who makes a taxable supply in Canada in the course of a commercial activity engaged in by the person in Canada (such as the service you supplied) is required to be registered for the GST/HST.

As a GST/HST registrant, you were required to collect and remit the GST in respect of the supply of the service at a rate of 5%. Pursuant to subsection 169(1), as a registrant, you may claim input tax credits to recover the tax paid or payable by you on property or services acquired or imported for consumption, use or supply in the course of your commercial activities based on the extent of the consumption, use or supply of the property or services in the course of those activities. For more information on the application of GST/HST to non-residents please consult CRA publication RC4027 Doing Business in Canada - GST/HST Information for Non-Resident which is accessible on the CRA website - http://www.cra-arc.gc.ca/E/pub/gp/rc4027.

In order to register you should contact the XXXXX Tax Services Office at the following address:

XXXXX

You may also contact that office by telephone at: XXXXX.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 957-7841 XXXXX.

Yours truly,
Dwayne Moore
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

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ETA 153, ETA 232.1

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Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
XXXXX
XXXXX
XXXXX
Case Number: 121701
Attention: XXXXX
XXXXX
March 15, 2010

Dear XXXXX:

Subject:

GST/HST RULING
Application of GST/HST to discounts automatically offered at point of sale

Thank you for your letter of XXXXX, and the additional information and contracts you submitted on XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to discounts automatically offered at point of sale at XXXXX to its customers.

HST applies at the rate of 13% in the participating provinces of Nova Scotia, New Brunswick, and Newfoundland and Labrador. GST applies at the rate of 5% in the remaining provinces and territories.

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

Statement of Facts

• XXXXX.

• XXXXX currently operates XXXXX locations in XXXXX as well as a XXXXX electronic commerce website that sells and delivers to its customers a host of goods and services XXXXX.

• The business number for XXXXX.

• XXXXX deducts amounts from money owed to its suppliers. These amounts, contractually agreed to by XXXXX and its suppliers, are used to promote specific goods by offering discounts on those goods to all customers for specific periods of time.

• In the course of XXXXX business, different goods are regularly offered at a discount in three scenarios of concern as follows:

Scenario A - XXXXX

• In reaction to competition, XXXXX will negotiate with its suppliers temporary discounts on goods which are automatically granted at the point of sale system to its customers.

• XXXXX enters into a XXXXX contract with each supplier; i.e., the XXXXX included in your submission. The contract identifies the discounts offered to XXXXX as temporary price discounts. In the past, the contract identified the temporary discounts as a "coupon" or "instant rebate."

• XXXXX.

• A sign card displays the description, original price, discount amount and after discount amount of the good as follows:

XXXXX
XXXXX
XXXXX
XXXXX g $19.99
Temporary price discount expiration
1/17/10 -5.00
Price at register $14.99

• The bar code pertaining to the item is programmed to display a second line on the sales receipt relating to the temporary discount (a negative amount).

• The sales receipt, like the sign card, shows the description, original price, and discount amount of the item.

• The cash register receipt will display the purchase of this good as follows:

XXXXX $19.99
XXXXX $ 5.00-
Sub Total $14.99
GST $ 1.00
Total $15.99

• The current and past practice has been to charge GST/HST on the pre-discounted price.

• The sum of the temporary discount granted to customers is tabulated by XXXXX and deducted automatically from payments owed to the respective vendors of the discounted goods.

Scenario B - XXXXX

• XXXXX also offers for sale goods on which a temporary price discount is negotiated with a supplier. Since these negotiations are not a reaction to competition but rather planned discounts (often due to the supplier having a promotional allowance budget for this item), XXXXX.

• XXXXX.

• Effective XXXXX, XXXXX modified its procedure in order to systematically grant the discounts to all customers. Since that date, the purchase of the discounted item reflects the same pricing and tax calculation procedures as the temporary price reductions outlined in Scenario A above.

Scenario C - Electronic Commerce Website Discounts.

• XXXXX agrees with its suppliers to offer temporary price discounts for on-line sales on its XXXXX electronic commerce website in accordance with the XXXXX Contract and the XXXXX.

• Customers are automatically granted these reductions for on-line purchases of the item in question. The customer has no obligation to remit any form of coupon to XXXXX.

• The current and past practice has been to charge GST/HST on the pre-discounted price.

Ruling Requested

With respect to the above three scenarios in which XXXXX grants a temporary discount you would like us to confirm that the GST/HST applies on the purchase price, net of the discount.

With respect to the discount amounts deducted from monies owed by XXXXX to its suppliers, you would like confirmation that the amounts deducted to promote the supplier's products are promotional allowances for purposes of section 232.1 of the ETA and hence the amounts are not consideration for a supply made by XXXXX to the suppliers.

Ruling Given

Based on the facts set out above, we rule that in each of the three outlined scenarios, the GST/HST applies on the consideration for the supply, net of the discounts, i.e, after the discounts are deducted from the price of the relevant goods.

With respect to the discount amounts deducted by XXXXX from amounts owed by XXXXX to its suppliers, the payments as described in the facts relating to the temporary price discounts represent amounts paid for promotional allowances for purposes of section 232.1 of the ETA and hence are not consideration for a supply made by XXXXX to the suppliers.

These rulings are based on facts and contracts provided to CRA describing XXXXX current discount programs and do not necessarily apply to past transactions where the facts and contracts were not consistent with those described in this ruling.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-952-9220. 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,
Larry Springstead
Specialty Tax Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate

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ETA 165, ETA Sch VI, Part III, 1(h)

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XXXXX
XXXXX
XXXXX
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5

Case Number: 121723
Attention: XXXXX XXXXX
July 5, 2010

Dear XXXXX:

Subject:

GST/HST RULING
Application of GST/HST to XXXXX

Thank you for your 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) unless otherwise specified.

Statement of Facts

Our understanding of the facts is as follows:

1. The Product is sold individually in XXXXX gram plastic cups with a lid.

2. The ingredients of the Product are: XXXXX yogurt XXXXX.

3. The ingredients are mixed together in the plastic cup.

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.

Explanation

Generally, every recipient of a taxable supply made in Canada shall pay tax calculated at the rate of 5% on the value of the consideration for the supply (13% in the participating provinces of Nova Scotia, New Brunswick, and Newfoundland and Labrador) unless the supply is zero-rated. The tax rate in respect of a zero-rated supply is 0%. Taxable supplies that are zero-rated for GST/HST purposes are described in Schedule VI.

The Product is considered to be yogurt for GST/HST purposes. As none of the exclusions included in paragraphs (a) to (r) of section 1 of Part III of Schedule VI apply in this case, supplies of the Product are zero-rated.

Yours truly,
Ben Boboski
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

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SOR/2010-117 New Harmonized Value-added Tax System Regulations : 42

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[Addressee]
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5

Case Number: 122025

Business Number: [...]

October 15, 2010

Dear [Client]:

Subject:

GST/HST RULING
GST/HST Ruling on advance payments for seasonal campsites

Thank you for your fax of March 1, 2010, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to advance payments for supplies of campsites.

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

Statement of Facts

We understand that the facts are as follows:

1. [...] [the Company] is a seasonal and overnight recreational campground in Ontario.

2. [The Company] enters into contracts with seasonal campers for supplies of campsites for the period of May 7, 2010 to October 11, 2010. The contracts provide that payment for the rental of a campsite is due in advance on May 1, 2010.

3. You understand that if the amount payable under the contract is paid by a seasonal camper before May 2010, the GST at the rate of 5% applies to the payment.

4. You do accept partial payments, from your seasonal campers, which are paid prior to May 2010 with a balance payable after April 30, 2010.

Ruling Requested

You would like to know how to apply the tax where a seasonal camper pays part of the amount payable under the contract before May 1, 2010, and the rest of the amount on or after that date. For example, a seasonal camper enters into a contract for $1,000 which is due under the contract on May 1, 2010, for the period of May 7 to October 11, 2010, and the camper pays $800 on April 30, 2010, and the remaining $200 in May 2010.

Ruling Given

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

• the GST at 5% applies to the partial payment made before May 2010;
• the GST at 5% also applies to the portion of the outstanding balance paid after April 2010 that can reasonably be attributed to the period before July 2010; and
• the HST at 13% applies to the portion of the outstanding balance that can reasonably be attributed to the period after June 30, 2010.

In your example, the GST at 5% applies to the payment of $800, the GST at 5% also applies to the portion of the $200 that can reasonably be attributed to the period of May 7 to June 30, 2010 (inclusive) and the HST at 13% applies to the portion of the $200 that can reasonably be attributed to the period of July 1 to October 11, 2010 (inclusive).

Explanation

[The Company's] contract for a supply of a campsite for the period of May 7 to October 11, 2010, is a written agreement for the supply of a campsite made by way of lease, licence or similar arrangement. For GST/HST purposes, the consideration for the supply of the campsite becomes due on the day the camper is required to pay the consideration under the agreement. [The Company's] contract provides that the camper is required to pay the amount for the rental of the campsite on May 1, 2010. Therefore, the consideration for the supply of the campsite becomes due on that date.

Where any part of the consideration for the supply of a campsite made by way of lease, licence or similar arrangement is paid or becomes due before May 1, 2010, a supplier would not charge the HST; however, the supplier would charge and collect the GST at 5%. We note in the situation you describe that part of the consideration is paid before May 1, 2010. Therefore, this rule applies. In the example provided, the GST at 5% applies to the $800 payment. The GST must be included in the GST/HST return for the reporting period that includes April 30, 2010.

Where any part of the consideration for the supply of a campsite made by way of lease, licence or similar arrangement becomes due or is paid without having become due on or after May 1, 2010, GST applies to that part of the consideration that can reasonably be attributed to a period that occurs before July 2010 and HST applies to that part of the consideration that can reasonably be attributed to a period on or after July 1, 2010. Given that the consideration for the supply of a campsite becomes due on May 1, 2010, this rule applies to any amount that is not paid before May 1, 2010. Therefore, in the example provided, GST at 5% applies to the portion of the $200 payment made in May 2010 that can reasonably be attributed to the period before July 2010 (that is, May 7 to June 30, 2010) and HST applies to the portion of the $200 payment that can reasonably be attributed to the period that occurs on or after July 1, 2010 (that is, July 1 to October 11, 2010). The GST and the federal part of the HST payable in respect of the $200 partial payment must be included in the GST/HST return for the reporting period that includes the date the payment was made in May 2010. The provincial part of the HST must be included in the GST/HST return for the reporting period that includes July 1, 2010.

The transitional rules for supplies of property, including real property, made by way of lease, licence or similar arrangement are included in section 42 of the New Harmonized Value-added Tax System Regulations. The application of these rules to supplies of real property is explained in GST/HST Info Sheet GI092, Harmonized Sales Tax: Leases of Real Property in Ontario and British Columbia.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-957-8222. 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,
Francine Ménard
Real Property Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate

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ETA 165(2), SOR/2010-151

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XXXXX
XXXXX
XXXXX
XXXXX
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5

Case Number: 122092
Attention: XXXXX
August 9, 2010

Dear XXXXX:

Subject:

GST/HST RULING
Application of the HST to a residential condominium unit

Thank you for your letter of XXXXX, and subsequent information submitted on

XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the purchase of a residential condominium unit.

The HST applies at the rate of 15% in Nova Scotia, 13% in New Brunswick, Newfoundland and Labrador, and Ontario, and 12% in British Columbia. GST applies at the rate of 5% in the remaining provinces and territories.

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

Statement of Facts

We understand that the facts are as follows:

1. On XXXXX, XXXXX (the "Seller") and XXXXX entered into a written agreement of purchase and sale (the "original agreement") for a residential condominium unit identified as Unit XXXXX, to be constructed in Ontario.

2. On XXXXX, the original agreement was amended substituting you (the "Buyer") for XXXXX. You indicated that XXXXX, XXXXX, signed the original agreement on your behalf under a power of attorney.

3. Ownership and possession of the residential condominium will likely transfer to the Buyer some time in XXXXX.

4. In XXXXX, notice from the Seller was given to the Buyer that the Seller assigned the original agreement to XXXXX (the "New Seller").

5. In XXXXX, the New Seller provided to the Buyer a proposed amendment to the original agreement to change the residential condominium unit from Unit XXXXX to Unit XXXXX.

6. As of July 1, 2010, the proposed amendment has not gone into effect.

7. The Buyer had originally purchased the unit for her personal use, but due to the delay in construction, the Buyer will sell the unit after final closing.

Ruling Requested

You would like to know if, as a result of the proposed amendment to the original agreement, the Buyer will be liable to pay the HST.

Ruling Given

Based on the facts set out above, we rule that the Buyer will be required to pay the HST at 13% if the purchase and sale agreement is amended such that the Buyer acquires a different residential condominium unit within the condominium complex.

Explanation

Given that the proposed amendment to the original agreement would change the actual residential condominium unit purchased by the Buyer, it is our view that the agreement will be materially altered to the extent that the agreement will be considered to be a new agreement if the amendment takes effect. The new agreement would be entered into on the day that the parties sign the amendment to the original agreement.

Since this new agreement would be entered into after June 18, 2009, and that both ownership and possession of the residential condominium unit, Unit XXXXX, will transfer, in accordance with the agreement, to the Buyer after July 1, 2010, the HST at 13% will apply to the purchase of the unit under the new agreement.

If the amendment does not occur, the purchase of the residential condominium, Unit XXXXX, would be subject to the GST at 5% since the agreement of purchase and sale for the unit was entered into on or before June 18, 2009.

It is noted that the original agreement provides that the purchase price includes the federal goods and services tax net of the new housing rebate, if applicable. The original agreement also provides that any new sales taxes or increases in the rates of existing sales taxes imposed on the sale by the federal, provincial or municipal government will be in addition to the purchase price. It is our view that if the original agreement is amended as proposed, the purchase price under the new agreement would include the 5% federal component of the HST and that the 8% provincial component of the HST would be in addition to the purchase price.

If you purchased the unit for the primary purpose of occupying the unit as your primary place of residence and, due to the delay in construction, later decide to sell the unit, the sale of the unit will be exempt of the GST/HST.

When you sell the unit to a purchaser, you may be entitled to claim the GST/HST new housing rebate in respect of the GST or the federal part of the HST provided that ownership of the unit is transferred to the purchaser before the unit is occupied by any individual as a place of residence or lodging. As indicated in the original agreement, this rebate may already be factored into the purchase price. If you enter into a new agreement with the Seller for a different unit and the sale is subject to the HST, you may also be entitled to claim the Ontario new housing rebate in respect of the provincial part of the HST. Based on the wording of the original agreement and the proposed amendment, it is our view that the purchase price does not take this rebate amount into account.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 957-8222. 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,
Francine Menard
Real Property Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate

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