GST/HST Ruling

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.

Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0L5

[Addressee]

Case Number: 206102
Business Number: […]

January 21, 2021

Dear [Client]:

Subject: GST/HST RULING
[Supplies made by a Charity] […]

Thank you for your letter (with attachments) of January 6, 2020, as well as subsequent facsimiles and telephone conversations, concerning the application of the goods and services tax/harmonized sales tax (GST/HST) as it pertains to supplies made to […][X] by […][Y]. We apologize for the delay in our response.

The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.

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

We understand the following based on: discussions with you and […][various correspondence]:

1. [X] is a non-resident […] based […][outside of Canada]. […]

2. [X] operates for-profit and is not registered for the GST/HST.

3. […], [X] has been delivering […][Program A] at […][the Venue]. […][Description of Program A].

4. […][The Venue] is located […][in Canada].

5. [The Venue] is administered [under an Agreement] by […][Y]. […][Information about Y’s responsibilities under the Agreement] .

6. […][Information about the Agreement].

7. […][Information from an Act other than the ETA]

8. [Y] became a registered charity for income tax purposes on [mm/dd/yyyy].

9. [Y] is not a public institution and meets the definition of charity found in subsection 123(1) of the Excise Tax Act.

10. […][Program A] is offered [by X] at [the Venue] an average of […] times per year […], each with a duration of […] days.

11. Invoices were issued by [Y] to [X] on the following dates […]: […][Dates of Various Invoices by year, Year 1, Year 2 and Year 3]

12. On the invoice dates indicated above, [Y] was a GST/HST registrant operating under business number […].

13. [Y] offers a […][Hospitality Program] at [the Venue] which includes the following elements that are only available through the [Hospitality Program]:

• [group] overnight accommodations […]
• meeting facilities
• catered meals

14. [X] utilized all the elements of the […][Hospitality Program] in […] [Program A].

15. The invoices [issued by Y to X] provide the following breakdown per element:

• Single room occupancy (# of rooms x # of nights x rate)
• Double room occupancy (# of rooms x # of nights x rate)
• Breakfast (catered) (# of participants x rate x number of days)
• Lunch (catered) (# of participants x rate x number of days)
• Dinner (catered) (# of participants x rate x number of days)
• Catered boxed lunch (for off-site excursions) (# of participants x rate)
• […][Transportation] […] (charged by the hour)
• […][Activity A] (reserved afternoon seating @ $[…] per person)

16. […] was used for transporting participants to off-site locations […].

17. [Y] offers two time slots for […][Activity A]. Per the invoices, due to the low number of participants this was not a mandatory activity. […][Time slot 1] is free of charge to anyone. […][Time slot 2] requires a reservation and had a cost of $[…] per person. Both time slots offer […][the same beverage, snack and entertainment]. […] [Time slot 2] also includes a copy of a book […].

18. [Y] had not charged the [GST/HST] on their invoices to [X] until […][Year 1]. [GST/HST] was charged on the total invoice amounts for the years […][Year 1, Year 2 and Year 3]. […].

19. You do not know whether [Y] has made an election under section 211 in respect of the [real] property at [the Venue], which allows a public service body, including a charity, to […][make] an exempt supply of real property […] be treated as taxable.

20. […]

RULINGS REQUESTED

You have requested a ruling to determine the following:

1. Is [Y] required to remit to the Canada Revenue Agency (CRA) the total amount of [GST/HST] they collected?

2. Is [Y] required to adjust, credit or refund the [GST/HST] collected from [X] in error?

3. Is the supply of [Activity A] an exempt supply?

4. Are the supplies made by [Y] to [X] exempt supplies?

RULINGS GIVEN

1. [Y] is required to remit to the Canada Revenue Agency (CRA) any positive amount of net tax for a reporting period.

2. [Y] is not required to adjust, credit or refund the amount collected as or on account of tax.

As outlined in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service (Memorandum 1.4), a ruling provides the position of the CRA on specific provisions of the legislation as they relate to a clearly defined fact situation of a particular person, supported by relevant documentation such as contracts and other pertinent agreements. Alternatively, an interpretation is a written statement that sets out the CRA’s view of how the legislation applies to a generic fact situation or sets out the CRA’s general understanding of particular provisions of the legislation, whether proposed or enacted.

As the facts available in this case do not provide sufficient information to determine the tax status of [Y’s] supplies to [X], we are providing you with an interpretation on this issue.

EXPLANATION

The [GST/HST] is a tax that applies to most supplies of property and services made in Canada. It also applies to many supplies of real property (for example, land, buildings, and interests in such property) and intangible personal property such as trademarks, rights to use a patent, and digitized products downloaded from the internet and paid for individually. […].

Generally, all supplies of property and services made in Canada are either taxable or exempt. Taxable supplies (including zero-rated) are made in the course of a commercial activity and are subject to the GST/HST on the value of consideration. Zero-rated supplies are listed in Schedule VI and are taxable at the rate of 0%. Exempt supplies are not taxable and can be found in Schedule V.

A GST/HST registrant has to calculate its net tax for each GST/HST reporting period and report it on its GST/HST return. Information Sheet GI-066, How a Charity Completes its GST/HST Return, explains how a charity that is a GST/HST registrant calculates its net tax for a reporting period. Net tax of a charity that is a GST/HST registrant is generally comprised of 60% of the total GST/HST collected less any input tax credits and adjustments to which it is entitled. Occasionally, a charity will have to include additional amounts in its net tax calculation, including 100% of any amounts collected as or on account of tax in error. The result of the calculation will be either a positive or negative net tax.

Upon registration, each GST/HST registrant is assigned specific reporting periods and due dates. Every GST/HST registrant must file a return with the Minister for each reporting period of the registrant. In addition, if the registrant’s net tax calculated for the reporting period is a positive amount, that amount must be remitted to the Receiver General (the CRA) on or before the due date of the return.

Refund, adjustment or credit of the GST/HST

A supplier is permitted, but not required, to adjust, refund or credit GST/HST where an excess amount of tax has been charged or collected. Under subsection 232(1) of the ETA, where a supplier has charged to, or collected from, another person an amount as or on account of tax in excess of the amount of tax collectible, the supplier may

(a) adjust the amount of tax charged, where the excess amount was charged but not collected; or

(b) refund or credit the excess amount of tax collected, where the excess amount was charged and collected.

The supplier has up to two years after the day on which the excess amount was charged to the other person but not collected to adjust the amount of tax charged, or if the excess amount was collected from the other person, two years after the day on which it was collected to refund or credit the excess tax. For additional information, see GST/HST Memorandum 12-2 Refund, Adjustment, or Credit of the GST/HST under Section 232 of the Excise Tax Act.

Alternatively, persons that paid an amount as GST/HST on supplies that should not have been taxed may file an application for a rebate of amounts paid in error. Form GST189, General Application for Rebate of GST/HST, is used to apply for the rebate. The time limit to apply for this rebate is within two years after the day the amount was paid. An amount that has previously been refunded or credited is not eligible for the rebate. For additional information, see the GST/HST Guide RC4033 General Application for GST/HST Rebates.

INTERPRETATIONS GIVEN

We are unable to issue a ruling [(in response to Ruling Requested #3 and # 4)] on the supplies […][made] by [Y] as we have insufficient information. We are issuing the following interpretations, which are general explanations of the applicable provisions and how the legislation would apply.

Single or multiple supplies

When determining the tax status of a supply, we must first analyze the facts and ascertain whether a supplier is making a single supply or multiple supplies. The CRA has set out guidelines to assist with this determination in GST/HST Policy statement P-077R2, Single and Multiple Supplies.

Two or more elements are part of a single supply when the elements are integral components; they are inextricably bound up with each other; the elements are so intertwined and interdependent that they must be supplied together; or one element of the transaction is so dominated by another element that the first element has lost any identity for fiscal purposes.

Multiple supplies occur when one or more of the elements can sensibly or realistically be broken out.

When analyzing the supply, the process should not involve artificially splitting something that commercially is a single supply. The intent of the parties, the circumstances surrounding the transaction, and the supplier’s usual business practices must be taken into account.

Furthermore, the way in which the price for a transaction is set out, such as in the invoices you provided, does not in itself determine whether there are one or more supplies. Although the invoices set out the individual costs charged for each of the elements, this breakdown does not mean that each invoice item is a separate supply. Due to the nature of the supplies in question, for accounting purposes the invoices have been broken down by number of single/double occupancy rooms and sittings per meal.

[…][Hospitality Program]

[X] acquires multiple elements from [Y] as part of the [Hospitality Program]. We have determined that the elements of short-term accommodations, meeting facilities and catered meals are a single supply of real property.

Section 1 of Part V.1 of Schedule V provides that a supply made by a charity of any property (including real property) or service is exempt, unless it is listed as one of the exclusions in paragraphs (a) to (p) of that section. The supply of real property by way of lease, licence or similar arrangement is not listed as an exclusion and is therefore generally an exempt supply.

However, section 211 allows a public service body, such as a charity, to file an election in respect of real property that is capital property of the body. Real property used to supply short-term accommodations meets this criteria. Paragraph 1(m) of Part V.1 of Schedule V recognizes this election and provides an exception to the general exemption for charities where a section 211 election has been filed. In other words, as [Y] is a charity, if it has not filed the election, the supply would be exempt; if it has filed the election, the supply would be taxable. For confidentiality reasons we are unable to provide information as to whether the election has or has not been filed by [Y]. Therefore, there is insufficient information to allow us to determine the tax status of the single supply of real property.

[Activity A]

[Activity A] is not a mandatory element of the [Hospitality Program]. […][Both time slots] include […][a beverage, snack and entertainment]. The afternoon session also includes a […] book. It is therefore reasonable to conclude that the charge of $[…]/person for the afternoon session is to cover the cost of the book. The supply of a book is a separate single supply of tangible personal property.

Paragraph 1(d) of Part V.1 of Schedule V provides an exception to the general exemption for charities where a charity supplies tangible personal property that was acquired, manufactured or produced by the charity for the purpose of making a supply of that property. Therefore, the supply of the book would not be exempt under the general exemption.

However, section 5.1 of Part V.1 of Schedule V provides another potential exempting provision which stipulates that a supply may be exempt if the consideration for which the property is sold does not exceed its direct cost. We do not have the facts as to [Y’s] direct cost for the book. We therefore have insufficient information to determine if the book may be an exempt supply under section 5.1 of Part V.1 of Schedule V.

[Transportation]

We are unable to determine the tax status of the [Transportation] service without additional information. We do not know if this service is only available through the [Hospitality Program]. It is also not clear whether you would have the option of obtaining an alternate form of […] from another supplier. Therefore, we cannot determine whether the [Transportation] service is part of a single supply of the [Hospitality Program] or a separate supply.

For example, the following two possible scenarios may apply:

1) the [Transportation] service is only available as an element of the [Hospitality Program]:

• the [Transportation] service would take on the tax status of the single supply of real property, i.e. with the short-term accommodations, meeting facilities and catering. As stated above, we have insufficient information to determine the tax status of the single supply of real property.

2) the [Transportation] service is a separate supply:

• per section 1 of Part V.1 of Schedule V, there are no exclusions to the general exemption for charities for this type of service. Therefore, this would be an exempt supply.

In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the rulings given in this letter provided that: none of the issues discussed in the rulings are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed. The interpretations given in this letter, including any additional information, are not rulings and do not bind the CRA with respect to a particular situation. Future changes to the ETA, regulations, or the CRA’s interpretative policy could affect the interpretations or the additional information provided herein.

We have completed our analysis of this case and the file is now closed. If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-670-7909. 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.

Sincerely,

Connie Carnegie
Charities, Non-Profit Organizations and Educational Sectors Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate

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.

Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0L5

[Addressee]

Case Number: 204827
Business Number: […]
Attention: […]

September 22, 2020

Dear [Client]:

Subject: GST/HST RULING
Seaweed Products

Thank you for your letter of November 11, 2019, concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to the supplies of […](Product 1) and […](Product 2), that are sold by […](the Company). We apologize for the delay in replying.

The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.

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

STATEMENT OF FACTS

We understand the facts as follows:

Product 1

1. Product 1 is imported […].

2. Product 1 contains […][seaweed and other ingredients].

3. Product 1 is marketed with the following description on the Company’s website: […][description references salty flavor of Product 1].

4. On the manufacturer’s website, […], Product 1 is also shown to be available in other flavours: […].

5. Product 1 consists of rectangular seaweed strips, loosely packaged in a foil bag, supplied in a single serving.

6. Each strip consists of […] thin, light, dry seaweed sheets with […][ingredients], that make it crispy and crunchy.

7. The size of each strip is […].

8. Each package of Product 1 weighs [#] grams and is sold individually for $[…].

Product 2

1. Product 2 is imported […].

2. Product 2 contains the […][seaweed and other ingredients] .

3. Product 2 is produced using a roasting process.

4. The packaging of Product 2 contains the following serving suggestions:

[…]

5. The packaging of Product 2 also includes the following references:

[…].

6. On the manufacturer’s website, […], the following information was obtained:

i. Product 2 [description][…].

ii. Shelf life is stated to be 12 months.

iii. Product 2 is available in other flavours: […].

iv. Product 2 in other flavours is described as […]; and [the website] includes [recipe] suggestions […].

7. There are [#] single serving foil packets in the package, each weighing [#] grams.

8. Each packet contains [#] rectangular sheets of Product 2, layered in a […], and wrapped in a foil-type package. The size of each sheet is […].

9. Product 2 has a thin, light, dry and flaky texture.

RULING REQUESTED

You would like to know if the supplies of Product 1 and Product 2 (the Products) are zero-rated as basic groceries.

RULING GIVEN

Based on the facts set out above, we rule that the supplies of the Products are excluded from zero-rating under section 1 of Part III of Schedule VI to the ETA.

EXPLANATION

Section 1 of Part III of Schedule VI to the ETA 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.

Paragraph 1(f) of Part III of Schedule VI to the ETA 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.

Paragraph 57 of the GST/HST Memoranda Series 4.3, Basic Groceries (MS 4.3) states

"Please note that products that are enumerated in paragraph 1(f) generally have potatoes, corn, or corn meal as a main ingredient. However, inclusion of ingredients not listed above would not preclude a particular product from falling within paragraph 1(f)”.

Our position is that if a product is represented (i.e., labelled and marketed) solely for use as an ingredient, it may be zero-rated. However, if a product is represented as a snack food that can be used as an ingredient/garnish, that product will be excluded from zero-rating if it falls within any one of the exceptions listed in paragraphs 1(a) to (r) of Part III of Schedule VI to the ETA.

This would mean that if the Product is represented as a snack which is excluded from zero-rating under paragraph 1(f) of Part III of Schedule VI to the ETA, the Product would not be zero-rated even though it can be used as an ingredient.

The following factors as listed in paragraph 56 of MS 4.3 are used when determining whether a food product is similar to the “snack foods” as identified in paragraph 1(f) of Part III of Schedule VI to the ETA:

Properties

* Ingredients: potatoes, corn or corn meal.

* Flavours: In addition to salty, the product is available in flavours such as salt and vinegar, barbecue, all-dressed, cheese, nacho, ketchup, pizza, sour cream and onion, etc.

* Texture: crispy, crunchy, brittle or fluffy.

* Cooking process: deep fried or baked.

* Size and shape: small, thin, slice, (chip); long and slender cylindrical form (stick); fluffy mass (puff); or spiral or winding form (curl).

Labelling

* The word "chip", "crisp", "puff", "curl" or "stick" appears in the name of the product or elsewhere on the label (e.g., "healthier than a chip", "tastes like a chip" or "part chip").

* The label includes words found on packages of chips, crisps, puffs, curls, or sticks (e.g., "snack", "party snack" or "crunch").

Packaging

* The product is packaged loosely in a bag.

Marketing

* The advertising, whether through print or electronic media, includes words such as "chips", "crisps", "puffs", "curls" or "sticks" (e.g., "chip-loving eaters" or "healthier than a chip").

* The advertising, whether through print or electronic media, includes words found on packages of chips, crisps, puffs, curls or sticks (e.g., "snack", "snack food", "party snack", "crunch" or "crispy").

PRODUCT 1

Properties

Ingredients: The main ingredients of Product 1 are: [seaweed and] […].

Flavours: Product 1 is sweet and salty. It is available in different flavours: […].

Texture: Product 1 is thin, light, dry, crispy and flaky.

Cooking process: Product 1 is roasted. It is not deep-fried or baked.

Size and shape: Product 1 is rectangular in shape. It comes in a convenient-size package and can be eaten directly, without further processing, by just opening the bag.

Labelling

The labelling of Product 1 states it is a seaweed snack and the words, “seaweed crisps” are included on the front label.

Packaging

Product 1 is packed loosely in foil-type bags similar to a bag of chips, in a single serving size.

Marketing

Product 1 is marketed as seaweed crisps and can be found in the snack aisle of most retail stores.

PRODUCT 2

Properties
Ingredients: The main ingredients of Product 2 are […][seaweed and] […]

Flavours: Product 2 is salty. It is available in other formats and flavours:[…].

Texture: Product 2 is thin, light, dry, crispy and flaky.

Cooking process: Product 2 is not deep-fried or baked but roasted with […].

Size and shape: Product 2 is rectangular in shape. It comes in a convenient-size package and can be eaten directly, without further processing, by just opening the bag.

Labelling
Product 2 is labelled as Roasted Seaweed with serving suggestions such as: […]

Packaging

Product 2 is packed in single serving foil-type bags similar to a bag of chips.

Marketing

Product 2 is marketed as Roasted Seaweed and can be found in the snack aisle of most retail stores. Product 2 in other flavours is described on the manufacturer’s website, as […]. It also includes […][snack and recipe suggestions].

Although Product 1 and Product 2 do not have potatoes, corn or corn meal as the main ingredients and can be used in food preparation, the properties, labelling, packaging, and marketing elements considered together provide an overall indication that the products are snack food similar to those listed in paragraph 1(f) of Part III of Schedule VI to the ETA. As such, they are excluded from zero-rating as the Products:

• have a salty and savoury taste;

• are crispy or crunchy in texture;

• are packaged in a fashion similar to other snack foods;

• are enjoyed and regarded as a snack food;

• can be consumed directly by just opening the bag;

• are generally marketed as a healthy snack food;

• are likely to be found in the snack aisle of retail stores;

• are not promoted solely for use as ingredients in food preparation; and

• are generally marketed as a snack food to compete with chips.

In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the ruling(s) given in this letter provided that: none of the issues discussed in the ruling(s) are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed. The interpretation(s) given in this letter, including any additional information, is not a ruling and does not bind the CRA with respect to a particular situation. Future changes to the ETA, regulations, or the CRA's interpretative policy could affect the interpretation(s) or the additional information provided herein.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 905-721-5222. 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,

Elizabeth Onsiong
Basic Groceries and Recaptured Input Tax Credits Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

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.

Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0L5

[Addressee]

Case Number: 209409

Dear: [Client]

Subject: GST/HST RULING
Tax Status of Financial Planning Services

Thank you for your letter of April 13, 2020, concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to the activities of […][the Company].

The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.

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

STATEMENT OF FACTS

We understand the following facts based on the information you provided.

1. […][The Company] is a GST/HST registrant located in […][Province A]. The services performed [in Province A] by the Company are performed by a certified financial planner employed by the Company.

2. The Company focuses on general financial planning advice centred around tax advice and planning and estate services.

3. The Company does not provide legal or accounting advice and does not practice law or accounting when providing financial plans to its clients.

4. The Company has provided us with a sample […] agreement with the client to perform financial planning services. The services performed by the Company include the following:

a. reviewing the client’s current financial status before making recommendations on a financial plan;

b. reviewing the client’s estate plan, if the plan requires updating the Company refers the client to an attorney;

c. reviewing the insurance policies held by the client and making an assessment on the appropriate risk level,

d. using technology to prepare projections and create a financial plan that addresses the client’s retirement, education and other future goals;

e. referring the client to the appropriate professional including referring the client to a financial brokerage firm.

5. The Company receives a specific fee that may be by the hour or a fixed fee with a quoted fee range for each financial plan provided. [Hourly] Fees range from […] $[…] to $[…] […].

6. Clients are under no obligation to follow any recommendation or advice provided by the Company. The Company does not receive any commissions that may result from the implementation of the client’s financial plan, unless fully disclosed to the client.

RULING REQUESTED

You would like a ruling to know whether the fee received for financial planning services are subject to GST/HST.

RULING GIVEN

Based on the facts set out above, we rule that the hourly fees paid to [the Company] for financial planning services [performed in Province A] are taxable at the [Province A] rate of […]%.

In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the ruling given in this letter provided that: none of the issues discussed in the ruling are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 343-571-0207. 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 Lacasse
Manager
Insurance and ITC Allocation Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate

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.

Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0L5

[Addressee]

Date: December 15, 2020

Case Number: 203737

Dear [Client]:

Subject: GST/HST RULING
Application of GST/HST to Supplies of Samosas, Pakoras, Namak Para, and Boondi

Thank you for your letter of October 21, 2019, concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to supplies of samosas […], pakoras […], namak para […], and boondi […].

The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.

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 have described [...][the Samosas] as a fried dish with a savory filling, such as potatoes, onions, peas, meat, or lentils, which is normally shaped in the form of a triangle.

2. As per your submission, it is our understanding that […][the Samosas are] prepared in your kitchen and then fried in a large batch in the morning. Throughout the day, they are sold in various quantities for takeout only. Where required, another large batch is prepared and fried.

3. You have indicated that [the Samosas are] not reheated or kept in a heated cabinet.

4. [The Samosas are] also prepared and sold uncooked or half-fried (not suitable for immediate consumption) to customers.

5. […]

6. […][The Pakoras are] prepared using ingredients such as onion, eggplant, potato, spinach, cauliflower, or chilli pepper. They are dipped in a batter made from gram flour then deep-fried.

7. You have indicated that [the Pakoras are] […][prepared and fried x times per week]. […]. […], in a phone conversation […], it was confirmed that [the Pakoras are] […] always served hot and fresh. Furthermore, [you indicated] […] that supplies of […][the Pakoras] are always made fresh.

8. You have described [...][the Namak Para] as a crunchy savory snack eaten in the Indian subcontinent. Furthermore, with respect to texture, you have indicated that [the Namak Para] consists of ribbon-like strips of pastry with cumin seeds.

9. [The Namak Para] is deep-fried in oil. The appearance, taste, and texture can be compared to that of samosa pastry.

10. […]

11. You have described […][the Boondi] as a batter of chickpea flour that is seasoned with salt and cumin seeds, and fried in oil in droplet form.

12. You have indicated that [the Boondi] is not a ready to eat snack but instead is popularly used to prepare raita. You explain that raita made with [the Boondi] typically contains curd (yogurt), [the Boondi] (which is soaked in water to make it soft, then sieved), and seasonings of salt, chilli, and other spices.

13. […]

14. [The Boondi] is prepared and fried […][y times per week]. They are not sold hot or re-heated and are sold by weight.

RULING REQUESTED

You would like to know whether supplies of [the Samosas], [the Pakoras], [the Namak Para], and [the Boondi] are zero-rated for GST/HST purposes.

RULING GIVEN

Based on the facts set out above, we rule that supplies of [the Samosas] in a frozen or half-fried state would be zero-rated for GST/HST purposes. Furthermore, we rule that supplies of [the Samosas] in a cooked state would be excluded from zero-rating under paragraph 1(o) and thus would be subject to the full rate of GST/HST.

We further rule that supplies of [...][the Pakoras] would be excluded from zero-rating under paragraph 1(o) and thus would be subject to the full rate of GST/HST.

With respect to [the Namak Para], we rule that supplies of [the Namak Para] would be excluded from zero-rating under paragraph 1(f) and thus would be subject to the full rate of GST/HST.

Finally, with respect to [the Boondi], we rule that supplies of [the Boondi] would be zero-rated for GST/HST purposes.

EXPLANATION

Section 1 of Part III of Schedule VI to the ETA zero-rates supplies of food or beverages for human consumption, including sweetening agents, seasonings and other ingredients to be mixed with or used in the preparation of such food or beverages, other than supplies excluded from zero-rating by way of paragraphs (a) to (r) of that section.

One of the intentions of Part III of Schedule VI to the ETA is to exclude from zero-rating convenience foods or foods supplied for immediate consumption. A food item that is supplied and heated for consumption would be considered a convenience item as the purchaser does not have to do any preparation and the item is ready for immediate consumption.

Paragraph 1(o) excludes supplies of food or beverages heated for consumption.

With respect to [the Samosas], [you assert they are][…] sold hot and fresh. […], supplies of [the Samosas], when sold in a cooked state, are excluded from zero-rating and are subject to GST/HST at the full-rate. Supplies of [the Samosas] sold in an uncooked or half-fried state are zero-rated for GST/HST purposes.

With respect to [the Pakoras], [we understand][…] that supplies of [the Pakoras] are always made fresh […] [and] always served hot and fresh. Again, in evaluating the tax status of [the Pakoras] in light of the commentary provided above, supplies of [the Pakoras] are also excluded from zero-rating under paragraph 1(o) and therefore are subject to GST/HST at the full-rate.

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".

Paragraph 56 of GST/HST Memorandum 4.3, Basic Groceries, (GST/HST Memo 4.3) outlines the 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.

The properties, labelling, packaging, and marketing elements of [the Namak Para], considered together, provide an overall indication that [the Namak Para] is a snack food similar to those listed in paragraph 1(f) of Part III of Schedule VI to the ETA. These include [the Namak Para]’s salty and savoury taste, its crispy texture, its appearance (small, bite-sized pieces resembling ribbon strips), its cooking process (deep-fried) and product marketing identifying [the Namak Para] as a snack. Therefore, supplies of [the Namak Para] are excluded from zero-rating under paragraph 1(f) and are subject to GST/HST at the full-rate.

As [the Boondi] is an ingredient that is not excluded under any of the exclusionary paragraphs (a) to (r) of section 1 of Part III of Schedule VI, supplies of [the Boondi] are zero-rated, or subject to the GST/HST at the rate of 0%.

In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the ruling(s) given in this letter provided that: none of the issues discussed in the ruling(s) are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed.

If you require clarification with respect to any of the issues discussed in this letter, […]. 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,

Zubair Patel
Senior Rulings Officer
Basic Groceries and Recaptured Input Tax Credits Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

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, 11th floor
320 Queen Street
Ottawa ON K1A 0L5

Case Number: 187870a
Business Number: […]

Dear [Client]:

Subject: GST/HST RULING
Lease of real property

[This amended letter concerns] […] the application of the goods and services tax/harmonized sales tax (GST/HST) to the lease of real property by […](the Corporation) to […](the Tenant). […]

The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.

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

STATEMENT OF FACTS

Based on […], we understand the following:

1. The Corporation owns and operates a rental housing complex located [in Province X] […] (the Building), consisting of [#] single or double independent living suites and shared common areas. The Corporation provides housing at reasonable rates for seniors who are at least 55 years of age and whose income is less than 5 times the annual rent. For 2018, the maximum income was $[…] for the single suites and $[…] for the double suites. Less than 5% of the tenants have an income equal to or greater than the maximum income amounts.

2. The Corporation was designated to be a municipality under subsection 259(1) in respect of activities that involve the provision of rent-geared-to-income (RGI) housing, with an effective date of [mm/dd/2002]. It has been a designated municipality in respect of these activities ever since.

3. The Corporation is not registered for GST/HST purposes.

4. You stated that the Corporation is a non-profit organization. However, it is not a qualifying non-profit organization for purposes of the GST/HST public service bodies’ (PSB) rebate, as its percentage of government funding is not at least 40% of its total revenue. As such, the Corporation is not entitled to the PSB rebate for qualifying non-profit organizations.

5. You also stated that the Corporation claims the PSB rebate for municipalities for the GST/HST paid or payable on all its purchases and expenses.

6. [Beginning in 2009] […], the Corporation undertook a major renovation of the Building […]. The new common area contains offices, a kitchen, a library, a dining room hall, and a bingo room.

7. The Corporation had two existing lounges that became unused as a result of the new common area, which it decided to lease to a third party.

8. The Corporation entered into a Lease Agreement with […](the Tenant), operating as […] with respect to the Premises, […]. The Tenant is using the Premises as a day care facility as defined in the […][relevant provincial legislation].

9. Section […] of the Lease Agreement states that the Landlord (i.e., the Corporation) agrees to lease to the Tenant the Premises, including all heating, ventilating, mechanical and electrical equipment, and water, sewage and electrical power services and utilities installed in the Premises, for the exclusive use of the Tenant.

10. The Lease Agreement states that, for the period [mm/dd/yyyy], through [mm/dd/yyyy], the annual rent shall be $[…][less than $50,000] (payable at $[…] monthly), plus GST. For each year thereafter commencing [mm/dd/yyyy], rent charges shall be reviewed and shall be adjusted as cost of living may warrant, but not to exceed cost of living. The Lease Agreement was amended to commence in [mm/dd/yyyy], which was the time the daycare opened and the Tenant began paying rent. […].

11. Section […] of the Lease Agreement states that the Tenant shall pay to the Corporation its proportionate share of costs for hydro, water, sewer and waste removal, unless the Tenant has made arrangements to meter the utilities themselves, in which case the Landlord shall adjust the Tenant’s share of the costs.

12. Section […] of the Lease Agreement states that all amounts which are payable by the Tenant to the Corporation pursuant to the lease shall be considered to be rent and all remedies from time to time available to the Corporation for the collection of rental shall apply.

13. Section […] of the Lease Agreement states that the Tenant shall pay all business taxes, shared property taxes and other similar levies applicable to the premises including any additional property taxes levied on the property due to the day care.

14. According to section […] of the Lease Agreement, the Tenant shall be responsible for making all changes, alterations or improvements to the interior of the Premises for its own requirements, provided that, before commencing any work, the Tenant shall obtain the written approval of the Landlord.

15. The Tenant paid for improvements to the Premises for its daycare business. The Corporation did not reimburse any amounts to the Tenant for costs incurred for the improvements.

16. The Corporation has not filed an election under section 211 to treat the lease of the Premises as taxable.

RULING REQUESTED

You would like to know if the Corporation’s lease of the Premises to the Tenant is a taxable supply.

RULING GIVEN

Based on the facts set out above, we rule that the Corporation’s lease of the Premises to the Tenant is a taxable supply. However, the Corporation is not required to collect the GST/HST on the lease payments and additional rents, as it is not a GST/HST registrant. If the Corporation becomes a GST/HST registrant, it will be required to collect the GST/HST on the lease payments and additional rents.

EXPLANATION

Generally, every recipient of a taxable supply (other than a zero-rated supply) is required to pay GST/HST on the value of the consideration for the supply. An exempt supply is a supply that is not subject to GST/HST and that is included in Schedule V.

A supply of real property made by a public service body (other than a financial institution, municipality or a government) is exempt unless an exception applies. For GST/HST purposes, a public service body includes a non-profit organization.

"Non-profit organization" is defined in subsection 123(1) 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."

It is a question of fact whether, at any particular time, an entity meets the definition of a non-profit organization for ETA purposes. In particular, whether the Corporation meets the criterion of operating solely for a purpose other than profit must be determined on an ongoing basis.

Generally, supplies of real property (other than short-term accommodation) by way of lease for a period of more than one month by a public service body are exempt unless an exception applies. One of the exceptions is if the supply is of designated municipal property and the public service body is a person designated to be a municipality for the purposes of section 259 (that is the PSB rebate). Since the Corporation is a designated municipality for purposes of section 259 in respect of its supplies of RGI housing, it must be determined whether the Building owned by the Corporation is designated municipal property.

Designated municipal property includes property of a person who,

* at any time, is designated to be a municipality for purposes of claiming the PSB rebate for municipalities;

* intended to consume, use, or supply the property more than 10% in the course of activities specified in its designation at that time; and

* is eligible to include an amount in its non-creditable tax charged of GST/HST paid on a supply of the property made to the person or an improvement to the property by the person at that time, for purposes of claiming the PSB rebate.

In general terms, "non-creditable tax charged" means the GST/HST paid or payable on property or services for which a PSB cannot claim an input tax credit (ITC), rebate, refund or remission, other than a PSB rebate.

Once property qualifies as designated municipal property, it is treated as such for as long as it is held by the designated municipality. The definition does not enable only part of a property to be designated municipal property.

The Corporation has been designated as a municipality in respect of its supplies of RGI housing under subsection 259(1) since [mm/dd/2002]. We understand that, throughout the time that the Corporation has been designated, it has intended to supply more than 10% of the housing units in the Building on an RGI basis. Moreover, the Corporation became eligible in 2009 to include the GST/HST paid or payable in respect of improvements made in 2009 to the Building in its non-creditable tax charged for purposes of claiming the PSB rebate. Therefore, the Building became designated municipal property in 2009, which is when it met all three criteria of the definition.

As the Building has been designated municipal property since 2009, the lease of the Premises by the Corporation to the Tenant beginning in [yyyy] is excluded from the exemption. Since no other exemption in the ETA applies, the lease of the Premises is a taxable supply for GST/HST purposes.

Standard lease agreements commonly provide for the payment of amounts known as "additional rents" as well as basic rent. Examples of amounts that might be included in a lease agreement as additional rents are percentage rents, common area expenses and certain cost reimbursements such as property taxes, insurance or utilities. Where these amounts form part of the total consideration for the supply of real property, even though these amounts may be charged separately, they will take on the same tax status as the rent.

The Corporation’s charge to the Tenant for their proportionate share of costs for hydro, water, sewer and waste removal under the terms of the Lease Agreement are additional rents. The Tenant's reimbursement of municipal property taxes, and any other taxes or levies applicable to the Premises is also considered additional rent under the Lease Agreement. These additional rents form part of the consideration for the lease of the Premises made under the Lease Agreement and will take on the same tax status as the lease.

Generally, GST/HST registrants must charge and collect the GST/HST on all taxable (other than zero-rated) supplies of property and services they make in Canada. For GST/HST purposes, a registrant is a person who is registered or required to be registered for the GST/HST. A person who is a “small supplier” is not required to be registered for the GST/HST and is therefore not a registrant (unless the person decides to register voluntarily).

A public service body is a small supplier if its total revenues from taxable supplies are $50,000 or less in the last four consecutive calendar quarters and in any single calendar quarter. A person who is not a GST/HST registrant is generally not required to collect the GST/HST on its taxable supplies. As the Corporation is not a registrant (i.e., it is a small supplier and not required to be registered for the GST/HST and it has not registered voluntarily), it is not required to charge GST/HST on the lease payments and additional rents.

If the Corporation becomes a registrant (i.e., exceeds the small supplier threshold or registers for GST/HST purposes), it would be required to charge and collect the GST/HST on all its taxable supplies. This includes the lease of the Premises, since the lease is a taxable supply.

As a designated municipality in […][Province X], the Corporation is eligible to claim the municipal PSB rebate of 100% of the GST paid or payable on eligible expenses in respect of its designated activities, i.e., supplies of RGI housing. When calculating its PSB rebate, the Corporation must take into account the extent that it intended to consume, use or supply the property or service in the course of its designated activities.

The municipal designation does not apply to any other activities that the Corporation may be engaged in, such as, the supply of residential units to tenants that are not on an RGI basis or for which no government subsidy is payable, the supply of commercial space (e.g., the lease of the Premises), or other activities that are not supplies of RGI housing.

A public service body that is a GST/HST registrant may be eligible to claim the GST/HST paid or payable on its purchases and expenses related to its commercial activities by claiming ITCs. Please note, there are special rules regarding entitlement to claim ITCs for capital personal property and capital real property.

A public service body that acquires property or services partly for use in commercial activities, and partly for use in exempt activities must apportion the GST/HST paid or payable on the property or services accordingly in calculating its ITC claim.

For more information, please refer to guide RC4049, General Information for Municipalities.

In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the ruling(s) given in this letter provided that: none of the issues discussed in the ruling(s) are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed.

If you require clarification with respect to any of the issues discussed in this letter, […]. 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,

Maria Forte-Long
Municipal Sectors Unit
Legislative Policy and Regulatory Affairs Branch Division
Excise and GST/HST Rulings Directorate

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.

Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0L5

[Addressee]

Case Number: 198971
Business Number: […]

Dear [Client]:

Subject: GST/HST RULING
Input tax credit entitlements related to […][the Program]

Thank you for your fax of April 18, 2019, concerning the input tax credit entitlements related to […][the Program]. We apologize for the delay in providing this response.

The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.

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

STATEMENT OF FACTS

We understand the facts as follows:

1. […][The Corporation] was incorporated under […][relevant federal legislation](Footnote 1) on [mm/dd/yyyy].

2. The purpose of the Corporation is […]

3. The members of the Corporation are: […][Member #1], […].

4. The Corporation operates under a Unanimous Members’ Agreement dated [mm/dd/yyyy].

5. Under article […] of the Unanimous Members’ Agreement, […][Member #1 agrees to pay the Corporation’s expenses].

6. The Corporation contracted with […][X] to provide […][the Program]. […][The related Agreement] was signed [mm/dd/yyyy]. […][The Agreement] contains the following clauses:

[…][Clauses include information about the scope and deliverables provided under the Agreement. It also includes a clause stating the Corporation is the sole payor for performance under the Agreement.]

7. […][Details about the Program]

8. A sample of invoices from [X] was provided. The invoices [each] contain the following information: […][Invoice number; X’s name and address; the name and address of the addressee; the total amount being billed to that addressee; the amount of GST/HST included in the Invoice]

9. [Member #1] paid the above invoices from [X], including those addressed to the Corporation.

10. The Corporation registered for GST/HST purposes on [mm/dd/yyyy].

11. […][Information about Member #1] (Footnote 2).

12. […][More information about Member #1] (Footnote 3), and […].

13. [Member #1] registered for GST/HST purposes on [mm/dd/yyyy].

14. […].

15. You confirmed that there is no agency agreement between any of the parties.

RULING REQUESTED

You would like to know:

1. Is the service supplied by [X] under [the Agreement] a taxable supply?

2. Is [Member #1] entitled to claim input tax credits for the tax payable or paid without becoming payable in respect of supplies acquired for [the Program]?

3. Is the Corporation entitled to claim input tax credits for the tax payable or paid without becoming payable in respect of supplies acquired for [the Program]?

4. Can the Corporation backdate its registration for GST/HST purposes prior to [mm/dd/yyyy]?

We acknowledge your request for rulings on the above matters. However, as noted in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, a ruling provides the Canada Revenue Agency’s (CRA’s) position on specific provisions of the legislation as these relate to a clearly defined fact situation of a particular person. As the circumstances are such that all of the pertinent facts cannot be established at this time (for example, if the Corporation can backdate its registration), we are unable to rule on these issues. Rather, we are providing general information which we trust will be of assistance.

RULING GIVEN

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

1. The service supplied by [X] to the Corporation under [the Agreement] is a single taxable supply. GST/HST should be charged on the sub-total of the invoice.

2. The Corporation is making a taxable supply to [Member #1]. The Corporation must charge GST/HST on the value of the consideration for the supply.

3. [a.] The Corporation may claim as an ITC the tax that became payable or was paid without becoming payable on the supply made by [X] during a reporting period during which the Corporation was a registrant, as it is an input into making taxable supplies for consideration.

3. [b.] [Member #1] is not entitled to input tax credits in respect of supplies made by [X], because [Member #1] is not the recipient of those supplies.

EXPLANATION

Supplies by [X]

Based on […][the Agreement], [X] is providing the Corporation a single supply of a service. As there are no exempting provisions that could apply, the supply is taxable and [X] should be charging GST/HST on the total cost of the service provided to the Corporation.

[…]. Because it is a single supply, tax should be charged on the full amount [i.e. the total cost of the service provided to the Corporation] even if some elements may be exempt of tax if they were supplied separately.

For more information on single and multiple supplies, see GST/HST Policy Statement P-077R2, Single and Multiple Supplies, available on CRA’s website.

Recipient of [X]’s supplies

The recipient of a supply is liable to pay the GST/HST owing on the supply. For GST/HST purposes a recipient includes “where consideration for the supply is payable under an agreement for the supply, the person who is liable under the agreement to pay that consideration”.

Paragraph […] of […][the Agreement] between the Corporation and [X] states that:

[…][The Corporation is the sole payor and will pay the X per the Agreement.]

The Corporation is liable to pay the consideration for the supply. Therefore, the Corporation is the recipient of the supplies by [X]. The tax on the supplies made under [the Agreement] is payable by the Corporation.

[Member #1] is not liable to pay the consideration for the supplies by [X] under [the Agreement] and is not the recipient of those supplies for GST/HST purposes.

Supplies by the Corporation

The Corporation is managing [the Program] by contracting [with X] for services. The Corporation’s purpose is […] as stated in its articles of incorporation. The Corporation has done this by contracting with [X] to carry out […][the Program]. The Corporation transacts with […][X] and reports to [Member #1]. Based on the information provided, the Corporation is supplying a “program management service” to [Member #1] for consideration.

The Corporation may be a non-profit organization for GST/HST purposes (see the section “Small supplier” for the definition) and a public service body. Certain supplies by public service bodies are exempt under the provisions of Schedule V. However, there are no sections of Schedule V that would apply to the above supply.

Therefore, the supply of the service supplied by the Corporation is taxable. The Corporation should charge and collect GST/HST on its supplies of program management services to [Member #1].

ITCs available to the Corporation

As the Corporation is the recipient of the supplies by [X], the Corporation may claim as an ITC the tax that became payable or was paid without becoming payable on this supply during a reporting period during which the Corporation was a registrant, provided the requirements to claim ITCs are met.

Based on the information provided, the Corporation was not a registrant (that is, neither registered for GST/HST purposes, nor required to be registered) prior to its date of registration. Therefore, the tax paid on the invoices provided that are dated prior to the date of registration is currently not available to the Corporation as an ITC.

If the Corporation is allowed to backdate its registration (see the Additional Information section), it may be entitled to claim ITCs for tax that became payable or was paid without becoming payable after the Corporation’s new effective date of registration (assuming the other requirements to claim ITCs are met).

See GST/HST Memorandum 8.4, Documentary Requirements for Claiming Input Tax Credits, for more information.

ITCs available to [Member #1]

Generally, a GST/HST registrant is eligible to claim ITCs to recover the GST/HST it pays to the extent that its purchases and expenses are inputs into making taxable supplies for consideration. No ITC is available where a purchase or an expense was incurred for the purpose of making exempt supplies, or for a purpose other than the making of supplies.

[Member #1] cannot claim as an ITC the tax paid on the invoices from [X] because it is not the recipient of the supplies made by [X].

ADDITIONAL INFORMATION

Backdating of registration

It is understood that the Corporation is currently registered for GST/HST. The effective date of registration is [mm/dd/yyyy].

The effective date of a person’s GST/HST registration depends on when they exceed the small supplier threshold (discussed below) or when they began collecting tax on its taxable supplies on a consistent basis.

[…]

Small supplier

In general, every person who makes a taxable supply in Canada in the course of a commercial activity (defined on the next page) engaged in by the person in Canada is required to be registered for the GST/HST, except where the person is a small supplier. A person is a small supplier if their total revenues and those of its associates from taxable supplies are $30,000 or less ($50,000 for public service bodies) in the last four consecutive calendar quarters and in any single calendar quarter.

For purposes of the GST/HST, the Corporation may be a non-profit organization, which is a public service body eligible for the $50,000 small supplier threshold. A non-profit organization is defined to mean “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”.

For GST/HST purposes, the definition of the term “commercial activity” includes the making of taxable supplies in the course of a business but specifically excludes the making of an exempt supply.

For more information, see GST/HST Memorandum 2.2, Small Suppliers, and Guide RC4022 under the heading “Small supplier”.

In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the rulings given in this letter provided that: none of the issues discussed in the rulings are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed. The interpretations given in this letter, including any additional information, is not a ruling and does not bind the CRA with respect to a particular situation. Future changes to the ETA, regulations, or the CRA's interpretative policy could affect the interpretation(s) or the additional information provided herein.

If you require clarification with respect to any of the issues discussed in this letter, […]. 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,

Desneiges Arbour
Charities and Non-profit Organizations Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate

FOOTNOTES

1 […].

2 […].

3 […].

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.

Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0L5

Case Number: 183395
Business Number: […]

Dear [Client]:

Subject: GST/HST RULING
Application of the GST/HST to Copper Intrauterine Devices

Thank you for your fax of [mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to the supply of copper intrauterine devices (IUDs). We apologize for the delay in responding.

The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.

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

STATEMENT OF FACTS

We understand the following:

1. You [ask how] […] the GST/HST [applies] to the sale of copper IUDs […].

2. […].

3. […].

RULING REQUESTED

You would like to know whether supplies of copper IUDs could be zero-rated throughout the distribution chain.

RULING GIVEN

Based on the facts set out above, we rule that supplies of copper IUDs are not zero-rated supplies and GST/HST is applicable throughout the distribution chain at the applicable rate depending on the province in which the supply is made.

EXPLANATION

Generally, all supplies of property and services made in Canada are taxable unless an exemption from the GST/HST applies. Taxable supplies are supplies made in the course of a commercial activity and may be taxable at the rate of 0% (zero-rated supplies), 5%, 13%, or 15% on the value of the consideration for the supply depending on the province in which the supply is made. Exempt supplies are not subject to the GST/HST and are included in Schedule V. Zero-rated supplies are included in Schedule VI.

The Canada Revenue Agency (CRA) published the article “Supplies of intrauterine devices” in the Excise and GST/HST News No. 101 on its website in March 2017, which explains the application of the GST/HST to the supply of hormonal IUDs and copper IUDs. Part II of Schedule VI lists medical devices for human use that are zero-rated for GST/HST purposes. Some devices are zero-rated in their own right, such as supplies of artificial eyes, artificial teeth and hearing aids. Other devices are zero-rated only when supplied under certain conditions (for example, on the written order of a specified professional for use by a consumer named in the order, or when specially designed for use by an individual with a disability). Part II of Schedule VI does not contain any provision that would zero-rate the supply of an IUD.

Although there are no provisions that zero-rate the supply of an IUD as a device, the supply of certain IUDs may be considered to be a supply of a drug for purposes of the GST/HST. Part I of Schedule VI contains provisions that zero-rate a broad range of drugs and substances that are regulated under federal legislation. Paragraph 2(b) of Part I of Schedule VI zero-rates a supply of “a drug that is set out on the list established under subsection 29.1(1) of the Food and Drugs Act or that belongs to a class of drugs set out on that list, other than a drug or mixture of drugs that may, under that Act or the Food and Drug Regulations, be sold to a consumer without a prescription”. For purposes of paragraph 2(b), drug means a drug as defined in the Food and Drugs Act.

CRA has received confirmation that the hormonal IUDs available in Canada contain a drug which is on the list established under subsection 29.1(1) of the Food and Drugs Act and requires a prescription from a physician to be purchased. Health Canada has advised that hormonal IUDs are drugs as defined in the Food and Drugs Act. Therefore, the supply of hormonal IUDs is zero-rated pursuant to paragraph 2(b) of Part I of Schedule VI.

Although hormonal IUDs may be considered drugs for purposes of the Food and Drugs Act, copper IUDs are not drugs as defined in the Food and Drugs Act. As they are not drugs, the zero-rating provisions in Part I of Schedule VI do not apply to sales of these products and as such, sales of copper IUDs are subject to GST/HST at the applicable rate (5%, 13% or 15%) depending on the province in which the supply is made. Therefore, sales of copper IUDs are subject to GST/HST throughout the distribution chain, regardless of whether they are prescribed by a medical practitioner and/or dispensed by a pharmacist.

[…]

In order to treat copper IUDs as zero-rated supplies, a legislative amendment to the ETA would be required. Legislative amendments are a matter of tax policy, which fall within the responsibility of the Department of Finance Canada. We have notified officials at the Department of your concerns.

In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the ruling given in this letter provided that: none of the issues discussed in the ruling are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at […]. 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,

Art Blommesteijn
Health Care Sectors Unit
Public Sectors Bodies and Governments Division
Excise and GST/HST Rulings Directorate

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.

Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0L5

[Addressee]

Case Number: 126129

Dear [Client]:

Subject:	GST/HST RULING
      		Application of GST/HST to Manual Osteopathic Services

Thank you for your letter of [mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to manual osteopathic services. We apologize for the delay in our response.

The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.

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

STATEMENT OF FACTS

We understand that:

1. You are qualified as an Osteopath providing manual osteopathic services and you exercise your profession in Ontario.

2. You are certified by […].

3. You are a member of […][X] and you […].

4. […], [X], is not an official regulating body and it does not certify any provincial recognition.

Please note that, for purposes of this ruling, the terms “manual osteopathic services”, “osteopathic manual practitioner” and “manual osteopathy” do not refer to the profession of osteopathy that is regulated in conjunction with the practice of medicine (i.e., that which is governed by a provincial College of Physicians and Surgeons).

RULING REQUESTED

You would like to know whether your supply of services as an osteopathic manual practitioner is exempt for GST/HST purposes.

RULING GIVEN

Based on the facts set out above, we rule that your supply of services as an osteopathic manual practitioner is taxable for GST/HST purposes at a rate of 13% when supplied in Ontario, as it is not exempt under section 7 of Part II of Schedule V.

EXPLANATION

Generally, most supplies of property and services made in Canada are subject to GST/HST, unless they are specifically exempt under Schedule V or zero-rated (taxed at 0%) under Schedule VI. Part II of Schedule V sets out the health care services that are exempt from GST/HST. A supply of a health care service rendered by a health care professional that is not included in Part II is generally subject to GST/HST.

Currently, there is no provision in the ETA that specifically exempts supplies of manual osteopathic services from GST/HST.

Paragraph 7(f) of Part II of Schedule V

Section 7 of Part II of Schedule V provides exemptions from the GST/HST, which includes osteopathic services (paragraph 7(f)), when these services are rendered to an individual by a “practitioner” of that service.

Section I of Part II of Schedule V defines ‘‘practitioner’’, to mean a person who

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

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

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

For purposes of section 7, to be a practitioner in respect of osteopathic services, a person must be licensed or otherwise certified to practise the profession of osteopathy in the province in which the service is supplied (paragraph (b) of the definition of ‘‘practitioner’’), or, where the person is not required to be licensed or otherwise certified to practise the profession in that province, the person must have the qualifications equivalent to those necessary to be so licensed or otherwise certified in another province (paragraph (c) of that definition).

In order to be licensed or otherwise certified to practise a particular health profession in a province, a person must be a member of a provincial regulatory body responsible for the regulation of the health profession in that province. The role of these provincial regulatory bodies and the authority to monitor and regulate their respective health professions is set out in provincial legislation.

In Ontario, the practise of osteopathy is regulated under the Medicine Act, 1991, and is under the jurisdiction of the College of Physicians and Surgeons of Ontario. Pursuant to 9(3) of the Medicine Act, 1991, no person other than a member of the College shall hold himself or herself out as a person who is qualified to practise as an osteopath in Ontario.

Manual osteopathy is not a regulated health profession in Ontario. There is no provincial licensing body in Ontario for providers of manual osteopathic therapy; i.e., there are no licensing or certification requirements to provide this service.

With respect to the supply of manual osteopathic services made in provinces other than Ontario, it is our understanding that there are no provincial licensing or certification requirements anywhere else in Canada for the profession of manual osteopathy and, there are no provincial regulatory bodies responsible for the regulation of the profession of manual osteopathy. Therefore, a osteopathic manual practitioner is not a "practitioner", as defined in section I of Part II of Schedule V, and supplies made by a manual osteopathic practitioner are not exempt under section 7.

Based on the information you provided, an osteopathic manual practitioner who is certified by […], is not a ‘‘practitioner’’ for purposes of section I of Part II of Schedule V. Therefore, a supply of manual osteopathic services rendered by such a practitioner is not exempt under paragraph 7(f) of Part II of Schedule V.

In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the ruling(s) given in this letter provided that: none of the issues discussed in the ruling(s) are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed.

If you require clarification with respect to any of the issues discussed in this letter, please call Art Blommesteijn directly at 613-670-7932. 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,

Kassandra Leonard
Health Care Sectors Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate

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.

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

[Addressee]

Case Number: 96569

July 26, 2013

Dear [Client]:

Subject:		GST/HST RULING
GST/HST Treatment of the sale of condominiums for subsequent use in a rental pool arrangement	

We are writing in response to [...] [correspondence], concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the sale of condominium units [...]

The HST applies in the participating provinces at the following rates: 13% in Ontario, New Brunswick and Newfoundland and Labrador, 14% in Prince Edward Island (effective April 1, 2013) and 15% in Nova Scotia. The GST applies in the rest of Canada at the rate of 5%.

Effective April 1, 2013, the 12% HST in British Columbia has been replaced by the 5% GST and a provincial sales tax.

The submission from your office included [...] [relevant documents].

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

Statement of Facts

We understand as follows:

1. The condominium hotel project known as [...] (the "Development") is being constructed by [...] (the "Declarant"). The Development is situated in [...] [Location A], [...].

2. The Development is being constructed [...] and, when completed, will include [...] [information about number of floors and the number of units]. All of the Units are intended for condominium hotel use in a rental pool arrangement, subject to certain opt-out rights for purchasers.

3. The Declarant will register the Declaration pursuant to the provisions of the [...] [legislation] in respect of the Development.

4. [...] requires that the Development be subject to a rental management program that restricts occupation by owners [...] to no more than [#] days per month. The purpose of the [...] requirement is to ensure that [...] of the Units in the Development are used for short-term rental purposes and are available as hotel accommodation for visitors to [Location A].

5. Every Unit purchaser is required to be a member of [...] (the "Association"). The purpose of the Association is to maintain and manage [Location A] lands, promote [Location A] as a year-round [...] [destination], [...] [plan activities] at [Location A] and provide [...] guest services [...], such as information services, garbage collection and garden maintenance.

6. Each Unit purchaser is required to pay an annual basic fee to the Association [...]. Purchasers that participate in the rental pool are also required to pay a [...] equal to [...]. Every purchaser is also required to pay an initial entry fee to the [...] Association equal to [...]. When a Unit is resold, new purchasers are generally required to pay an entry fee equal to [...].

7. The Units are marketed to potential purchasers as hotel condominium properties and are sold on a turn-key furnished basis with all of the furniture and other items necessary for the use of the Unit as a hotel.

8. The Declarant has arranged for [...] ("the Manager") to [have] [...] the exclusive right to operate the rental pool for the Development. [...], the Manager is responsible for managing the rental of the Units in accordance with the requirements of [...] (the "Agreement").

9. Every Unit purchaser is required to enter into the Agreement with the Manager, which is subject to certain opt-out provisions. At the time of purchase, up to [...] of purchasers are entitled, [...], to elect to withdraw their specific Unit from the rental pool. In addition, provided that [...] of the Units remain in the rental pool at all times, an owner is entitled to withdraw their Unit from the rental pool for a subsequent rental year [...]. Any Unit withdrawn from the rental pool will not participate in the rental pool for any subsequent year unless the owner elects to rejoin the rental pool.

10. Under [...] of the Declaration, no owner of a Unit may at any time lease or permit occupation of their Unit (except for immediate family members and guests) unless it is pursuant to the Agreement as part of the rental pool.

11. Unless a purchaser elects to opt out of the rental pool at the time of purchase, the purchaser is required to provide a certificate confirming that the purchaser is registered for the GST/HST at the time of closing.

12. All Units in the rental pool are intended to be rented out to visitors to [Location A] on a short-term basis (i.e., for periods of less than 60 days). Rental charges for a Unit exceed $20 per day.

13. The key provisions of the Agreement are as follows:

• [...] - Each owner of a Unit in the rental pool is entitled to share in [...] [rental revenue]. Each owner is responsible for a proportionate share of certain expenses relating to the operation of the rental pool which are deducted in determining [...] [their final share of rental revenue] (e.g., promotional discounts and commissions payable to travel agents and brokers).

• [...] - Each owner of a Unit participating in the rental pool is entitled to payment [...] of their proportionate share [...] calculated in accordance with [...]. Each owner is entitled to this payment for each day the Unit is in the rental pool, regardless of whether the specific Unit is rented during the month.

• [...] - The Manager is required to [regularly] provide each owner with [...] [documents about the overall financial performance of the rental pool and details about the individual owner's final share]

• [...] - The Manager collects GST/HST and other taxes from guests on behalf of the owners.

• [...] - The Manager is entitled to a [...] management fee equal to [...]. The Manager is responsible for payment of certain expenses out of its management fee revenue as indicated in [...] the Agreement.

• [...] - The Manager provides daily housekeeping services for rental guests and after personal use of the Units by the owners.

• [...] - Each subsequent purchaser of a Unit is required to assume the owner's responsibilities under the Agreement as a condition of sale.

• [...] - A Unit cannot be rented out to third parties by an owner except in accordance with the terms of the Agreement.

Rulings Requested

You would like a ruling confirming the following:

1. Where a Unit is sold to a purchaser who intends to participate from the time of purchase in the rental pool under the terms of the Agreement, the particular Unit will not be a "residential complex," as that term is defined in subsection 123(1) of the ETA. In those circumstances, a GST/HST-registered purchaser will be required to self-assess the applicable GST/HST on the purchase and the Declarant will not be required to collect and remit GST/HST in respect of their sale of the Unit.

2. Where the purchaser of a Unit elects to opt out of the rental pool at the time of purchase, the sale of the Unit will be a sale of a residential complex.

3. A GST/HST-registered purchaser that purchases a Unit for short-term rental usage through the rental pool will be entitled to claim input tax credits (ITCs) for the GST/HST paid on the purchase of the Unit and on ongoing operating expenses to the extent that the Unit is used in the short-term rental pool operations. Specifically, an owner that places a Unit in the rental pool for 329 or more days a year will be entitled to claim full ITCs while an owner who places a Unit in the rental pool for less than 329 days a year, including up to the maximum non-rental pool use of 120 days a year, will be entitled to claim pro-rated ITCs calculated on the proportion of the days the Unit is in the rental pool to the total days in the rental year.

Rulings Given

Based on the facts set out above, we rule as follows:

1. The sale by the Declarant of a Unit to a purchaser that participates from the time of purchase in the rental pool under the terms of the Agreement is not a sale of a "residential complex" as defined in subsection 123(1) of the ETA. The sale of such a Unit is subject to the GST/HST.

The Declarant is not required to collect the GST/HST payable in respect of a taxable supply by way of sale of a Unit where the Unit is not a residential complex and the recipient of the supply is registered for GST/HST purposes.

2. The sale by the Declarant of a Unit to a purchaser that opts out of the rental pool at the time of purchase is a sale of a "residential complex" as defined in subsection 123(1) of the ETA.

The Declarant is required to collect the GST/HST in respect of a taxable supply by way of sale of a Unit where the Unit is a residential complex and the recipient of the supply is an individual, whether or not the individual is registered for GST/HST purposes. The Declarant is not required to collect the GST/HST in respect of a taxable supply by way of sale of such a Unit where the recipient of the supply is not an individual and is registered for GST/HST purposes.

3. Provided that there is a market for short-term rentals of the Units at the Development throughout the year, a GST/HST-registered purchaser that places their Unit in the rental pool will be entitled to claim input tax credits (ITCs) for the GST/HST paid on the purchase of the Unit and on ongoing operating expenses to the extent that the Unit is used in the short-term rental pool operations. However, a purchaser or an owner of a Unit that initially places it in the rental pool for 329 or more days per year is not necessarily entitled to claim full ITCs for the tax paid or payable on the purchase of the Unit or on ongoing operating expenses.

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
Supplier's obligation to collect GST/HST on taxable sale of residential complex to individual

The general rule under subsection 221(1) requires every person who makes a taxable supply to collect the tax payable by the recipient in respect of the supply. However, subsection 221(2) provides certain exceptions to the general rule. Under certain circumstances, this subsection relieves a supplier from the requirement to collect the tax where the supplier makes a taxable supply of real property by way of sale to a recipient who is registered for the GST/HST. However, this exception to the general rule does not apply in respect of a taxable sale of a residential complex made to a recipient who is an individual.

Where the Declarant makes a taxable sale of a Unit that is included in the rental pool upon its purchase, the Declarant is making a taxable sale of real property that is not a residential complex. Under the application of subsection 221(2), the Declarant is not required to collect the tax payable on the supply of such a Unit if the recipient of the supply is registered for GST/HST purposes.

However, where the Declarant makes a taxable supply by way of sale of a Unit and the purchaser of the Unit opts out of the rental pool at the time of purchase, the Declarant is making a taxable sale of a residential complex. If the recipient of the supply is an individual, the Declarant is required, under subsection 221(1), to charge and collect GST/HST on the taxable sale of the complex, regardless of whether the individual is registered for GST/HST. The Declarant is not required to collect the tax payable when it makes a taxable supply by way of sale of a Unit that is a residential complex to a recipient other than an individual provided the recipient is registered for GST/HST purposes.

ITCs and extent of use in commercial activity

Provided there is a market for short-term rentals of the Units at the Development throughout the year, a GST/HST-registered purchaser is eligible for ITCs to the extent that the Unit is used in the rental pool arrangement. [...]

Pursuant to subsection 141.01(5), the method used by a person in a fiscal year to determine the extent of use of property or services in commercial activities (e.g., making short-term rentals of a condominium unit) must be fair and reasonable and used consistently throughout the year. A fair and reasonable method of determining extent of use should take into account all of the relevant facts and circumstances of the particular case.

You suggested that by placing a Unit in the rental pool for 329 or more days per year, a purchaser is entitled to full ITCs for the tax paid or payable on the purchase of a Unit and on ongoing operating expenses. However, this position ignores the provisions of [...] the Agreement. Under those provisions, a purchaser may reserve, at any time and from time to time during the term of the Agreement, up to [#] days per month for the personal use of Unit by the purchaser, the purchaser's family or the purchaser's guests.

Though the purchaser may commit, [...], to make the Unit available in the rental pool for at least 329 days in the coming year, the purchaser can nonetheless notify the Manger, [...], of their desire to use the Unit personally for certain days. Unless the Unit is already reserved for the day(s) the purchaser is requesting personal use of the Unit, the Manager must make every reasonable effort to accommodate the purchaser's request. Accordingly, it would not be reasonable, in all cases, to assume that the Unit is in fact in the rental pool for those 329 days (even if that was the purchaser's initial indication), given that the personal use of the Unit could be [#] days during a year. In some cases, such an assumption may be valid, but that would depend on the facts of the particular case.

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,
Lisa Papineau
Real Property Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate

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.

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

[Addressee]

Case Number: 162970
Business Number: […]

Dear [Client]:

Subject:	GST/HST RULING
		Tax Status of […][the Product]

Thank you for your letter of June 17, 2014, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to supplies of […][(the “Product”)] produced by […][(the “Company”)].

The HST applies in the participating provinces at the following rates: 13% in Ontario, New Brunswick and Newfoundland and Labrador, 14% in Prince Edward Island and 15% in Nova Scotia. The GST applies in the rest of Canada at the rate of 5%.

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

STATEMENT OF FACTS

We understand from your letter the following:

1. The Product is available in [#] different flavours: […].

2. The Company does not control the placement of its product at the store level. The Product is intended to be shelved in the cracker aisle.

3. The Product is new and has been launched in […] but not yet in Canada.

4. […].

5. A sample of the Product, in the […] flavour, […], has been provided.

6. The Product is packed loosely in a plastic, foil-lined bag, and has a net weight of […] grams.

7. The Product is processed into […] pieces. Each piece measures approximately [#] x [#] centimetres in size, and is about [#] millimetres thick.

8. The sample contains the following information on the package: […][ingredients and nutrition facts of the Product]

9. The labelling on the package contains the following descriptions: […][description of the Product]

10. There is no claim that the Product is sold as breakfast cereal.

11. The Product can be eaten on its own but is also pictured on the package to be eaten along with dips.

RULING REQUESTED

You would like to know the tax status of the Product.

RULING GIVEN

Based on the facts set out above, we rule that supplies of the Product are subject to the GST/HST under subsections 165(1) and 165(2). The Product is excluded from zero-rating under paragraph 1(f) of section 1 of Part III of Schedule VI to the ETA.

EXPLANATION

Generally, in accordance with section 165, every recipient of a taxable supply made in Canada is required to pay GST/HST on the value of the consideration for the supply, unless the supply is zero-rated (listed in Schedule VI to the ETA and subject to the GST/HST at the rate of 0%) or exempt (listed in Schedule V to the ETA and not subject to the GST/HST).

Section 1 of Part III of Schedule VI to the ETA 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.

Paragraph 1(f) of Part III of Schedule VI to the ETA 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.

The food items captured by paragraph 1(f) as mentioned above are not limited to potato chips, corn chips, cheese puffs, potato sticks, bacon crisps, or cheese curls but include any other similar snack foods. The CRA applies the following factors as listed in paragraph 56 of the GST/HST Memoranda Series 4.3, Basic Groceries (MS 4.3), when determining whether a food product is similar to the snacks as identified in paragraph 1(f) of Part III of Schedule VI to the ETA.

Properties

* Ingredients: potatoes, corn, or corn meal

* Flavours: in addition to salty, the product is available in flavours such as salt and vinegar, barbecue, all-dressed, cheese, nacho, ketchup, pizza, sour cream and onion, etc.

* Texture: crispy, crunchy, brittle, or fluffy
* Cooking process: deep fried, or baked
* Size and shape: small, thin, slice, (chip); long and slender cylindrical form (stick); fluffy mass (puff); or spiral or winding form (curl)

Labelling

* The word "chip", "crisp", "puff", "curl" or "stick" appears in the name of the product or elsewhere on the label (e.g., "healthier than a chip", "tastes like a chip" or "part chip").

* The label includes words found on packages of chips, crisps, puffs, curls, or sticks (e.g., "snack", "party snack" or "crunch").

Packaging

* The product is packaged loosely in a bag.

Marketing

* The advertising, whether through print or electronic media, includes words such as "chips", "crisps", "puffs", "curls" or "sticks" (e.g., "chip-loving eaters" or "healthier than a chip").

* The advertising, whether through print or electronic media, includes words found on packages of chips, crisps, puffs, curls or sticks (e.g., "snack", "snack food", "party snack", "crunch" or "crispy").

In determining whether the Product is similar to the snacks as identified in paragraph 1(f) of Part III of Schedule VI to the ETA, we have looked at these factors. Our findings respecting the Product are listed below:

Properties

* Ingredients: Dried potatoes are the second ingredient listed.

* Flavours: The Product has a salty and savoury taste. It comes in [#] different flavours: […][list of flavours].

* Taste: The Product tastes very much like the […] potato chips.

* Texture: The Product is thin, light, puffed, and dry. It has a puffy and crunchy texture similar to chips.

* Size and shape: The Product is […] in shape. Each piece is comparable to the size of a potato chip. The Product can be eaten directly without further processing by just opening the bag.

Labelling

* The label includes these descriptions: […] chips.

Packaging

* The Product is packed loosely in foil-type bags similar to a bag of potato chips.

Marketing

* The Product is marketed as […] chips.

Based on the above, the Product is considered to be a “similar snack food” for purposes of paragraph 1(f) of Part III of Schedule VI to the ETA.

Although we consider placement of a product in a store as a relevant consideration, it alone is not considered a determinative factor.

In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the ruling given in this letter provided that: none of the issues discussed in the ruling are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 905-721-5217. 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,

Denise Chan
Basic Groceries and Point-of-Sale Rebates Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

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.

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

[Addressee]

Case Number: 158435

Dear [Client]:

Subject:	GST/HST RULING
		Application of the GST/HST to casting charges

Thank you for your fax of November 29, 2013, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to casting charges. We understand that you are requesting a ruling on behalf of […]([…][XYZ]).

The HST applies in the participating provinces at the following rates: 13% in Ontario, New Brunswick and Newfoundland and Labrador, 14% in Prince Edward Island and 15% in Nova Scotia. The GST applies in the rest of Canada at the rate of 5%.

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

STATEMENT OF FACTS

We understand:

1. [XYZ] is not registered nor required to be registered for GST/HST purposes.

2. On [mm/dd/yyyy], [XYZ] purchased two car parts from […] (the Store) [located in Canada].

3. Each of the parts is identified on the bill of sale as […].

4. The price of each part was $164.99 for a total of $329.98.

5. [XYZ] stated that an amount of $140 ($70 per part) was included in the total charged for the parts which represented a “casting charge”.

6. HST at the rate of 13% was charged on the total purchase price of the two parts (including the amount of the casting charge) in the amount of $42.90.

7. Later the same day, [XYZ] returned to the Store and provided two used castings.

8. [XYZ] was paid $70.00 by the Store for each casting for a total of $140.00.

9. [XYZ] was not paid an amount as HST in respect of the supply of the used castings.

RULING REQUESTED

You would like to know how the GST/HST applies to the payment of $140.00 made by the Store to [XYZ] for the used castings.

RULING GIVEN

Based on the facts set out above, we rule that GST/HST was not applicable to the supply of the used castings made by [XYZ] to the Store.

In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the ruling(s) given in this letter provided that: none of the issues discussed in the ruling(s) are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed.

EXPLANATION

Generally, every recipient of a taxable supply made in Canada shall pay GST/HST 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 14% in Prince Edward Island).

An additional amount is charged by some vendors when certain automotive parts are sold to a person. This is often referred to as a core charge and may sometimes be referred to as a casting charge.

Old or failed parts such as batteries, alternators, starters, CV shafts, brake callipers, and distributors contain a “core” or recyclable component. These cores can be provided to the manufacturer for rebuilding or recycling. Rebuilding or remanufacturing is the process of taking used parts, completely disassembling and thoroughly cleaning them, replacing the faulty and/or worn components with new components, and restoring them to their original specification.

A vendor may choose to impose a core charge to encourage the person to bring the used part to the vendor for rebuilding or remanufacturing. Some vendors of automotive parts do not apply a core charge.

Where an automotive part is sold and the vendor charges a core charge, the core charge forms part of the consideration payable for the sale of the part. As such, the vendor is required to charge the applicable rate of GST/HST calculated on the total consideration payable for the part including the core charge. As a result, the Store correctly charged the HST for the supply of the new parts.

Where the person provides a used part to the vendor any time after the purchase of the part from the vendor, the person is making a supply of the used part to the vendor. If the used part is recyclable and the vendor agrees to purchase the used part, the vendor will pay an amount to the person for the used part. Where the person is not registered or required to be registered for the GST/HST, the person does not charge or collect the GST/HST from the vendor for the supply of the used part. This was the case for [XYZ]. As a result, the Store did not pay the GST/HST to [XYZ] when he supplied the used castings to the Store.

We have enclosed a copy of GST/HST Info Sheet GI-167, Application of the GST/HST to Core Charges, which discusses the GST/HST treatment in detail, including the special trade-in rules that may apply in certain circumstances.

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

Enc: GST/HST Info Sheet GI-167, Application of the GST/HST to Core Charges

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

[Addressee]

Case Number: 159529
Business Number: […]

Dear [Client]:

Subject:	GST/HST RULING
		Application of the point-of-sale rebate to the supply of the bookazine, […][the Publication]

Thank you for your letter concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the supply of the “bookazine”, […][the Publication]. We apologize for the delay in responding. A copy of the Publication was submitted for our review.

The HST applies in the participating provinces at the following rates: 13% in Ontario, New Brunswick and Newfoundland and Labrador, 14% in Prince Edward Island and 15% in Nova Scotia. The GST applies in the rest of Canada at the rate of 5%.

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 company’s] retail stores sell the Publication across Canada.

2. The Publication is produced by […][the publisher]. It is a collector’s edition and is a single issue.

3. The Publication retails for $[…].

4. The Publication contains photographs and articles of […]. It contains more photographs than text.

5. The Publication is printed on thick glossy paper. It has a soft cardboard front and back cover.

6. The Publication has […] pages which are glued to the side.

7. The Publication is displayed with magazines that are for sale.

8. The Publication cannot be obtained by subscription.

9. The Publication contains no advertisements.

10. Instruction for “Display until [mm/dd/yyyy]” is printed on […] the Publication.

11. The Publication does not have an International Standard Book Number (ISBN), or an International Standard Serial Number (ISSN). It has a Universal Product Code (UPC) bar code.

12. The distributor collects the unsold inventory of the Publication which is shredded in the same way as a regular magazine.

RULING REQUESTED

Is the Publication a magazine subject to HST at the rates of 13%, 14% or 15%, depending on the place of supply, or is it a printed book for purposes of the point-of-sale rebate (the rebate) in respect of the provincial component of the HST?

RULING GIVEN

Based on the facts set out above, we rule that the Publication is a printed book that qualifies for the rebate in respect of the provincial component of the HST.

EXPLANATION

The governments of Ontario, Nova Scotia, New Brunswick, and Newfoundland and Labrador and Prince Edward Island (the participating provinces) provide a point-of-sale rebate equal to the provincial part of the HST payable on all taxable supplies of printed books and other qualifying property. Under the Deduction for Provincial Rebate (GST/HST) Regulations, the following goods qualify for the rebate,

• a printed book as defined under subsection 259.1(1) or an update of a printed book;

• an audio recording 90% or more of which is a spoken reading of a printed book (e.g., an "audio book");

• a bound or unbound printed version of scripture of any religion;

• a composite property, which is property that is wrapped, packaged or otherwise prepared for sale as a single product the only components of which are only a printed book and

a) a read-only medium that contains material all or substantially all of the value of which is reasonably attributable to one or more of the following:

(i) a reproduction of the printed book, and
(ii) material that makes specific reference to the printed book and its content, and that supplements, and is integrated with, that content; or

b) if the product is specially designed for use by students enrolled in a qualifying course, a read-only medium or a right to access a website, or both of them, that contains material that is related to the subject matter of the printed book.

The rebate is provided for by the provincial legislation of the participating provinces and is administered by the Canada Revenue Agency (CRA). A supplier may credit the amount of the rebate, i.e., the amount equal to the provincial part of the HST, to the purchaser of a printed book where the supply is made in a participating province.

The term “printed book” has its ordinary meaning subject to specific exclusions. Generally, a “printed book” consists of a number of printed sheets that are fastened together in some way, whether by staple, glue, or other method. It may contain printed words, printed pictures, diagrams and other visual aids, including Braille and music. Therefore, a book containing printed words and images or even one containing only printed images is a printed book.

In the ETA, the term “printed book” is defined only by its exclusions as set out under subsection 259.1(1). For purposes of the rebate, a book must meet the ordinary meaning of a printed book and not be excluded by any paragraphs to the definition of “printed book” under subsection 259.1(1).

Under subsection 259.1(1), a “printed book” does not include anything that is or the main component of which is:

(a) a newspaper;

(b) a magazine or periodical acquired otherwise than by way of subscription;

(c) a magazine or periodical in which the printed space devoted to advertising is more than 5% of the total printed space;

(d) a brochure or pamphlet;

(e) a sales catalogue, a price list or advertising material;

(f) a warranty booklet or an owner's manual;

(g) a book designed primarily for writing on;

(h) a colouring book or a book designed primarily for drawing on or affixing thereto, or inserting therein, items such as clippings, pictures, coins, stamps or stickers;

(i) a cut-out book or a press-out book;

(j) a program relating to an event or performance;

(k) an agenda, calendar, syllabus or timetable;

(l) a directory, an assemblage of charts or an assemblage of street or road maps, but not including

(i) a guidebook, or
(ii) an atlas that consists in whole or in part of maps other than street or road maps;

(m) a rate book;

(n) an assemblage of blueprints, patterns or stencils;

(o) prescribed property; or

(p) an assemblage or collection of, or any item similar to, items included in any of paragraphs (a) to (o).

The Publication meets the ordinary definition of a printed book. However, it must next be determined whether the Publication is a magazine or periodical as described in paragraphs (b) or (c) above.

The ETA does not define “magazine” or “periodical”. It is our view that magazines or periodicals generally have the following characteristics:

* the pages are stapled, not bound to the cover;

* they contain miscellaneous pieces (articles, stories, poems, etc.) by various contributors, usually with photographs, illustrations or other graphics;

* they are issued in successive parts and intended to be continued indefinitely;

* each issue contains the volume number, issue number and/or date of issue;

* they are sold at least in part through subscription;

* they are displayed and sold in part through newsstands and magazine racks with other publications which may or may not contain editorials, photos, advertising or contributed works;

* outdated issues are not kept on display or for sale; and

* they are assigned an ISSN, which is an internationally recognized identification number for serial publications, consisting of an eight-digit standard number that, once assigned, becomes a permanent attribute of the individual serial for as long as it is issued under a given title.

Note that any one criterion by itself is not conclusive. Although the Publication is sold with magazines, and outdated issues are not kept on display, it is our view that the Publication would not be a magazine or periodical. It is glued, and not stapled. It is not dated or numbered, nor published periodically and does not have an ISSN. It is generally published as a single publication and is not purchased by subscription.

Since none of the exclusions to the definition of “printed book”, as set out in subsection 259.1(1) apply, the Publication is a printed book that qualifies for the rebate.

In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the CRA is bound by the ruling given in this letter provided that: none of the issues discussed in the ruling are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (905) 721- 5219. 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,

Elizabeth Onsiong
Basic Groceries and Point-of-Sale Rebates Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate