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, 15th floor
320 Queen Street
Ottawa ON K1A 0L5

[Addressee]

Case Number: 152222
Business Number: […]

May 5, 2014

Dear [Client]:

Subject:	GST/HST RULING
		[…] [Public service bodies’ rebate of the provincial part of the HST – whether resident in a province]

Thank you for your letter of [mm/dd/yyyy], concerning […] (the Association)’s entitlement to claim a public service body rebate of the provincial part of the Harmonized Sales Tax (HST). We apologize for the delay in responding to your enquiry.

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Effective April 1, 2013, the 12% HST in British Columbia has been replaced by the 5% GST and a provincial sales tax.

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

STATEMENT OF FACTS

We understand

1. The Association was incorporated without share capital under the laws of Canada on [mm/dd/yyyy]. The Association is not continued elsewhere.

2. The Association is a registered charity for income tax purposes, effective [mm/dd/yyyy]. The Association is also a charity for ETA purposes.

3. The Association is not registered for GST/HST purposes. However the Association files for the public service bodies’ rebate using GST/HST account number […].

4. The Association is a national organization composed of the provincial associations […] from several [participating and non-participating] provinces […]. Each member provincial association has an equal vote in the operation of the Association.

5. Pursuant to […] of the Association’s Bylaws, the Association’s board of directors consists of the Executive Committee and the president of each member provincial association.

6. Pursuant to […] of the Association’s Bylaws, the Executive Committee is comprised of the officers of the Association and the immediate past president. […]

7. There are […] directors/ trustees and like officials listed on the Association’s 2012 T1235, Directors/Trustees and Like Officials Worksheet, […]. Two of these officials reside in […][Province 1], one in […][Province 2] and one in […][Province 3].

8. The main purpose of the Association is to […][describes the Association’s purpose] and this is primarily accomplished at the Association’s annual conference. In 2012, the conference was held in […], […][Province 4].

9. In its T3010, Registered Charity Information Return for the fiscal year ending [mm/dd/yyyy], the Association described its ongoing programs as follows: […]

10. The Association has no fixed place of activities.

11. The Association does not own any real property.

12. As set out in the Association’s Letters Patent dated [mm/dd/yyyy], the Association’s head office was initially in […][Province 5]. Pursuant to […], […] [the Board of Directors determines the location of the head office]

13. In correspondence dated [mm/dd/yyyy], the Association’s representative explained […] [describes how the location of the Association’s head office is determined]

14. According to the Association’s Federal Corporation Information available on Industry Canada’s website, the Association’s registered office address is […], [Province 1] […].

15. In a phone conversation with […][a rulings officer] of the Canada Revenue Agency on [mm/dd/yyyy], the Association’s representative explained that the Association’s directors meet once or twice a year for board meetings, most recently in [Province 2].

16. In a phone conversation on [mm/dd/yyyy], the Association’s representative explained that meetings of the board of directors usually occur by conference call. The board of directors meets in person at the annual conference, which is also the location of the Association’s annual general meeting. The board of directors held a meeting at the 2012 conference in […], [Province 4].

17. The Association’s books and records are kept with the treasurer. Audited books from past years are kept with the president. As such, the books move around depending on the locations of the current officers. In 2012, both the president and the treasurer lived in [Province 1].

18. Until [mm/yyyy], the Association’s bank accounts were located in […][Province 6].

19. Contracts and other documents which require a signature are sent to the location of the appropriate officer(s) for signing. Pursuant to […] of the Association’s Bylaws, all documents requiring a signature for the Association shall be executed for the Association by any two of the President, Vice-President or Treasurer. The board of directors has the power to appoint any officer(s) or director(s) to sign specific documents on behalf of the Association.

RULING REQUESTED

You would like to know

1. In which provinces was the Association resident in 2012? In particular, was the Association resident in [Province 4]?

2. Is the Association entitled to claim a public service bodies’ (PSB) rebate of the provincial part of the HST for the claim periods of January 1 – June 30, 2012, and July 1 – December 31, 2012?

RULING GIVEN

Based on the facts set out above, we rule that

1. The Association was resident only in [Province 1] in 2012. The Association was not resident in [Province 4].

2. The Association is not entitled to claim a PSB rebate of the provincial part of the HST for the claim periods of January 1 – June 30, 2012, and July 1 – December 31, 2012.

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

Resident in a province

The ETA contains deeming rules whereby a person is deemed to be resident in a province in certain circumstances. Pursuant to subsection 132.1(1), a person is deemed to be resident in a province if:

* the person is resident in Canada; and

* one of paragraphs 132.1(1)(a)-(d) applies.

Pursuant to paragraph 132(1)(a) of the ETA, a corporation incorporated or continued in Canada and not continued elsewhere is deemed to be resident in Canada. A corporation incorporated in Canada refers to a corporation that is formed in Canada (i.e. via the act of provincial or federal incorporation). The Association is incorporated under the laws of Canada and is not continued elsewhere. Therefore, the Association is deemed to be resident in Canada.

Paragraphs 132.1(1)(a)-(c) do not apply to the Association. Paragraph 132.1(1)(d) deems a person to be resident in a province if the person is resident in Canada and the person has a permanent establishment in that province. Pursuant to subsection 132.1(3) and the New Harmonized Value-added Tax System Regulations, No. 2, a charity will be deemed to have a permanent establishment in a province if a place in that province would be a permanent establishment for income tax purposes under the following circumstances:

* the charity were a corporation; and

* the charity’s activities were a business for income tax purposes.

“Permanent establishment” is defined in subsection 400(2) of Part IV of the Income Tax Regulations. Generally, a permanent establishment of a charity is a fixed place of activities. However, there are other circumstances set out in subsection 400(2) of the Income Tax Regulations where a charity may have or be deemed to have a “permanent establishment” in a province.

Pursuant to paragraph 400(2)(a), where a corporation does not have any fixed place of business, permanent establishment means the principal place in which the corporation's business is conducted. The term “principal” is not defined in the Income Tax Act or the ETA; therefore, it must be given its ordinary meaning. The word “principal” is generally regarded as being synonymous with the words “chief” or “main”.

Based on the facts provided, the principal place in which the Association’s activities are conducted is [Province 1]. [Province 1] is the chief or main place where corporate decisions are made. During the relevant claim periods, two of the members of the Executive Committee resided in [Province 1], the President and Treasurer. These two officers also had signing authority on behalf of the Association. In addition, the Association’s books and records were kept in [Province 1].

Therefore, the Association would have a permanent establishment in [Province 1] under paragraph 400(2)(a) of the Income Tax Regulations, if the Association’s activities were a business for income tax purposes. As such, the Association is deemed to have a permanent establishment in [Province 1] under subsection 132.1(3) of the ETA. As the Association is deemed to have a permanent establishment in [Province 1], the Association is deemed to be resident in [Province 1] under paragraph 132.1(1)(d) of the ETA.

The Association does not have a permanent establishment in [Province 4] under any of the circumstances set out in subsection 400(2) of the Income Tax Regulations. As such, the Association is not resident in [Province 4].

Charities that are not resident in a participating province are not eligible for a PSB rebate of the provincial part of the HST. The Association is only resident in [Province 1], a non-participating province. Therefore, the Association is not entitled to claim PSB rebate of the provincial part of the HST. However, the Association is entitled to claim a PSB rebate of 50% of the GST or the federal part of the HST. For further information, see Guide RC4034, GST/HST Public Service Bodies’ Rebate.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-952-9592. 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,

Heather Reardon
Charities and Non-Profit Organizations 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: 152577
Business Number: [...]

November 27, 2013

Dear [Client]:

Subject: GST/HST RULING
Application of GST/HST to [...] [the Product]

Thank you for your letter of [mm/dd/yyyy], concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the products described below. We apologize for the delay in responding.

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.

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

Statement of Facts

From your letter [...], the product packaging sample provided, and various websites [...], our understanding of the facts is as follows:

1. [...] [The Company] is distributing [...] (the Product) in [...] different sizes: convenient-size packages of [...] grams and family-size packages of [...] grams.

2. You stated in your letter that:

• [The Company] has been charging GST/HST on the Product assuming it would fall into the snack category;
• [The Company] is distributing the Product in cases of [...] packages and retailers are selling them as individual packages; and
• [...] is questioning [the Company]'s decision [to charge the] GST/HST on supplies of the Product.

3. [...] [Information] supplied with your letter shows the following:

• The Product is marketed as [...] [a] roasted [...] snack that is [...] [vegan, gluten-free and made using olive oil].

• The Product is available in [#] flavours: [...].

• The Product is a product of [...] [Country A] and has a [...] shelf life.

• Retailers can display the Product on a [...] [describes promotional store display].

4. Samples of packaging for the Product [...] have been provided. They are for the [...] flavour packaged into [...] foil-type bags. The convenient-size package is [...] [describes size and weight]. The family-size package is [...] [describes size and weight]. [...].

5. Each sample packaging contains nutritional facts and ingredients.

6. The labelling and packaging for the convenient-size package show that:

• [the package includes] words [...] [about product flavor, ingredients, description and convenience];
• [the package includes] the [...] [product name and promotional text];
• the Product [...] [contains no sugar, cholesterol, trans fat or MSG];
• the package contains [...]mg of sodium; and
• the listed ingredients are [...].

7. Claims from the manufacturer appear on the [...] convenient-size package as follows: [...]

8. The labelling and packaging for the family-size package show that:

• The package contains [...] enough for [...] servings;
• [the package includes] words [...] [about product flavor, ingredients, description and convenience];
• the Product [...] [contains no sugar, cholesterol, trans fat or MSG];
• the package contains [...]mg sodium; and
• the listed ingredients are [...].

9. Claims from the manufacturer appear on the [...] family-size package as below: [...]
10. On the [...] family-size package, the manufacturer stated the following: [...]

11. There is no evidence that the Product is being sold as a breakfast cereal.

12. The manufacturer describes the Product on its website [...] as healthy snacks [...]. The following statements are found in the manufacturer's website: [...] [Product benefits, preparation ideas and other information found on packaging]
13. On the manufacturer's website [...], [the product] is advertised as a snack [...]. The website states: [...] [more about ingredients and promotional text]
Ruling Requested

You would like to know if the Product in the convenient-size packages ([...] grams) and family-size packages ([...] grams) are zero-rated under section 1 of Part III of Schedule VI to the ETA.

Ruling Given

Based on the facts set out above, we rule that supplies of the Product in the convenient-size packages ([...] grams) and family-size packages ([...] grams) are subject to the GST/HST under subsections 165(1) and 165(2). Supplies of the Product are not zero-rated under section 1 of Part III of Schedule VI to the ETA.

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

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.

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

"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 both an ingredient and a snack food, 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 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 and our findings are listed below:

Properties

• Ingredients: The Product does not have potatoes, corn or corn meal as its main ingredients. The main ingredients of the Product are [...].

• Flavours: The Product has a salty and savoury taste. It is available in [...] flavours: [...].

• Texture: The Product is thin, light, dry, and crunchy. It has a chip-like texture.

• Cooking process: The Product is roasted [...].

• Size and shape: The Product [...] [comes in more than one shape]. Either package can be eaten directly without further processing by just opening the bag.

Labelling

• The convenient-size package is labelled as a [...] food product. The family-size package is labelled as a snack product.

Packaging

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

Marketing

• The Product is not marketed as "chip", "crisp", "puff", "curl", "stick", "popcorn" or "pretzel". However, it is marketed as a healthy snack [...].

Although the Product does not have potatoes, corn or corn meal as its main ingredients and can be used in food preparation, the properties, labelling, packaging, and marketing elements considered together provide an overall indication that the Product is a snack food similar to those listed in paragraph 1(f) of Part III of Schedule VI to the ETA. The Product:

• has a salty and savoury taste;
• is crispy or crunchy in texture;
• is packaged in a fashion similar to snack foods;
• is commonly enjoyed and regarded as a snack food;
• can be consumed directly by just opening the bag;
• is marketed as a healthy snack food;
• is likely to be found in the snack aisle of retail stores;
• is not promoted solely for use as ingredients for food preparation; and
• is marketed as a snack food to compete with chips.

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 & 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: 147778
Business Number: [...]

July 19, 2013

Dear [Client]:

Subject:		GST/HST RULING AND INTERPRETATION
       Children's [...][sport] programs	

Thank you for your letter of October 1, 2012, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to children's [...][sport] programs provided by [...]([...][the Corporation]).

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.

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

Statement of Facts
We understand

1. [The Corporation] was incorporated as a corporation without share capital under [...] on [mm/dd/yyyy], and [...].

2. [The Corporation] is registered for GST/HST purposes with GST/HST account number [...].

3. [The Corporation] has stated that it is a non-profit organization as that term is defined in subsection 123(1). Given this fact, [the Corporation] would also be a public sector body for GST/HST purposes.

4. [The Corporation] operates a private membership-based [sport] club in [...][City 1, Province 1].

5. [The Corporation] provides various [sport] programs for the children of members of [the Corporation]. The fees for these programs are separate from [the Corporation] membership fees.

6. [The Corporation]'s programs were established by [the Corporation]'s head coach, following guidelines set by [...][Organization X] and [...][Organization Y].

7. [The Corporation] employs coaches and other support staff to carry out its [sport] programs.

8. Two such programs are the [...][Program A] and the [...][Program B]. The [Program A] is for children ages 12 and 13 and the [Program B] is for children ages 14 and 15. The [...][Programs A and B] each consist of a series of training sessions where the athletes receive supervised instruction in [sport] from [the Corporation]'s coaches.

[Program A]
9. [...][Description of Program A and its fees]

10. [...].

11. In addition, all [Program A] athletes must attend [...] pre-season camp. The athlete must choose one of the following camp options listed on the registration form: [...]

12. On the [Program A] registration forms, an athlete must add the cost of their chosen camp to the program cost to arrive at the total amount owing. [...].

13. According to the [...][Organization X guidelines].

[Program B]
14. [...][Description of Program B and its fees]

15. In addition, all [Program B] athletes must attend [...] pre-season camp. The athlete must choose one of the following camp options listed on the registration form: [...]

16. On the [Program B] registration forms, an athlete must add the cost of their chosen camp to the program cost to arrive at the total amount owing. [...]

17. According to the [...][Organization X guidelines].

18. [...][A small number of] athletes enrolled in the [Program B] were 15 years of age during the [yyyy-yyyy] [sport] season. [The Corporation] expects approximately the same age distribution next season.

19. [...]

20. The [Programs A and B] offer between [...] days of training in [Province 1], with the remainder being out of region, overnight stays.

21. The pre-season camp options are conducted off-site by [the Corporation]'s coaching staff. During the [...] camps, overnight supervision is provided by [the Corporation]. The coaches and athletes stay in [...][accommodations] at the off-site location. The off-site camps include [sport] coaching, accommodation, meals, transportation and afternoon activities (e.g. [...])

22. [The Corporation] considers the off-site camps to be part of [Programs A and B]. Since it is not possible to offer the required number of [...] days in [Province 1], pre-season training is a mandatory component of the [Programs A and B] and is offered in the format of off-site training camps.

23. [...][Direct quote from Organization X documents]

24. Participants in the [Programs A and B] must also occasionally travel out-of-province to attend [...][events]. [...]. These out-of-province [events] involve overnight stays, where the participants are supervised by [the Corporation]'s coaches.

25. The [...][XYZ] pre-season camp operates as a day-camp. [The Corporation] provides supervision and training from [...][time period] daily and then the children stay overnight with their parents for the remainder of the time away. The [XYZ] camp is open to athletes of all skill levels. Generally, [#] participants attend the camp, most of who are 14 and under. [...].

Ruling Requested
You would like to know

1. Is [Program A] provided by [the Corporation] exempt from HST under paragraph 12(a) of Part VI of Schedule V?

2. Is [Program B] provided by [the Corporation] exempt from HST under paragraph 12(a) of Part VI of Schedule V?

3. Is the off-site pre-season day camp provided by [the Corporation] exempt from HST under paragraph 12(a) of Part VI of Schedule V?

Ruling Given
Based on the facts set out above, we rule that
1. [The Corporation]'s supplies of services supplied as part of [Program A], including the off-site camps, are exempt from GST/HST under section 12 of Part VI of Schedule V. Therefore, the [Program A] fees and the off-site camp fees are not subject to GST/HST.

2. [The Corporation]'s supplies of services supplied as part of [Program B] in the [yyyy-yyyy] season, including the off-site camps, are exempt from GST/HST under section 12 of Part VI of Schedule V. Therefore, the [Program B] fees and the off-site camp fees are not subject to GST/HST.

3. [The Corporation]'s supplies of services supplied as part of the [XYZ] day-camp are exempt from GST/HST under section 12 of Part VI of Schedule V. Therefore, the [XYZ] day-camp fees are not subject to GST/HST.

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

Explanation

A "non-profit organization" is defined under subsection 123(1) 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.

It is a question of fact whether, at any particular time, [the Corporation] 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.

In general, supplies of property and services made by a non-profit organization are taxable for GST/HST purposes unless the supply is an exempt supply under a provision in Schedule V. Section 12 of Part VI of Schedule V exempts the following:

A supply made by a public sector body of a membership in, or services supplied as part of, a program established and operated by the body that consists of a series of supervised instructional classes or activities involving athletics, outdoor recreation, music, dance, arts, crafts or other hobbies or recreational pursuits where
(a) it may reasonably be expected, given the nature of the classes or activities or the degree of relevant skill or ability required for participation in them, that the program will be provided primarily to children 14 years of age or under, except where the program involves overnight supervision throughout a substantial portion of the program; or
(b) the program is provided primarily for underprivileged individuals or individuals with a disability.

A supply will be exempt under section 12 of Part VI of Schedule V where:

* The supplier is a public sector body (which is defined to include a non-profit organization);
* The supply is of a membership in a program or services supplied as part of a program;
* The program is established and operated by the public sector body;
* The program consists of a series of supervised instructional classes or activities involving athletics, outdoor recreation, music, dance, arts, crafts or other hobbies or recreational pursuits;

* One of the following circumstances applies:

* The program is provided primarily to children 14 years of age or under and it does not involve overnight supervision throughout a substantial part of the program; or
* The program is provided primarily to underprivileged individuals or individuals with a disability.

The term "program" is not defined in the ETA. The determination as to whether [the Corporation] supplies one or more programs is a decision for [the Corporation] itself - that is, [the Corporation] itself may define its own programs provided it is done on a reasonable basis. [The Corporation] considers the pre-season off-site camps to be part of the same program as the on-site training at [the Corporation]. The off-site camps are added to [Programs A and B] to enable the athletes to receive the required number of [...] training days. The off-site camps are an extension of the regular on-site training.

Some of the participants in [Program B] are not 14 and under. However, based on the information provided, it may reasonably be expected that [Program B] will be provided primarily to children 14 years of age or under in the [yyyy-yyyy] season. Therefore, all of [the Corporation]'s supplies of services supplied as part of [Program B] in the [yyyy-yyyy] season will be exempt, including supplies made to children who are 15. If the age ratio in [Program B] remains the same, so that it may reasonably be expected that [Program B] will be provided primarily to children 14 years of age or under, [the Corporation]'s supplies of services supplied as part of [Program B] will continue to be exempt in future seasons.

[Programs A and B] do involve some overnight supervision; however, the overnight off-site camps and occasional out-of-province [events] do not occur throughout a substantial portion of these Programs.

Interpretation
[Event] entry fees

Section 12 of Part VI of Schedule V only applies to supplies of memberships in, or services supplied as part of, a program. This exempting provision does not apply to other types of supplies, such as the right to participate in [...][an] [event]. The right to participate in [an] [event] is a supply of intangible personal property. There is no exempting provision that would exempt such a supply of intangible personal property made by a non-profit organization, regardless of the age of the participants. Therefore, a non-profit organization that is a GST/HST registrant must collect GST/HST on [event] entry fees [...].

GST/HST collected in error

Any amounts [the Corporation] collects as or on account of GST/HST, including GST/HST collected in error (e.g., tax collected in error on an exempt supply), must be included in its net tax calculation for the reporting period in which the tax became collectible or was collected.

Under subsection 232(1), where [the Corporation] has charged an amount as GST/HST in error on an exempt supply made to a participant in [Programs A or B] or other person, it has the option to adjust, refund or credit the excess tax to the person within two years after the day the amount was so charged or collected. If [the Corporation] chooses to adjust, refund, or credit the excess amount of GST/HST, a credit note containing prescribed information must be issued to the person within a reasonable time by [the Corporation]. [The Corporation] may also make an adjustment to its net tax calculation to account for any adjustment, refund or credit of an amount of tax paid in error to the extent that the amount was included in determining the net tax for the reporting period or a prior reporting period.

Alternatively, persons that paid an amount as GST/HST on supplies that are exempt may file an application for a rebate of amounts paid in error. Form GST 189, General Application for Rebate of Goods and Services (GST)/Harmonized Sales Tax (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.

Additional information concerning tax collected in error may be found in GST/HST Memorandum Series 12.2, Refund, Adjustment, or Credit of the GST/HST under Section 232 of the Excise Tax Act. Additional information concerning the claiming of rebates of tax paid in error may be found in Guide RC4033, General Application for GST/HST Rebates.

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

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-952-9592. 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,
Heather Reardon
Charities and Non-Profit Organizations 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: 148089

Dear [Client]:

Subject:	GST/HST RULING
		Application of GST/HST to certain in vitro diagnostic test kits

Thank you for your letter of [mm/dd/yyyy], concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to in vitro diagnostic test kit[s] used to test for the presence of drugs-of-abuse, pregnancy and Strep A.

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

Based on the information provided in your letter of [mm/dd/yyyy], the product inserts provided by […] (the Manufacturer), and our phone discussion […], our understanding of the facts is as follows:

1. […] (the Company) […] [sells] medical devices and is located in […][Canada].

2. The Company retails certain in vitro diagnostic test kits. Specifically, the Company retails the following in vitro diagnostic tests:

* […][Drugs of Abuse Test Panel]
* […][Pregnancy Test Strip]
* […][Strep A Test Device]

Drug test

3. The [Drugs of Abuse Test Panel] is designed for the simultaneous, qualitative detection of multiple drugs-of-abuse and metabolites in human urine samples.

This [Drugs of Abuse Test Panel] is a lateral flow chromatographic immunoassay that can detect the presence of the following drugs-of-abuse without the need of instruments: […]

4. […] [Describes parts of the [Drugs of Abuse Test Panel] and how to read the results]

Each test in the [Drugs of Abuse Test Panel] contains mouse monoclonal antibody-coupled particles and corresponding drug-protein conjugates. A goat antibody is employed in each control line.

[…] [Describes how the test is performed and how it works]

5. […] [Describes how to read the test results]

6. […].

7. The [Drugs of Abuse Test Panel] is labelled for in vitro diagnostic use only. […].

Pregnancy tests

8. […] (the Pregnancy Test Strip) is designed for the qualitative detection of human chorionic gonadotropin (hCG) in urine to aid in the early detection of pregnancy.

9. The Pregnancy Test Strip is a rapid chromatographic immunoassay which utilizes a combination of antibodies including mouse monoclonal anti-hCG antibodies and goat polyclonal anti-hCG antibodies to selectively detect elevated levels of hCG.

[…] [Describes & explains test procedures]

10. […] [Describes & explains test procedures and how to read test results]

11. The Pregnancy Test Strip is labelled for in vitro diagnostic use only.

Strep A tests

12. The [Strep A Test Device] [is] designed for the qualitative detection of Strep A carbohydrate antigen in a throat swab to aid in the diagnosis of Group A Streptococcal infection.

13. The test is a lateral flow immunoassay and an antibody specific to Strep A carbohydrate antigen is coated on the test line region of the [Strep A Test Device].

Based on our phone conversation on [mm/dd/yyyy], you confirmed that the [Strep A Test Device] contains polyclonal antibodies.

14. […] [Describes test procedure]

[…] [Describes & explains test procedures and how to read test results]

15. […] [Interpreting test results].

16. […] [Explains Test (quality) Controls]

17. The [Strep A Test Device] is labelled for in vitro diagnostic use only.

18. In Canada, all medical devices and drugs are regulated federally under the Food and Drugs Act, RSC 1985, c. F-27 (FDA) and the Regulations made under that Act which include the Medical Devices Regulations SOR/98-202 (MD Regulations) and the Food and Drug Regulations CRC, c. 870 (FD Regulations).

19. Products are defined as “drugs” or “devices” for purposes of the FDA. Medical devices and drugs are distinguished in terms of how they are defined in section 2 of that Act and how they are regulated under the Regulations. The term “device” covers a wide range of health products and medical instruments.

20. Medical devices are classified into one of Classes I to IV by means of the classification rules set out in Schedule 1 of the MD Regulations. Class I represents the lowest risk and Class IV represents the highest risk. The in vitro diagnostic test kits subject to this ruling are classified as follows:

[Drugs of Abuse Test Panel] (Class III medical device)
[Pregnancy Test Strip] (Class II medical device)
[Strep A Test Device] (Class III medical device)

21. The Medical Device Active Licence Listing (MDALL) web page of Health Canada contains information on all medical devices for sale in Canada for which licences have been issued.

22. Section 26 of the MD Regulations provides that no person can import or sell a Class II, III or IV medical device unless the manufacturer of the device holds a licence in respect of that device. The Licence No. issued by Health Canada for each in vitro diagnostic test kit subject to this ruling are as follows: […]

RULING REQUESTED

You would like to know whether:

i. a supply of the [Drugs of Abuse Test Panel] is zero-rated.

ii. a supply of the [Pregnancy Test Strip] is zero-rated.

iii. a supply of the [Strep A Test Device] is zero-rated.

RULING GIVEN

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

i. A supply of the [Drugs of Abuse Test Panel] is zero-rated under section 2 of Part I of Schedule VI.

ii. A supply of the [Pregnancy Test Strip] is not zero-rated under Part I of Schedule VI and is subject to tax at a rate of 5%, 13%, 14% or 15%, depending on the place of supply.

iii. A supply of the [Strep A Test Device] is zero-rated under section 2 of Part I of Schedule VI.

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

EXPLANATION

The general rule in section 165 is that every recipient of a taxable supply made in Canada shall pay tax calculated at the rate of 5% GST, 13%, 14%, or 15% HST, depending on the place of supply, on the value of the consideration for the supply, unless the supply is zero-rated. The tax rate in respect of a zero-rated supply is 0%. A zero-rated supply is a supply that is included in

Schedule VI.

Part I of Schedule VI contains provisions that zero-rate a broad range of drugs and substances that are regulated under federal legislation. Paragraphs 2(a) to (d.1) of Part I of Schedule VI refer to drugs or substances that are included in schedules to the FDA and its Regulations and regulations made under the Controlled Drugs and Substances Act (CDSA). In order to fall within paragraphs 2(a) to (d.1) of Part I of Schedule VI, the supply in question must be that of a “drug” or, in the case of paragraph 2(c), a “drug or other substance”.

As you are aware, the Tax Court of Canada (TCC) decided in Centre Hospitalier Le Gardeur et al v The Queen 2007 TCC 425 (Le Gardeur) that certain in vitro diagnostic test kits are zero-rated pursuant to paragraph 2(a) of Part I of Schedule VI to the ETA. Further to the TCC decision, the CRA adopted an interim administrative position, described in GST/HST Notice 248, Application of the GST/HST to Supplies of In Vitro Diagnostic Test Kits (Notice 248), whereby the supply of an in vitro diagnostic test kit is zero-rated pursuant to paragraph 2(a) of Part I of Schedule VI to the ETA if it is for use in the diagnosis of a disease in humans and it contains one or more of the following substances (which were listed in the TCC decision):

• monoclonal and polyclonal antibodies;
• blood and blood derivatives;
• snake venom; and
• micro-organisms that are not antibiotics.

Notice 248 indicates that CRA’s administrative position is temporary and that CRA will announce its decision with respect to the application of GST/HST to in vitro diagnostic products once an in-depth review of the matter has been completed.

Drug tests

The [Drugs of Abuse Test Panels] are used to measure the presence and level of certain drugs-of-abuse in urine specimens. The [Drugs of Abuse Test Panels] are not labelled or supplied for agricultural or veterinary use only and include a reagent that is a monoclonal or polyclonal antibody.

The terms “diagnose” and “disease” are not defined in the ETA, the FDA, MD Regulations or the FD Regulations.

Dorland’s Illustrated Medical Dictionary 30th edn. (Dorland’s). Defines the term “diagnose”:

To make a diagnosis of; to recognize the nature of an attack of disease

Dorland’s defines the term “disease” as:

Any deviation from or interruption of the normal structure or function of a part, organ, or system of the body as manifested by characteristic symptoms and signs; the etiology, pathology and prognosis may be known or unknown.

Black’s Law Dictionary (6th edn.) (Blacks) defines the term “disease” as:

Deviation from the healthy or normal condition of any of the functions or tissues of the body.

The term “diagnosis”, when used in the medical sense, relates to the discovery, identification or recognition of a disease. Therefore, an in vitro diagnostic test must detect or identify a disease. In our view, the [Drugs of Abuse Test Panel] can be used to test for the presence of a substance that indicates whether or not an individual has consumed or ingested certain drugs-of-abuse. Testing for whether certain drugs-of-abuse have been ingested is one of many tests used by a medical practitioner for identifying a drug addiction. Therefore, the [Drugs of Abuse Test Panels] are a drug for purposes of the ETA and a supply of which is zero-rated under paragraph 2(a) of Part I of Schedule VI.

Pregnancy tests

Generally, the intended use of the [Pregnancy Test Strips] is for the qualitative detection of hCG in urine or serum specimens exclusively for the early detection of human pregnancy. The [Pregnancy Test Strips] are not labelled or supplied for agricultural or veterinary use only and contain monoclonal or polyclonal antibodies.

Section 2 of the FDA defines the term “device” as follows:

“device” means any article, instrument, apparatus or contrivance, including any component, part or accessory thereof, manufactured, sold or represented for use in

(a) the diagnosis, treatment, mitigation or prevention of a disease, disorder or abnormal physical state, or its symptoms, in human beings or animals,

(b) restoring, correcting or modifying a body function or the body structure of human beings or animals,

(c) the diagnosis of pregnancy in human beings or animals, or

(d) the care of human beings or animals during pregnancy and at and after birth of the offspring, including care of the offspring,
and includes a contraceptive device but does not include a drug;
					[Emphasis added]

Paragraph (c) of the definition of the term “device” includes any article, instrument, apparatus or contrivance that diagnosis pregnancy in human beings or animals. The [Pregnancy Test Strips] diagnose pregnancy and therefore are a device under the FDA. In addition, the definition of the term “device” specifically excludes “a drug”. As the definition of the term “device” specifically excludes a drug, the [Pregnancy Test Strips] cannot be a drug if the [Pregnancy Test Strips] are a device. It is the CRA’s view that based of the definitions of “drug” and “device” in section 2 of the FDA the [Pregnancy Test Strips] are a device and not a drug for purposes of the ETA. Therefore, the [Pregnancy Test Strips] are not zero-rated under paragraph 2(a) of Part I of Schedule VI.

The Le Gardeur decision did not contemplate circumstances in which a product was specifically included in paragraph (c) of the definition of the term “device” in section 2 of the FDA. As such, the principles set out in Le Gardeur cannot be applied in this case. As there are no other provisions in the ETA to zero-rate (or exempt) the [Pregnancy Test Strips], a supply of such will be subject to GST/HST at the rate of 5%, 13%, 14% or 15%, depending on the place of supply.

Strep tests

The [Strep A Test Devices] are used to detect Strep A antigen in a throat swab specimen as the presence of this antigen is indicative of Group A Streptococcal infection. The [Strep A Test Devices] are not labelled or supplied for agricultural or veterinary use only and contain one or more substances that are monoclonal and polyclonal antibodies. Considering the approach taken in Le Gardeur, it is reasonable to conclude that the [Strep A Test Device] can be described by the term “drug” as it appears in paragraph 2(a) of Part I of Schedule VI. Accordingly, a supply of the [Strep A Test Device] is zero-rated under paragraph 2(a) of Part I of Schedule VI.

As indicated above, the CRA is reviewing its policy regarding the application of GST/HST to in vitro diagnostic test kits and whether certain in vitro diagnostic test kits diagnose a disease and are therefore “drugs” as defined in section 2 of the FDA. Health Canada administers the FDA and its Regulations. Our review of our policy will include consultations with and recommendations from Health Canada.

Amounts paid as or on account of tax

Where a supplier has charged or collected an excess amount as or on account of tax on supplies that qualify for zero-rating, the supplier may refund or credit the excess amount to the recipient in accordance with section 232. If the supplier refunds or credits the amounts collected as GST/HST, it must do so within two years after the day the amount was charged or collected and it must provide the recipient with a credit note containing prescribed information.

Alternatively, persons who have paid an amount as GST/HST on supplies that qualify for zero-rating may make an application to the CRA for a rebate of tax paid in error under section 261 using form GST189 General Application for Rebate of GST/HST (available on CRA’s website at www.cra-arc.gc.ca). The time limit to apply for this rebate is within two years after the day the amount was paid.

For more information, refer to GST/HST Memorandum Series Chapter 12.2, Refund, Adjustment, or Credit of the GST/HST under Section 232 of the Excise Tax Act and Guide RC4033, General Application for GST/HST Rebates.

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

Alison Jones
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: 148701
June 28, 2013

Dear [Client]:

Subject:	 	GST/HST RULING
       FCTIP - Tour Package Eligibility	

Thank you for your fax of November 2, 2012, concerning the eligibility of certain tours for purposes of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) rebate provided under the Foreign Convention and Tour Incentive Program (FCTIP).

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.

Statement of Facts

Based on your fax of November 2, 2012, our telephone conversation [...], we understand:

1. [...] (hereafter, the Non-Resident Tour Operator) is not resident in Canada. The Non-Resident Tour Operator is not registered for GST/HST purposes.

2. The Non-Resident Tour Operator purchased short-term accommodation in Canada and assembled the accommodation in a tour which it marketed as [...] (hereafter, the Tour) which took place from [mm/dd] to [dd/yyyy]. The Tour was sold to persons that are not resident in Canada (hereafter, non-resident persons).

3. The Tour included [...] nights short-term accommodation in Canada in [...]. The Tour included other elements such as [...].

4. The Tour included services such as [...] services.

5. The Non-Resident Tour Operator sold the Tour for an all-inclusive price.

Ruling Requested

You would like to know if the Tour is an eligible tour package for purposes of the FCTIP.

Ruling Given

Based on the facts set out above, we rule that the Tour is an eligible tour package for purposes of the FCTIP.

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 Excise Tax Act (ETA), regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.

Explanation

The Tour is an eligible tour package for purposes of the FCTIP since it is a tour package that includes short-term and/or camping accommodation in Canada, at least one service, and it is sold for an all-inclusive price.

ADDITIONAL INFORMATION

Under the FCTIP, a non-resident tour operator that is not registered for GST/HST purposes may be entitled to a rebate of 100% of the GST/HST payable on short-term and/or camping accommodation in Canada purchased from a GST/HST registrant. Generally, a non-resident tour operator is entitled to a rebate where it:

• pays GST/HST on the purchase of the short-term and/or camping accommodation in Canada;
• assembles the accommodation in an eligible tour package which it sells to non-resident persons; and
• meets all other conditions and restriction set out in the ETA. Information on these conditions and restrictions can be found in GST/HST Guide RC4160, Rebate for Tour Packages, Foreign Conventions, and Non-Resident Exhibitor Purchases.

A non-resident tour operator that is entitled to a rebate should file form GST115, GST/HST Rebate Application for Tour Packages, to claim the rebate. When filing Form GST115 with the Canada Revenue Agency, a copy of this ruling may be attached as evidence that the Tour is an eligible tour package for purposes of the FCTIP.

This ruling should not be construed as being a declaration by the Canada Revenue Agency that the Non-Resident Tour Operator is entitled to a rebate.

More information on the FCTIP is available at www.cra.gc.ca/visitors, including the forms and publications mentioned in this letter.

If you require clarification with respect to any of the issues discussed in this letter, please call me collect at 604-658-8528. 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,
Rosalind Erceg
Services and Intangibles 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: 150099a
Business Number: […]

Dear [Client]:

Subject:	GST/HST RULING
		Application of the GST/HST to the supply of a service of providing care, supervision and a place of residence to an individual with a disability.

We […][are writing about] the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the operation of […][ABC], […]

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%.

STATEMENT OF FACTS

Based on information you provided […]; information gathered from public websites; and our conversation of [mm/dd/yyyy], we understand the following:

1. [ABC] is the operating name for the legal entity known as […] (the Corporation).

2. The Corporation is registered for purposes of the GST/HST under Business Number […].

3. The Corporation is licensed […] under the provisions of The Personal Care Homes Act (the Act) and its Regulations to operate a personal care home at […] (the Facility) in the Province of Saskatchewan with a total occupancy of [#] persons. The Corporation must operate in accordance with the most recent edition of the Licensees’ Handbook: Personal Care Homes (the Handbook), published by the Ministry.

4. The Act defines the term personal care home, states the conditions for operating a personal care home and allows for regulations to be made for certain purposes. It states (in part):

“2 In this Act,

(e) “personal care home” means a facility that provides

(i) accommodation and meals; and

(ii) supervision or assistance with personal care;

to an adult who is not a relative of the person who operates the facility, but does not include any facility:

(iii) designated as a special-care home pursuant to The Regional Health Services Act;

(iv) for which a licence or certificate of approval is issued pursuant to The Residential Services Act;

(v) that is a facility within the meaning of The Mental Health Services Act;

(vi) that has been designated as a hospital or a health centre pursuant to The Regional Health Services Act;

(vii) that is a facility used by the cancer agency continued pursuant to The Cancer Agency Act;

		(viii) Repealed. 2002, c.R-8.2, s.110.

(ix) that is designated in the regulations.

3 No person shall operate or cause to be operated a personal care home unless that person holds a licence authorizing him or her to do so.”

19 The Lieutenant Governor in Council may make regulations:

(a) classifying personal care homes for the purpose of the regulations;

		(a.1) authorizing the publication of, or the provision of public access to, information respecting inspections of personal care homes, including the contents of an inspection report and information respecting a licensee’s compliance or non-compliance with any Act or regulation;

		(a.2) prescribing the period within which the information mentioned in clause (a.1) may be published or public access may be given;

		(a.3) governing the manner of publication or provision of public access to the information mentioned in clause (a.1);

(b) establishing standards for the construction, operation and maintenance of personal care homes;

(c) designating any facility for the purposes of subclause 2(e)(ix);

(d) respecting the eligibility of, and criteria to be met by, applicants for licences;

(e) respecting the terms and conditions to be contained in licences;

		(e.1) for the purposes of subsection 8.1(3), prescribing categories of existing personal care homes and requiring the licensees of personal care homes in those categories, on and from a prescribed date, to provide a bond or other security;

		(e.2) prescribing and governing the form and amount of a bond or other security to be provided pursuant to section 8.1;

		(e.3) governing recourse to a security in any form other than a bond;

(f) respecting eligibility for residence in personal care homes;

(g) respecting the accommodation, services and programs to be made available to residents of personal care homes;

(h) respecting the number of individuals who may reside in a personal care home;

(i) respecting the personnel requirements for personal care homes and qualifications of persons who operate or provide services in personal care homes;

(j) establishing and protecting the rights and privileges of persons who reside in personal care homes;

(k) respecting the records to be kept by persons who operate personal care homes;

(l) respecting the confidentiality of information concerning personal care homes and operators of personal care homes;

(m) respecting agreements between persons who operate personal care homes and residents of personal care homes;

(n) establishing standards respecting fire protection;

(o) establishing application fees for licences;

(p) defining, enlarging or restricting any term or expression used in this Act but not defined in this Act;

		(p.1) prescribing any other matter or thing that is required or authorized by this Act to be prescribed in the regulations;

(q) respecting any other matter that the Lieutenant Governor in Council considers necessary to carry out this Act according to its intent.”

5. The Personal Care Homes Regulations to the Act defines terms relevant to the definition of personal care home and sets out obligations and responsibilities of a person licensed to operate a personal care home. It states (in part):

“2(1) In these regulations:

(b) “activities of daily living” includes but is not limited to, the following activities:

(i) eating;
(ii) bathing;
(iii) dressing;
(iv) grooming;

(v) participating in social and recreational activities.

(h) “care” means the provision of personal care, specialized care or both
personal care and specialized care to a resident;

(r) “personal care” means direct assistance to, or supervision of, a resident in performing activities of daily living, including the administration of medication, but does not include specialized care.

(v) “specialized care” means health care services provided by health care professionals that are required by a resident, but does not include personal care;

7 The licensee of a home is responsible for the care management and administration

of the home.

15(1) A licensee must develop a care plan for each resident within seven days after the resident is admitted to the home.

15(2) A care plan must identify the types of assistance or supervision that the resident needs in all activities of daily living and must address the physical, cognitive, emotional, social and spiritual needs of the resident.

17(1) A licensee shall ensure that:

(a) a written admission agreement respecting the terms and conditions of residence in the home is entered into between the licensee and the resident;

(b) the admission agreement provides for:

(i) the care, service and type of accommodation that the licensee agrees to give to the resident, including services required pursuant to the Act and these regulations;

(ii) the rights and privileges of the resident other than those listed in section 34;

(iii) the responsibilities of the resident and the resident’s supporter;

(iv) the rules of the home;

(v) payment for the residency, including:

(A) the monthly, weekly or daily rate for services rendered or care and accommodation provided to the resident;

(B) the method of payment for the services, care and accommodation mentioned in paragraph (A) and the date on which payment is due;

(C) any charges for incidental services;

(D) any charges made when the resident is temporarily absent from the home;

(E) an explanation of the rate mentioned in paragraph (A) and the charges mentioned in paragraphs (C) and (D) as those rates and charges relate to the care to be provided to the resident;

(F) conditions under which refunds of rates and charges will be made;

(vi) details of insurance coverage of the home with respect to the possessions of the resident;

(vii) the term of the admission agreement;

		(viii) the alteration or renewal of the admission agreement; and

(ix) the dating and execution of the admission agreement by the licensee and the resident within seven days after admission of the resident into the home; and

(c) an original of the admission agreement is provided to the resident and, at the resident’s request, to the resident’s supporter.

22(1) A licensee shall provide the care to residents that is required to meet the
individual needs of each resident.”

6. A sample […] Agreement (the Agreement) has been provided for our review. The Agreement is between the Licensee (the Corporation) and the Resident. It states (in part) […] [the obligations of the [Corporation] such as accommodation, meals, services and care provided and the obligations of the resident such as resident fees]

7. The Corporation began accepting residents on [mm/dd/yyyy].

8. The Facility consists of:

* a kitchen and dining area;
* a nursing area which contains a nursing desk, secure medication room and consultation room;
* an activity room and large common room for entertainment and church services;
* accommodation areas described as […];
* administrative areas; and
* a fenced in courtyard.

9. All of the Facility’s exterior doors are equipped with wander guard alarms. Residents are not permitted to leave the facility unattended.

10. The Facility’s staff includes a nursing care supervisor, care aides, and cooks. The nursing care supervisor is responsible for the residents’ medications and treatments (as a doctor or nurse practitioner has ordered); she arranges their doctor appointments and scheduled lab draws; and arranges for refills of their medications. The care staff is responsible for monitoring residents’ blood pressure, constipation, height and weight; for meeting their personal care and emotional needs; and assisting with their spiritual, exercise, and recreational programs. The cooks must follow Canada’s Food Guide and be knowledgeable in managing special diets such as diabetic and cardiac diets. You stated the staff have the Personal Care Worker Course taught by St. John Ambulance; CPR and First Aid; and must know how to operate the automated external defibrillators on site.

11. As of [mm/dd/yyyy], the Corporation provides services to [#] persons who are residents of the Facility. A resident’s stay at the Facility is intended to be a long-term living arrangement. However, residents will require alternate living arrangements if they require a higher level of care which the Corporation cannot provide.

12. The residents range in age […]. You have stated, “… all of the residents of the home require assistance with their activities of daily living.” You have provided a diagnosis for each resident that supports your statement. You have also confirmed that the impairment of each resident has lasted or is expected to last for at least 12 months.

13. You have stated that the Corporation is licensed to offer Level 1 - Light and Level 2 - Intermediate personal care to residents. These terms are defined in […], a document published by the Ministry, to mean:

“5. Light Care

* Resident is independent with personal care. May need reminders and cueing.

* Minimal specialized care (e.g. supervising a resident with their own specialized care).

* Independent with transfers and mobility.

6. Intermediate Care

* Supervision of behaviour.

* Supervision and some assistance with personal care.

* Assistance with specialized care.

* Supervision and/or one person assist transfers and/or mobility.”

RULING REQUESTED

You would like to know if the supply made by the Corporation to a resident of the Facility is an exempt supply for purposes of the GST/HST.

RULING GIVEN

Based on the facts set out above, we rule that the supply made by the Corporation to a person with a disability of accommodation, meals, services and care pursuant to the Agreement is an exempt supply pursuant to section 2 of Part IV of Schedule V to the Excise Tax Act (ETA). Section 2 of Part IV of Schedule V to the ETA exempts a supply of a service of providing care, supervision and a place of residence to children, underprivileged individuals or individuals with a disability in an establishment operated by the supplier for the purpose of providing such service.

EXPLANATION

The supply made by the Corporation to a resident of the Facility pursuant to the Agreement is a single supply of a service of providing care, supervision and a place of residence in an establishment that is operated for the purpose of providing care, supervision and a place of residence to individuals with a disability. This conclusion is supported by the terms of the Agreement between the Corporation and the Resident, and the requirements of the Corporation’s license under provisions of the Act and its Regulations to operate a personal care home in the Province of Saskatchewan.

It is a question of fact if the service is being provided to an individual with a disability and this determination needs to be made on a supply-by-supply (i.e. case-by-case) basis. The CRA’s interpretation of the term “disability” is that it generally refers to a long-term impairment that restricts an individual in carrying out his or her activities of daily living. You have confirmed that as of [mm/dd/yyyy], all residents of the Facility are individuals with a disability. You have provided sufficient documentation for us to conclude that each of these residents has an impairment and because of that impairment is restricted in carrying out the activities of daily living. You have also confirmed that the impairment of each resident has lasted or is expected to last for at least 12 months.

ADDITIONAL INFORMATION

Your request for a ruling of [mm/dd/yyyy], indicated that you required information on whether or not the Corporation is required to be registered for purposes of the GST/HST. As we are not sure what supplies the Corporation makes other than those discussed in this letter we are not able to answer the question of registration definitively. However, we are providing you with the following information which should help you determine whether the Corporation should be registered for purposes of the GST/HST.

Every person who makes a taxable supply in Canada in the course of a commercial activity engaged in by the person in Canada must register for the GST/HST, except where:

* the person is a small supplier;
* the only commercial activity of the person is the making of supplies of real property by way of sale otherwise than in the course of a business; or
* the person is a non-resident person who does not carry on any business in Canada.

A person is not engaged in a commercial activity and is not required or permitted to be registered for the GST/HST where that person is making only exempt supplies.

A person is a small supplier during any particular calendar quarter and the following month if the total value of the consideration for world-wide taxable supplies, including zero-rated supplies, made by the person (or an associate of the person at the beginning of the particular calendar quarter) that became due, or was paid without becoming due, in the previous four calendar quarters does not exceed $30,000 or, where the person is a public service body, $50,000.

The CRA may, after giving reasonable notice in writing, cancel the registration of a person, provided the CRA is satisfied that the registration is no longer required. An application to request the cancellation of a GST/HST registration number can be made by using form RC145, Request to Close Business Number (BN) Accounts. Alternatively, a person may request the cancellation of their GST/HST registration by contacting our Business Enquiries line at 1-800-959-5525. The following information must be supplied to the CRA:

* the reason for the cancellation request,
* the effective dates of registration and cancellation,
* a statement that all commercial activity has ceased or that the person is a small supplier, and
* the signature of the registrant or an authorized person or, when cancelling by telephone, confirmation that the person is authorized.

Further information on closing your GST/HST account can be found in GST/HST Memorandum 2.7, Cancellation of Registration published on the CRA's website at www.cra-arc.gc.ca.

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 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.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 952-0420. 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,

Trent MacDonald
Charities and Non-profit Organizations 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: 150927
June 20, 2013

Dear [Client]:

Subject: GST/HST RULING
Application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to trailer park site rental fees

Thank you for your letter of February 2, 2013, concerning the application of the GST/HST to the rental of a site at [...] (the Resort) located [in] [...].

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.

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

Statement of Facts

Based on your letter and supporting documentation, as well as our phone conversation of March 6, 2013 with [...], we understand the following:

1. You first began leasing [...] (the Site) at the Resort in [mm/yyyy]. You have been leasing the Site on a one-year term, renewable annually. The Resort is a seasonal waterfront resort which is generally open from the beginning of May to the Thanksgiving weekend. You have occupied the Site from [...][May] until October (Thanksgiving) each year since [mm/yyyy].

2. You have installed a [...] unit, manufactured by [...], on the Site. The unit measures [...]' by [...]'. The unit is not a camping trailer. It cannot be towed by a car. The unit has remained on the Site year-round since the time of purchase in [yyyy].

3. The unit is fully skirted and includes an attached deck and sunroom measuring [...]. The Site is fully landscaped including landscaping around the perimeter of the unit. You have provided photos of your unit.

4. The hauling tongue has been removed from the unit. The unit is tied down and permanently installed on a concrete block foundation in a manner that is conducive to long-term residential use.

5. The unit is designed for year-round habitation and has permanent sewer, electrical, water and satellite systems. Central air conditioning, as well as four-season central heating, is also included.

6. You have indicated that you do not have phone service or mail delivery at the Site. You have maintained the address of your residence in [...][City 1] as your mailing address.

7. You indicate that you reside in your unit at the Resort from [May] to the Thanksgiving weekend every year. During this period you return to your primary place of residence in [City 1] from time to time only to attend doctor appointments and pick up any mail.

8. During the winter, the Site is not easily accessible as the roads are not cleared in the park.

9. You have provided a copy of [...] (the Agreement) for the Site. You have also provided copies of the invoices for the [yyyy] and [yyyy] rental of the Site. The Agreement indicates that the use of the Site shall be for recreational and/or vacation purposes only. In addition, the occupant of the Site must maintain liability insurance in an amount not less than $[...] as well as "all perils" insurance coverage.

10. You indicate that your case is similar to [...], who are also residents of the Resort, and that they have received a rebate of the HST charged on the rental of their site.

Ruling Requested

You would like to know whether the rental in respect of the Site is subject to GST/HST.

Ruling Given

Based on the facts set out above, we rule that the amount charged for the rental of the Site is consideration for a supply of land that is exempt of the GST/HST under subparagraph 7(a)(i) of Part I of Schedule V to the ETA.

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

Subparagraph 7(a)(i) of Part I of Schedule V to the ETA provides that a supply of land (other than a site in a residential trailer park) made by way of lease, licence or similar arrangement that provides for continuous possession or use of the land for at least one month is exempt if the supply is made to an owner, lessee or person in occupation or possession of a residential unit that is or is to be affixed to the land for the purpose of its use and enjoyment as a place of residence for individuals.

Subsection 123(1) defines the term "residential unit" to include a house, semi-detached house, mobile home or "any other similar premises". Whether a particular unit has the same permanent residential characteristics as a house such that it is considered to be a "residential unit", is affixed to the land, and is used as a place of residence for individuals is determined on a case-by-case basis taking into consideration the facts and circumstances of the particular case.

Based on the facts referred to above, the unit is considered to be a residential unit. It has the necessary residential characteristics, including permanency, as a house. It is installed in a permanent manner that is conducive to long-term residential use and is connected in a permanent way to sewer, electrical and water facilities. As such, the unit is considered to be a residential unit that is affixed to the land.

Whether a particular unit is used as a place of residence is a question of fact. That determination is made on a case-by-case basis. A residential unit that is affixed to the land may be considered to be a place of residence based on the purpose for which it was affixed to the land, as well as the length of time and the frequency throughout the year that the individual occupying the unit is physically present and using the unit as a place of residence.

The meaning attributed to a "place of residence", as opposed to "lodging", is based on a determination of the purpose of the stay, the amount of time of the stay, and the physical presence of the individual(s) occupying the unit. If a unit is the individual's primary place of residence, it will be considered to be for use and enjoyment of the individual as a place of residence. While an individual has only one primary place of residence, it is possible for an individual to have more than one place of residence. To be considered an individual's place of residence, the unit should be used for purposes of habitation or dwelling, but would not normally include an abode of a transient nature.

In this case, the facts indicate that you have been using the unit as your place of residence throughout the period the Resort is in operation, annually, from May to the Thanksgiving weekend. As such, all of the requirements of subparagraph 7(a)(i) of Part I of Schedule V to the ETA are met.

ADDITIONAL INFORMATION
Tax paid in error

Under the ETA, where a person has paid an amount as or on account of tax that was not payable, the person may request a refund or credit of the amount from the supplier. A supplier may refund or credit the tax within two years after the day the amount was charged or collected. Further information on the time limitations and conditions for claiming refunds and credits is available in GST/HST Memoranda Series Chapter 12.2, Refund, Adjustment, or Credit of the GST/HST under Section 232 of the Excise Tax Act, available on the CRA Web site.

Where a refund or credit is not issued by the supplier, the person may make an application under subsection 261(1) for a rebate of the tax paid in error by completing and submitting application form GST 189, General Application for Rebate of Goods and Services Tax (GST)/Harmonized Sales Tax (HST), a copy of which is enclosed. It should be noted that a rebate application made under section 261 cannot include amounts that were paid in error more than two years before the application is filed.

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

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-952-9212. 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,
Melissa Mercer
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: 143085
Business Number: […]

Dear [Client]:

Subject:	GST/HST RULING -
		[Corp A] - Requirement to recapture input tax credits on loaner vehicles supplied during a repair service

Thank you for your letter of March 13, 2012, concerning the recapture of input tax credits (RITCs) requirement and loaner vehicles supplied during a repair service.

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

Based on the information provided, our understanding of the facts is as follows:

1. […]([…][Corp A]) is a corporation incorporated under the Canada Business Corporations Act with its head office in […][City 1, Province A]. [Corp A] sells and leases vehicles through its [Corp A] retailers (hereafter referred as “Dealerships”). Vehicles are purchased by the Dealerships, and resold or leased to customers.

2. [Corp A] is registered for GST/HST purposes under Business Number […], and is considered a large business pursuant to section 236.01, and section 27 of the New Harmonized Value-Added Tax System Regulations, No.2 (the Regulations).

3. A Dealership may sell optional service contracts or extended warranty plans (hereafter referred as “Service Contracts”) on behalf of [Corp A].

4. [Corp A] reimburses the Dealerships for basic warranty repair services, and repairs performed under Service Contracts. These repair services are provided to customers by the Dealership on [Corp A]’s behalf and not as agent of [Corp A].

5. When repair services performed under basic warranty coverage require a customer to leave its vehicle overnight, a Dealership may provide the customer, at its own discretion, with a vehicle (hereafter referred to as “loaner vehicle”) from its fleet of new vehicles. If none are available, the Dealership may provide a loaner vehicle from a car rental company at its own discretion and cost.

6. [Corp A] is not obligated to reimburse the Dealerships for loaner vehicles under the basic warranty coverage; however, under [Corp A]’s […]([…][Program X]), [Corp A] agrees, under certain circumstances, to reimburse a Dealership that provides a loaner vehicle to its customer, either from its fleet or from a car rental company, $[…]/day up to a maximum of [#] days, and up to $[…]/day for certain vehicles needing repair, […].

7. The basic warranty coverage ([…]) states, in part, the following: […][direct quote about what is not covered under the warranty]

8. [Program X] provides the following:

a. Dealerships will be reimbursed for providing alternate transportation for their basic warranty customers whose vehicles cannot be driven and must be kept at the Dealership overnight. [Program X] allows every Dealership to provide a loaner vehicle for at least [#] days without authorization from the Dealer Service Manager (DSM). Dealerships can provide vehicles quickly and at their own discretion, to ensure their customers’ immediate satisfaction.

b. [Program X] does not apply to vehicles that can be driven safely; customer-pay repairs; same-day repairs; shop comeback repairs; […] parts repairs (where the vehicle basic warranty will not cover the repair); maintenance service; sublet repairs; and repairs where a customer’s Service Contract will cover the cost of a loaner vehicle.

c. […]. If a Dealership cannot provide a vehicle from its fleet, it may obtain a vehicle from a commercial daily rental agency.

d. The Dealership can provide a loaner vehicle for up to [#] days at $[…] per day without authorization by the DSM. An authorization is required for claims that exceed the day or dollar limits. (A day is a 24-hour period.)

e. [Program X] is not part of any warranty. It’s a separate program designed to enable the Dealership to provide immediate alternate transportation for its warranty customers that are genuinely inconvenienced. Loaner vehicles are provided at the Dealership’s discretion.

9. When repairs are performed under a Service Contract, where the vehicle was inoperable, and the customer is required to leave the vehicle at the Dealership overnight, the customer is entitled to an amount for the rental of substitute transportation, up to $[…]/day for a maximum of [#] days (hereafter referred to as the “daily maximum allowance”) as per the Service Contract.

10. A Service Contract between [Corp A] and a customer that owns a vehicle that is under the […] basic warranty coverage, states, in part […] the following: […][direct quote about what is covered under the warranty]

11. For repairs made under a Service Contract, a Dealership may make arrangements directly with a car rental company, and [Corp A] reimburses the Dealership up to the maximum daily allowance. Alternatively, the Dealership may provide the customer with a vehicle from its own fleet, in which case [Corp A] reimburses the Dealership an amount equal to the maximum daily allowance.

12. Where a Dealership provides a customer with a loaner vehicle from a car rental company, whether under [Program X] or a Service Contract, the customer enters into the car rental agreement with the car rental company and the rental costs are billed to the Dealership in accordance with the agreement between the Dealership and the car rental company. The Dealership is not acting as agent of [Corp A] in facilitating the rental of the loaner vehicle.

13. For basic warranty repairs and Service Contract repairs performed by a Dealership on [Corp A]’s behalf, the Dealership submits weekly electronic claim statements which itemize the charges for parts, labour, special services and loaner vehicles provided under [Program X] or a Service Contract.

14. [Corp A] sends […][an acknowledgement] to the Dealership for each claim submitted.

15. Example of a claim for a repair service under a Service Contract:

a. A Dealership submits a claim […] to [Corp A] for repairs performed on […][Model ABC] covered by a Service Contract;

b. The total claim in the amount of $[…], including HST, includes itemized charges for parts, labour and a loaner vehicle charge of $[…];

c. The loaner vehicle in this case was rented from [a] […]([…][car rental company]), and the rental charges were invoiced directly to the Dealership in the amount of $[…] ($[…] plus HST); and

d. The Dealership paid the invoice from [a] [car rental company], and included the loaner vehicle charge of $[…] in its weekly electronic claim statement sent to [Corp A].

16. Example of a claim for a repair service under the basic warranty coverage:

a. A Dealership submits a claim ([…]) to [Corp A] for repairs performed on […][Model DEF] covered by the basic warranty;

b. The total claim in the amount of $[…], including HST, includes itemized charges for parts, labour and a loaner vehicle charge of $[…] that was claimed under [Program X];

c. The loaner vehicle in this case was rented from [a] [car rental company], and the rental charges were invoiced directly to the Dealership in the amount of $[…] ($[…] plus HST); and

d. The Dealership paid the invoice from [a] [car rental company], and included the loaner vehicle charge of $[…] in its weekly electronic claim statement sent to [Corp A].

RULING REQUESTED

You would like to know whether [Corp A] is required to recapture the input tax credits with respect to the provincial part of the HST paid to the Dealerships for loaner vehicle charges included in the weekly electronic claim statements for repair services performed on vehicles either under the basic warranty coverage or Service Contract.

RULING GIVEN

Based on the facts set out above, we rule that [Corp A] is not subject to the RITC requirement in respect of the provincial part of the HST paid or payable on the consideration payable to Dealerships for repairs services, which includes the Dealerships’ charges for loaner vehicles, provided under the basic warranty coverage or Service Contracts whether a loaner vehicle is provided to a customer from a car rental company or a Dealership’s fleet.

In accordance with the qualifications 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.

EXPLANATION

Based on our analysis of the information provided, for each vehicle repaired by a Dealership as described in this ruling, [Corp A] is acquiring a single supply of a repair service that is subject to the GST/HST. The charge in respect of a loaner vehicle under either the basic warranty coverage or Service Contract is part of the consideration for the supply of the repair service.

[Corp A] is required to pay GST/HST on the total consideration payable to the Dealerships for the repair services and [Corp A] may claim input tax credits (ITCs) in respect of this GST/HST to the extent that the repair services are acquired, consumed or used in the course of its commercial activities and the conditions for claiming the ITCs are met.

In accordance with subsection 28(1) of the Regulations, the repair services acquired by [Corp A] are not specified property and services for purposes of section 236.01 and, as such, the ITCs claimed in respect the repair services are not subject to the recapture requirement.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-9699. 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,

Linda Féquière
General Operations 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: 144979
Business Number: [...]

June 11, 2013

Dear [Client]:

Subject: GST/HST APPLICATION RULING
Tax status of [...] Snack Crackers

Thank you for your letter of May 29, 2012, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the products described below. We apologize for the delay in responding.

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.

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

Statement of Facts

From your letter of May 29, 2012, the sample provided, and various Web sites noted in this letter, our understanding of the facts is as follows:

1. [...] snack crackers come in various flavours, two of which are:

* [...] Flavour (Product A), and
* [...] Flavour (Product B).

2. Your view is that supplies of Product A and Product B are zero-rated under Part III of Schedule VI to the ETA based on paragraph 94 of the GST/HST Memoranda Series, 4.3 Basic Groceries (MS 4.3) which states in part:

"The following are examples of zero-rated supplies. They are not considered to be sweetened goods for the purposes of paragraph 1(m):

...

* crackers (other than graham crackers), including:

...

- snacking crackers (including vegetable, bacon or cheese flavoured)"

3. You stated in your letter that Product A and Product B are dry package goods that will be marketed as an alternative to other cracker snacks and will be located in the cracker section of the retailer's store.

4. Neither Product A nor Product B is sold primarily as breakfast cereal.

5. Samples of Product A and Product B have been provided to us. Each sample includes the package which is a bag containing nutritional facts and ingredients.

6. Product A is sold in [...]g multi-serving bags. [...].

7. The contents of Product A are [...], with [...] packaged loosely in a bag.

8. The ingredients listed on the bag for Product A are [...].

9. The ingredients contained in Product A are found to be similar to those in another [...] product called [...].

10. The appearance of Product A is [...]. [...].

11. Words such as [...] appear on the bag of Product A.

12. [...].

13. Product B is sold in [...]g multi-serving bags. [...].

14. You stated that the contents of Product B are [...]

15. The contents of Product B are [...], packaged loosely in a bag.

16. The ingredients listed on the bag for Product B are [...].

17. Words such as [...] appear on the bag of Product B.

Ruling Requested

You would like to know if supplies of Product A and Product B are zero-rated under section 1 of Part III of Schedule VI to the ETA.

Ruling Given

Based on the facts set out above, we rule that supplies of Product A and Product B are subject to the GST/HST under subsections 165(1) and 165(2). Supplies of Product A and Product B are not zero-rated under section 1 of Part III of Schedule VI to the ETA.

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

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.

Product A

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".

On a comparison of the significant properties (ingredients, flavour, texture, and labelling) of Product A to other traditional [...] products available on the market, we have found no significant differences. The ingredients contained in Product A are similar to those in other [...] products. The taste of Product A is no different from the taste of a traditional [...]. Also, Product A is somewhat crunchy and [...] in texture like a traditional [...]. Thus, we consider Product A to be a [...] rather than a cracker. Though product placement is a relevant consideration, it alone is not considered a determinative factor. As Product A is a [...] which falls under the exclusion as described in paragraph 1(f) of Part III of Schedule VI to the ETA, supplies of Product A are subject to the GST/HST at the applicable rates according to subsections 165(1) and 165(2) and the place of supply rules.

Product B

Product B is one unique good containing two elements, sold in a bag for a single price. The two elements are mixed together before the bag is sealed. Though the two elements remain separate and distinct from each other and are not bound into one whole, they are integral to the final product and neither of them is incidental to the other. Though individual packages of each element are available in the market, the elements are now combined together to be sold as one new product.

When a person combines two or more goods together, it must be determined whether the person is making a single supply or multiple supplies. Policy Statement P-077R2: Single and Multiple Supplies sets out criteria to determine if a transaction consists of a single supply or multiple supplies.

Using the criteria in the above policy statement, we have concluded that the supply of Product B is a single supply.

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

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

Paragraph 67 of the MS 4.3 provides that snack mixtures usually have the following characteristics:

• Consumers commonly view them as snacks.

• Their ingredients are ready to eat; no further processing is required.

• The ingredients have been combined before the product is sold.

• The main ingredients remain separate and distinct from each other and are not bound into one whole.

• The main ingredients are often coated with a savoury seasoning such as salt or barbecue flavouring.

• They are eaten by the handful or as individual bite-sized pieces without utensils.

• They are usually sold in pouch packs or bags, from bulk bins or in clear plastic containers.

Product B is sold in [...] gram bags containing an equal mixture by weight of two ingredients. One ingredient being [...] which is an item identified in paragraph 1(f) of Part III of Schedule VI to the ETA and the other ingredient being small crackers which is not specifically excluded from paragraphs (a) to (r) of section 1 of Part III of Schedule VI to the ETA. Though the ingredients are mixed together, they remain separate and distinct from each other. Both ingredients are coated with a savoury flavouring. Product B can be eaten by the handful or as individual bite-sized pieces without utensils. Product B is ready to eat generally as a snack and no further processing is required. As Product B has all the characteristics as described in paragraph 67 of MS 4.3, we consider Product B to be a snack mixture which falls under the exclusion of paragraph 1(i) of Part III of Schedule VI to the ETA. As Product B is a snack mixture, supplies of Product B would be subject to the GST/HST at the applicable rates according to subsections 165(1) and 165(2) and the place of supply rules.

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: 145577
Business Number: [...]

June 13, 2013

Dear [Client]:

Subject: GST/HST RULING
Application of GST/HST to [...] [ACo] Snack Crackers

Thank you for your letter of June 18, 2012, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the products described below. We apologize for the delay in responding.

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.

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

Statement of Facts

From your letter of June 18, 2012, the sample provided, and various Web sites noted in this letter, our understanding of the facts is as follows:

1. [ACo] snack crackers come in various flavours, three of which are:

• [...] (Product A),
• [...] (Product B), and
• [...] (Product C).

2. You stated in your letter that Product A, Product B, and Product C are shelved in the cracker section of the stores.

3. Product A, Product B, and Product C are not sold primarily as breakfast cereal.

4. Copies of the product labels for Product A, Product B, and Product C have been provided.

5. Also, samples of Product A, Product B, and Product C have been provided. Each sample includes the package which is a [...] containing nutritional facts and ingredients.

6. Product A is sold in a [...].

7. The contents of Product A are [...], with [...] flavour packaged loosely [...].

8. The ingredients listed [...] for Product A are [...].

9. The appearance of Product A is [...]. The inside is solid.

10. Words such as [...] appear [...] [on the packaging] of Product A.

11. Product B is sold in a [...].

12. The contents of Product B are [...], with [...] flavour packaged loosely [...].

13. The ingredients listed on [...][the packaging] for Product B are [...].

14. The appearance of Product B is [...], hollow on the inside, crunchy, dry, and fluffy in texture. Product B has a savoury taste.

15. Words such as [...] appear on [...][the packaging] of Product B.

16. Product C is sold in a [...].

17. The contents of Product C are [...], with [...] flavour packaged loosely [...].

18. The ingredients listed on [...][the packaging] for Product C are [...].

19. The appearance of Product C is [...], hollow on the inside, crunchy, dry, and fluffy in texture. Product C has a savoury taste.

20. Words such as [...] appear on [...][the packaging] of Product C.

Ruling Requested

You would like to know if Product A, Product B, and Product C would be excluded from zerorating as other similar snack foods described under paragraph 1(f) of Part III of Schedule VI to the ETA.

Ruling Given

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

• supplies of Product A are subject to the GST/HST under subsections 165(1) and 165(2). Supplies of Product A are excluded from zero-rating under paragraph 1(f) of Part III of Schedule VI to the ETA; and
• supplies of Product B and Product C are zero-rated under section 1 of Part III of Schedule VI to the ETA.

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

Generally, in accordance with section 165 of the ETA, 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.

Product A

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".

On a comparison of the significant properties (ingredients, flavour, texture, and labelling) of Product A to other traditional [...] products available on the market, we have found no significant differences. The ingredients contained in Product A are similar to those in other [...] products. The taste of Product A is no different from the taste of a traditional [...]. Also, Product A is somewhat crunchy and [...] in texture like a traditional [...]. Thus, we consider Product A to be a [...] rather than a cracker. Though product placement is a relevant consideration, it alone is not considered a determinative factor. As Product A is a [...] which falls under the exclusion as described in paragraph 1(f) of Part III of Schedule VI to the ETA, supplies of Product A are subject to the GST/HST at the applicable rates according to subsections 165(1) and 165(2) and the place of supply rules.

Product B & Product C

In determining whether Product B and Product C are foods similar to chips, crisps, puffs, curls, or sticks as listed in paragraph 1(f) of Part III of Schedule VI to the ETA, we have looked at the following factors:

Properties

- Ingredients: Product B and Product C do not have potatoes, corn or corn meal as its main ingredients. The main ingredients of Product B and Product C are flour and vegetable oil.

- Flavours: In addition to salt, Product B is coated with a [...] seasoning and Product C is coated with a seasoning that tastes like [...]. These savoury seasonings are commonly found in snack foods.

- Texture: The texture of Product B and Product C is dry and fluffy.

- Cooking process: Both Product B and Product C are baked goods.

- Size and shape: Both Product B and Product C are small in size and can be eaten by the handful. Also, they are in the form of [...] rather than in a form of a slice, stick or cylinder.

Labelling

- Both Product B and Product C are labelled as snack crackers. Neither Product B nor Product C has the word "chip", "crisp", "puff", "curl", "stick", "popcorn" or "pretzel" appear in the name of the packaging.

- The words appearing on the label of Product B and Product C are "snack crackers" rather than "snack" or "party snack" that are commonly found on packages of chips, crisps, puffs, curls, or sticks.

Packaging

- The contents of Product B and Product C are packaged loosely [...].

Marketing

- Neither Product B nor Product C is marketed as "chip", "crisp", "puff", "curl", "stick", "popcorn" or "pretzel".

- None of the advertising of Product B and Product C includes words found on packages of "chip", "crisp", "puff", "curl", "stick", "popcorn" or "pretzel".

- Both Product B and Product C are promoted as snack crackers and generally found in the cracker aisle of the grocery store.

Though the contents of Product B are packaged loosely [...] and Product B comes in a savoury flavour which is commonly found in snack foods, Product B is significantly different in the main ingredients, shapes, labelling and marketing from the types of snack foods listed in paragraph 1(f) of Part III of Schedule VI to the ETA. The same was observed for Product C. Thus, we do not consider Product B and Product C to be snack foods which are excluded from zero-rating under paragraph 1(f) of Part III of Schedule VI to the ETA.

Paragraph 94 of the GST/HST Memoranda Series, 4.3 Basic Groceries states in part:

"The following are examples of zero-rated supplies...:

...

* crackers (other than graham crackers), including:

...

- snacking crackers (including vegetable, bacon or cheese flavoured)..."

Product B and Product C are found to be similar to snacking crackers which are not excluded by any of paragraphs (a) to (r) of section 1 of Part III of Schedule VI to the ETA. Thus, supplies of Product B and Product C are zero-rated under section 1 of Part III of Schedule VI to the ETA.

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 & 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: 146639
Business Number: [...]

May 13, 2013

Dear [Client]:

Subject: GST/HST RULING
Application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the sale of a lot (the Lot)

Thank you for your letters of [mm/dd] and [mm/dd/yyyy], concerning the application of the GST/HST to the sale of the Lot on which a portion of a residential complex is currently situated.

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.

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

Statement of Facts

We understand the following from your letter dated [mm/dd/yyyy] and the telephone conversation of [mm/dd/yyyy] between yourself and [...][an officer] of our GST/HST Rulings office in the [...] region:

1. [...] (the Municipality) is a municipality for purposes of the ETA.

2. The Municipality has created stand-alone residential lots from land that it owns. The Lot is one of these residential lots.

3. The Lot is located at [...] in [...][Province X] .

4. A structure (the Structure) was built on the Lot in [yyyy]. The Structure is attached to, and forms part of, the existing residential complex (the Building) on the neighbouring property at [...] in [Province X]. The Structure consists of a family/living room, a garage/carport, and multiple patios. It was built by the previous owner of the neighbouring property who did not have a building permit for the construction of the Structure.

5. The Municipality is negotiating to sell the Lot to the current owner (the Owner) of the neighbouring property at [...].

6. If the two parties cannot come to an agreement, the Owner will have to remove the Structure from the Lot and the Lot may be sold by the Municipality to a third party.

Rulings Requested

You would like to know whether the sale of the Lot by the Municipality is a taxable supply of real property subject to the GST/HST in the following circumstances:

a) The Lot with the existing Structure is sold to the Owner.

b) The Owner removes the Structure from the Lot and the Lot is sold to another party.

Rulings Given

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

a) The sale of the Lot, including the existing Structure, by the Municipality to the Owner is a taxable supply of real property and is subject to the GST/HST.

b) If the Structure is removed and the Municipality sells the Lot to another party, the sale is a taxable supply of real property and is subject to the GST/HST.

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

Explanation
Sale of the Lot with existing Structure to the Owner

As you are aware, an amendment was introduced in 2004 whereby supplies of real property made by a municipality are excluded from the exemption under section 25 of Part VI of Schedule V to the ETA. As it applies to this case, this amendment applies to any supply for which consideration becomes due after March 9, 2004 or was paid after that day without having become due. Therefore, a municipality's supply of real property by way of sale after March 9, 2004 is generally taxable, unless an exempting provision applies.

Section 2 of Part I of Schedule V to the ETA exempts the sale of a residential complex or an interest in a residential complex, subject to certain conditions.

The sale of the Lot, including the Structure, by the Municipality to the Owner is not the sale of a residential complex as the Structure and the Lot do not form a residential complex. In addition, the sale is not the sale of an interest in a residential complex as it is only an interest in part of a building that is being sold, not an interest in a residential complex.

As no other exemptions apply, the sale of the Lot, including the Structure, is a taxable supply of real property and is subject to the GST/HST.

Removal of Structure and sale of Lot to another party

If the Structure is removed, the sale of the Lot would be a sale of vacant land. The sale of vacant land by a municipality is a taxable supply unless an exemption applies. As no exemption applies to the sale of the Lot by the Municipality in such circumstances, the sale of the Lot to a third party would be a taxable supply of real property and subject to the GST/HST.

ADDITIONAL INFORMATION
[...]
Interpretation Requested

In your letter of [mm/dd/yyyy], you asked when the GST/HST becomes payable in respect of a sale of real property made under a written agreement of purchase and sale.

Interpretation Given

Subsection 168(5) stipulates that, other than in the scenario described in the next paragraph, tax in respect of a taxable supply of real property by way of sale is payable on the earlier of the day ownership of the property is transferred to the recipient and the day possession of the property is transferred to the recipient under the agreement for the supply.

In the case of a supply of a residential condominium unit where possession of the unit is transferred to a recipient after 1990 and before the condominium complex in which the unit is situated is registered as a condominium, tax is payable on the earlier of the day ownership of the unit is transferred to the recipient and the day that is sixty days after the day the condominium complex is registered as a condominium.

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

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-4393. 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,
Melissa Mercer
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: 140263R

Attention: [Client]

Dear [Client]:

Subject:	GST/HST RULING
		Revised Ruling - Application of GST/HST to supplies of […] Stevia Products

We have reviewed our previous GST/HST ruling (140263) regarding the tax status of supplies of […] Stevia Products (the Products) and have taken into account new information made available subsequent to that ruling. We provide the following ruling, which revokes and replaces our previous ruling letter issued under case number 140263 and dated February 28, 2012.

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, as confirmed by way of revised product labels submitted on April 1, 2014, to be as follows:

1. The Products are sold in three formats: […].

2. Product A is available in [various flavours].

3. The Product A label states: […][source and ingredients described].

4. The Product B label states: […][source, uses, benefits and ingredients described].

5. The Product C label states: […][source, uses and ingredients described].

6. The […] website states the following: […][uses and benefits described].

RULING

Based on the facts set out above, we rule that supplies of the Products are zero-rated under section 1 of Part III of Schedule VI to the ETA. The Products are ingredients that are not captured by any of the exclusionary paragraphs of (a) to (r) in that section.

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 this ruling 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.

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. Zero-rated supplies (listed in Schedule VI to the ETA) are subject to the GST/HST at the rate of 0%. Exempt supplies (listed in Schedule V to the ETA) are 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.

The terms “food” and “beverage” are not defined in the ETA. As stated in paragraph 2 of GST/HST Memorandum 4.3, Basic Groceries, we consider a product to be a food or beverage if an average consumer would recognize and purchase the product as such in the ordinary course of buying basic groceries.

The term “ingredient” is also not defined in the ETA. Generally, our view is that an average consumer would consider a product to be an ingredient if the product added to the flavour, texture, or appearance of the final product; that is, if it was integral to the final product. Moreover, in order to be regarded as an ingredient to a food or beverage, the final product, in and of itself, must be a food or beverage.

A review of the tax status of stevia based products has recently been conducted in light of steviol glycosides being added as a table-top sweetener by way of a modification to the List of Permitted Sweeteners published by Health Canada. Prior to the inclusion of steviol glycosides as a table-top sweetener, we had ruled that stevia based products could not be classified as ingredients as the products were only made available in Canada by virtue of their use as dietary supplements. Factors supporting this position included the fact that stevia was not listed in Table IX of Division 16 of Part B of the Food and Drug Regulations of the Food and Drugs Act as a permitted sweetener and the fact that Health Canada had issued specific guidelines regarding stevia and its use, including limits on its consumption. Given the regulatory restriction on the sale of stevia, supplies of stevia products were excluded from zero-rating.

As Health Canada now considers steviol glycosides a table-top sweetener, our policy on the tax status of stevia based products has been expanded and some of these products may now be zero--rated. With respect to the Products, as they are advertised as sweeteners, marketed as alternatives to sugar and artificial sweeteners, employ labelling that do not contain any risk information, and are used, recognized, and commonly sold as ingredients to food, where the primary use of each of the Products is to impart a sweet taste to food and drink to which they are added, we now consider each of the Products to be an ingredient that is zero-rated under section 1 of Part III of Schedule VI to the ETA.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 905-721-5220. Should you have additional questions on the interpretation and application of the GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.

Yours truly,

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