GST/HST Ruling

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

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

[Addressee]

Case Number: 182230
Business Number: […]

Dear [Client]:

Subject: GST/HST RULING AND INTERPRETATION
GST/HST Status of […][Energy and Fruit Bars]

Thank you for your letter of January 31, 2017, concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to […][Energy Bar](Product A), […][Energy Bar](Product B) and […][Fruit Bar](Product C). We apologize for our delay in responding.

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

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

We understand the following:

1. In your submission, you described Product A as energy bars. Although there are many variations of Product A, in general, you have indicated that the product contains ingredients such as […].

2. Product A energy bars, although fortified with vitamins and minerals, do not qualify as meal replacements or nutritional supplements.

3. The packaging for many of the flavours for Product A state that the product is “made with […]."

4. You have described Product B as being similar to Product A except that they are made specifically to meet the nutritional needs of […][certain individuals].

5. You have described Product C as fruit and nut bars. Again, although there are many variations of Product C, you have described the product as […].

6. Product C does not contain dairy and is made entirely from plant-based foods.

7. Product C is made from whole food and each flavour contains no more than [#] ingredients that are minimally processed to preserve their natural states.

8. All of the products under consideration are sold individually and also in packages of six or more.

9. It is your opinion that “while the bars are taxable when sold individually or in packages containing less than six items, these bars qualify for zero-rating when sold to consumers in packages containing quantities of six or more items”.

RULING REQUESTED

You would like to know how the GST/HST applies to supplies of Product A, Product B, and Product C.

RULING GIVEN

As samples of the products were not available for our review, we are unable to provide a ruling for Product A and Product B. We have provided an interpretation on the subject which may help you determine the tax status of the products.

With respect to Product C, based on the information available for our review, as a fruit bar, Product C would be excluded from zero-rating under paragraph 1(l) of Part III of Schedule VI to the ETA. Therefore, the supply of Product C would be fully taxable, regardless of the quantity sold.

EXPLANATION

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

Product C is not a granola product and therefore, it is not excluded from zero-rating under paragraph 1(h). Nor is the product labelled as a meal replacement or a nutritional supplement under the Food and Drugs Act and Regulations as set forth in paragraph 160 of Memorandum 4.3 – Basic Groceries. The Product is not similar to products listed in paragraph 1(m). Included in this paragraph are foods commonly purchased or served as desserts or snacks that are baked, fried, fresh or frozen, or otherwise prepared for sale.

Product C has dates as the principal ingredient. Its physical composition is dried fruit and spices compressed into a rectangular bar. The label for Product C clearly identifies the product as a fruit and nut energy bar. The product label also describes the product as […][a product that contains fruits and nuts].

Product C contains a significant amount of fruit i.e., dates, which serves to bind all ingredients. Without the date content, Product C would crumble and would not hold its bar shape. The dates also provide sweetness to Product C and serves as a substitute for sugar. Based on the information available for our review, Product C would be considered a fruit bar given that fruit is a main or important ingredient in its composition and therefore, would be excluded from zero-rating under paragraph 1(l) of Part III of Schedule VI.

INTERPRETATION GIVEN

The term "energy bar" is applied to a variety of products such as:

• bars marketed along with chocolate bars;
• bars made almost wholly from fruit or from a mix of fruit and vegetables;
• nutritional supplement or meal replacement bars that meet the requirements set out in the Food and Drug Act (FDA); and
• bars which have nutritional attributes, such as protein or added vitamins or minerals, but which are not meal replacement or nutritional supplement bars since they do not meet FDA requirements.

Most protein, energy or similar bars have the following characteristics:

• they are fruit or candy flavoured (candy referring to chocolate, caramel, vanilla and other typical candy flavourings);
• they are often comprised of a mixture of fruits, nuts, seeds and cereals;
• they are either naturally or artificially sweetened;
• they are individually wrapped in single servings, although they may be sold individually or prepackaged in multiples of individually wrapped single servings; and
• they are usually consumed as snacks.

It is our view that most supplies of protein, energy or similar bars (chocolate coated or fruit-based) will be excluded under paragraph 1(e) or 1(l). Paragraphs 1(h) and 1(m) may also apply to exclude some of these bars.

Paragraph 1(e) excludes supplies of “candies, confectionery that may be classed as candy, or any goods sold as candies, such as candy floss, chewing gum and chocolate, whether naturally or artificially sweetened, including fruits, seeds, nuts and popcorn when they are coated or treated with candy, chocolate, honey, molasses, sugar, syrup or artificial sweeteners.”

This exclusion is intended to apply quite broadly as it applies not only to candy, but also to supplies of confectionery which may be classed as candy, and supplies of goods which are sold as candy. Furthermore, it applies whether the product at issue is artificially or naturally sweetened. Thus, the exclusion is intended to apply not only to supplies of candy, but supplies of anything that is likely to compete with candy in the marketplace.

As with other products, the manner in which these bars are marketed, including labelling, advertising, type of packaging and method of distribution should be considered. After a review of the marketing of protein, energy and similar bars, it is our view that bars of this nature are usually positioned in the marketplace as snacks, which are healthier alternatives to other snacks such as candy bars. Bar manufacturers emphasize the pleasing taste and flavours of the product often with an emphasis on chocolate or fruit. As such, we can conclude that consumers do consume the products for pleasure, although, as with other foods, today's more health conscious consumer may also select a particular bar because of the perception that there are specific health or performance benefits to be gained from consuming the product as well.

Paragraph (h) excludes granola products except for those which are sold primarily as breakfast cereal. Paragraph 64 of Memorandum 4.3 – Basic Groceries (Memorandum 4.3) identifies granola bars as generally having a mixture of cereals (e.g., rolled oats, rice, or other whole grains) and honey and/or syrup as the main ingredients, and may include nuts and dried fruits. The ingredients in granola bars are not processed to a great extent, thereby retaining the distinct character of each ingredient within the bar. Granola bars may also have a chocolate or sweetened coating.

Paragraph 65 of Memorandum 4.3 also addresses bars that contain a mixture of cereals and honey and/or syrup, where the ingredients have been processed to the point that they have lost their distinct character. Bars of this nature are not considered to be granola bars, but rather cereal bars or muffin bars. Cereal bars are treated as a product similar to sweetened baked goods and may be excluded under paragraph 1(m) of Part III of Schedule IV for GST/HST purposes. Paragraph 1(m) excludes from zero-rating such products when sold in quantities of less than six items, each of which is a single serving.

Paragraph 1(l) excludes supplies of "fruit bars, rolls or drops or similar fruit-based snack foods". "Fruit-based snack foods" is the common denominator in the exclusion; that is, the exclusion applies to fruit-based snacks in the form of bars, rolls or drops, and similar fruit-based snacks as well. In the context of this provision, our view is that "fruit-based" means the product contains fruit as the main ingredient and may also contain other ingredients.

It is also our view that products having fruit as an important ingredient, such that the product is represented to consumers as being fruit-based, will be within this exclusion. Such a product could include fruit in combination with any of the following: vegetables, grains or seeds. It may also mean that a product is not dominantly composed of fruits.

Since a wide variety of products may fall within this exclusion, we are of the view that textures will also vary. As a result, we do not consider texture to be an important criterion in determining if a product falls under this exclusion. As noted at the outset, the fact that a product is nutritious would not, in our view, preclude the product from being excluded under paragraph 1(l). As a result, we consider that protein, energy and similar bars which contain fruit as a main or important ingredient or which are marketed in a manner which suggests to the consumer that the bar is a fruit-based bar, would fall within the ambit of this exclusion.

Other Exclusions

It is also possible that supplies of some bars will be taxable at 5% (or the applicable HST rate) as sweetened baked goods when sold in quantities of less than six, pursuant to the exclusions in paragraph 1(m). This provision may only be applicable in instances where no other exclusionary provisions apply to the products.

Meal replacement bars, nutritional supplement bars

Despite our view that supplies of protein, energy or similar bars would usually be taxable at 5% (or the applicable HST rate), there will be some instances where the exclusions would not apply. Our position is that supplies of bars that meet the FDA requirements for meal replacements or nutritional supplements are zero-rated for purposes of the ETA. This would include protein bars that meet these requirements. Based on the available information, neither Product A nor Product would meet the FDA requirements to be considered meal replacement or nutritional supplement bars.

In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the interpretation(s) given in this letter, including any additional information, is not a ruling and does not bind the Canada Revenue Agency (CRA) with respect to a particular situation. Future changes to the ETA, regulations, or the CRA’s interpretative policy could affect the interpretation(s) or the additional information provided herein.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 905-721-5218. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.

Yours truly,

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

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

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

[Addressee]

Case Number: 193880
Business Number: […]

Dear [Client]:

Subject: GST/HST RULING
Charity acting as an agent to purchase a service

Thank you for your letter of September 17, 2018, concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to a charity acting as an agent to purchase a service. We apologize for the delay in our reply.

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

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

STATEMENT OF FACTS

We understand

1. […][the Charity][…][represents and supports […](the Faculties)].

2. [The Charity] has been a registered charity for income tax purposes since [mm/dd/yyyy]. Its registration number is […].

3. As a registered charity for income tax purposes, [the Charity] is also a charity for GST/HST purposes under the definition of “charity” in subsection 123(1). It is not a public institution.

4. [The Charity] is not registered for GST/HST purposes. However, it does have an RT account because it claims the public service bodies’ rebate (PSB rebate).

5. […][the Organization] is the organization responsible for […][Describes the services supplied by the Organization].

6. [The Organization] states on its website (Footnote 1) that it is a non-profit corporation. [The Organization] is registered for GST/HST purposes and its GST/HST number is […].

7. Both [the Charity] and [the Organization] are located in [city], [province].

8. On [mm/dd/yyyy], [the Charity] and [the Organization] signed a Service Contract (the Contract) providing that starting [mm/dd/yyyy], [the Organization] will invoice a single fee to [the Charity] instead of invoicing the […] Faculties separately. The first invoice was for $[…], plus […]% [tax].

9. Subsequent to receiving [the Organization]’[s] invoice, [the Charity] will invoice the […] Faculties individually for their share of the […] service provided by [the Organization]. [the Charity] also intends to add around […]% as an administration fee to cover its costs.

10. Section […] of the Contract states that […][the Charity and the Organization are separate entities].

11. The […] page of the Contract states, in part, that […][the Charity will act as agent for the Faculties].

12. Section […] of the Contract states that […][the Faculties will be bound to the Service Contract by the Charity].

13. […].

14. Schedule […] to the Contract states, in part, that […][the Charity pays for the service on behalf of the Faculties].

15. Schedule […] to the Agreement sets out [the Charity]’s obligations under the Contract. All the obligations mentioned in Schedule […] are obligations of the Faculties, not of [the Charity].

16. Section […] of [the Charity]’s By-Laws dated [mm/dd/yyyy], states, in part, that […][the service must be used by the Faculties that are members of the Charity].

17. Section […] of [the Charity]’s By-Laws states, in part, that […][the board of directors is made of the following individuals].

18. You have stated that [the Charity] does not make any other taxable supplies.

RULINGS REQUESTED

You would like to know

1. Must [the Charity] charge GST/HST on the […][service] fee?

2. Must [the Charity] register for GST/HST purposes?

3. If the fee for the service is taxable, at what rate should it be charged? Is it based on the province where the Faculty is located?

4. How to calculate input tax credits (ITCs) and which calculation method should be used?

RULINGS GIVEN

Based on the facts set out above, we rule that

1.1. No, [the Charity] must not charge GST/HST on the [service] fee since it is not the supplier of the […] service.

1.2. No, [the Charity] must not charge tax on the […]% administration fee since it is consideration for a supply of a service that is exempt under section 1 of Part V.1 of Schedule V.

2. No, [the Charity] does not need to register for GST/HST purposes.

3. As [the Charity] is not making taxable supplies to the […] Faculties, it does not need to charge the GST/HST.

4. [The Charity] cannot claim an ITC for the GST/HST charged by [the Organization] since it is not the recipient of the supply of the […] service.

EXPLANATIONS

Ruling 1.1

There are two distinct supplies being made in this situation.

The first supply, the […] service, is made by [the Organization]. […] This is a taxable supply of a service.

The basic rule for the GST/HST is that, under section 165, every recipient of a taxable supply made in Canada must pay GST/HST in respect of the supply. “Recipient” in respect of a supply of property or a service is defined in subsection 123(1) to mean, where consideration for the supply is payable under an agreement for the supply, the person who is liable under the agreement to pay that consideration.

Although the name of the person on [the Organization]’[s] invoice is [the Charity], [the Charity] acts as an agent for the Faculties, as expressly mentioned in the Contract and demonstrated by the facts. Schedule […] to the Contract, quoted above, explicitly states that the fee is paid by [the Charity] on behalf of the Faculties, which means the Faculties are the ones liable to pay the consideration. As such, the […] Faculties are the recipients of the […] service supplied by [the Organization] and the persons liable to pay the GST/HST on this service.

Because the person making the supply is [the Organization], not [the Charity], [the Charity] must not charge GST/HST on the […][service] fee since it is simply passing on the cost to the Faculties.

When [the Charity] subsequently seeks reimbursement from the Faculties, the amount of the reimbursement will include the GST/HST charged by [the Organization] and paid by [the Charity] in respect of the original invoice. As [the Charity] originally paid the fees as agent for the Faculties, [the Charity] is not making an additional taxable supply to the Faculties when the Faculties reimburse [the Charity] for those costs. The reimbursement by the Faculties of the […] service fee would not be consideration for a supply, and therefore GST/HST will not be payable on the reimbursement. If [the Charity] had not paid the GST/HST on the consideration for the supply of the […] service on behalf of the Faculties, the Faculties would be liable to pay the GST/HST to [the Organization].

Ruling 1.2

The second supply is made by [the Charity] to the Faculties, the consideration for which is the […]% administrative fee. This is a supply of a service of acting as an agent. As [the Charity] is a charity, the general exemption under section 1 of Part V.1 of Schedule V will exempt the supply unless an exception in any of paragraphs 1(a) to (p) applies. None of the exceptions to the exemption apply, which means the supply of the service is exempt.

Rulings 2 and 3

Since [the Charity] does not make any taxable supplies, it neither needs to register for GST/HST purposes nor charge the GST/HST. A charity is required to register for GST/HST purposes if it makes taxable supplies in Canada and it is not a small supplier. A charity is a small supplier if it meets either of the following two tests:

• if its total revenues from taxable (that is, not exempt) supplies of property and services (other than sales of capital property, supplies of financial services and certain payments for goodwill), and those of associated persons, has not exceeded $50,000 in the current calendar quarter and the previous four consecutive calendar quarters; or
• if it is the charity's first fiscal year, it is a small supplier; or if the charity is in its second fiscal year, its gross revenue from its first fiscal year was $250,000 or less; and if it the charity's third or subsequent fiscal year, its gross revenue for either of its two preceding fiscal years was $250,000 or less. Gross revenue includes business income, revenues from taxable and exempt supplies, donations, grants, gifts, property income, investment income and any amount considered a capital gain less any amount considered a capital loss from the disposal of property for income tax purposes.

If all of a charity’s supplies are exempt, it cannot register for GST/HST purposes, even should it want to. For more information, see Guide RC4082, GST/HST Information for Charities.

Ruling 4

[The Charity] cannot claim an ITC or PSB rebate for the tax paid on the […] service on behalf of the Faculties since, not being the recipient, no tax was paid or became payable by [the Charity].

An ITC can only be claimed by persons that are registrants (which means registered or required to be registered) for GST/HST purposes to recover the GST/HST paid or payable by the person on property or a service to the extent that the property or service was acquired, imported or brought into a participating province for consumption, use or supply in the course of the person's own commercial activities (i.e., for making taxable supplies for consideration) provided all other conditions for claiming the ITCs are met. Based on the information provided, not only is [the Charity] not a registrant, [the Charity] is not the recipient of the […] service, and therefore does not meet these requirements.

A charity can claim the PSB rebate under subsection 259(3) to recover a percentage of the GST/HST paid or payable on its eligible purchases and expenses. However, [the Charity] cannot claim a PSB rebate for the tax paid on the […] service on behalf of the Faculties since it was not the recipient of the supply, and as a result no tax would be included in its “non-creditable tax charged” as defined under subsection 259(1). In general terms, “non-creditable tax charged” means the GST/HST paid or payable by a person on property or services in a claim period for which the person cannot claim an ITC, rebate, refund or remission other than a PSB rebate. The PSB rebate is based on the “non-creditable tax charged”, so if that amount is nil because no tax was payable, the rebate will also be nil.

[The Charity] can however claim the PSB rebate for the GST/HST paid or payable on inputs into its exempt supply of a service of acting as an agent, such as the GST/HST paid or payable on paper and postage fees for use in invoicing the Faculties.

The Faculties are universities that fall under the definition of “selected public service body” under subsection 259(1), which means they are also eligible to claim the PSB rebate under subsection 259(3). Being the recipients of the […] service supplied by [the Organization], the Faculties will be able to recover a percentage of the GST/HST paid or payable on that service.

Additional information concerning the PSB rebate may be found in Guide RC4034, GST/HST Public Service Bodies' Rebate.

INTERPRETATION GIVEN

Under the Contract, [the Organization] makes a taxable supply of a […] service to the […] Faculties. As such, this supply is subject to the GST/HST at the applicable rate (depending on the place of supply). We are pleased to provide you with the following general comments about the application of the place of supply rules to the supply of the […] service.

A) Place of supply

The general place of supply rules for services, such as the […] service provided by [the Organization], are set out in section 13 of the New Harmonized Value-Added Tax System Regulations.

Generally, under subsection 13(1) of the Regulations, a supply of a service is made in a province if, in the ordinary course of business of the supplier, the supplier obtains an address in the province that is

(a) if the supplier obtains only one address that is a home or a business address in Canada of the recipient, the home or business address in Canada obtained by the supplier;

(b) if the supplier obtains more than one address described in paragraph (a), the address described in that paragraph that is most closely connected with the supply; or

(c) in any other case, the address in Canada of the recipient that is most closely connected with the supply.

For purposes of subsection 13(1) of the Regulations, the address obtained by the supplier in the ordinary course of its business must be an address in Canada of the “recipient” of the supply who, under subsection 123(1), is generally defined to mean the person who is liable under the agreement for the supply to pay the consideration payable for the supply. The determination of the recipient of a particular supply would depend on the facts of each case, including the terms of the agreement for the supply and the relationship of the parties. As determined above, the recipients of the […] service supplied by [the Organization] are the […] Faculties.

If the supplier obtains more than one home or business address in Canada of the recipient in the ordinary course of its business, the province in which the supply is made is determined by the address that is most closely connected with the supply. The business address of the recipient from which the supplier is hired pursuant to the agreement for the supply (the “contracting address”) is generally the address that is most closely connected with the supply. This address will therefore determine the province in which the supply of the service is made where it is in Canada and is obtained by the supplier in the ordinary course of its business. If the contracting address of the recipient is not obtained, the business address of the recipient that is most closely connected with the supply would be the obtained business address of the recipient in Canada that the supplier has the most contact with and that the supplier mostly uses in connection with that supply.

Where the supplier does not, in the ordinary course of its business, obtain a home or business address in Canada of the recipient, but obtains another address in Canada of the recipient, the supply is made in the province where such an address that is most closely connected with the supply is located. For purposes of this part of the place of supply rule, there is no requirement for the address of the recipient to be an address at which the recipient is located. The types of addresses that could fall under this part of the rule could also include an address of the recipient such as a billing address, provided it is obtained by the supplier for a legitimate underlying business reason.

Additional information concerning place of supply rules for GST/HST purposes may be found in Draft GST/HST Technical Information Bulletin B-103, Harmonized Sales Tax – Place of supply rules for determining whether a supply is made in a province. Specifically, the Services – General rules would be the ones to apply.

B) Tax paid in error

Under subsection 232(1), where a person has overcharged or collected the wrong amount as or on account of GST/HST in error, the person has the option to adjust, refund or credit the excess tax within two years after the day the amount was so charged or collected. If the person chooses to adjust, refund, or credit the excess amount of GST/HST, a credit note containing prescribed information (Footnote 2) must be issued by the person to the recipient within a reasonable time (unless the recipient issues a debit note). The person may also make an adjustment to its net tax calculation to account for any adjustment, refund or credit of an amount of tax charged or collected 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 who have paid an amount as GST/HST in error may make an application to the Canada Revenue Agency (CRA) for a rebate of tax paid in error under section 261 using Form GST189, General Application for Rebate of GST/HST. 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 Memoranda 12.2, Refund, Adjustment, or Credit of the GST/HST under Section 232 of the Excise Tax Act. Further information regarding rebate claims is set out in Guide RC4033, General Application for GST/HST Rebates.

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

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-670-0671. 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,

Pierre-Olivier Roy
Charities and Non-Profit Organizations Unit
Public Service Bodies and Government Division
Excise and GST/HST Rulings Directorate

FOOTNOTES

1 […][Organization’s website], consulted on December 17, 2018.

2 The information is prescribed in the Credit Note and Debit Note Information (GST/HST) Regulations.

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

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

[Addressee]

Case Number: 189168
Business Number: […]

Dear [Client]:

Subject: GST/HST RULING
Cured, smoked meat products

Thank you for your letter of [mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to […] cured, smoked meat products. […].

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

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

STATEMENT OF FACTS

We understand the following:

1. […][The manufacturer] produces meat sausage products […].

2. The manufacturer is registered for GST/HST purposes.

3. […][The Products] are meat sausages, with a casing surrounding a meat filling. […].

4. […][The Products do not] require refrigeration nor do they need to be further prepared by the consumer as they are ready-to-eat straight from the package.

5. […][Product A is] available for individual purchase in prepackaged single servings. […]. The remaining products consist of the meat sausage […] and are offered in [various] sizes […].

6. […][Product B] sausages are available […] [in reclosable packages]. The sausages are loosely packed […] and are available in the following flavours: […].

7. […][The Products] will initially be available in gas and convenience stores and will be situated next to existing meat snacks such as pepperoni sticks and beef jerky. It is anticipated that in the near future, these products will be available in traditional grocery stores. In grocery stores, they would likely be placed next to existing meat snacks already available at these stores.

8. [Product A] prepackaged single servings are labelled “sausage snack”. The display […] containing the single servings will also be labelled “sausage snack. […].

9. […].

10. The main ingredient for [the Products] is meat.

11. The cooking process does not include deep frying or baking. The products are manufactured through smoking and curing.

12. The texture of [the Products] is not crispy, crunchy, brittle, or fluffy.

RULING REQUESTED

You would like to know whether supplies of […][Product A and Product B] are zero-rated for GST/HST purposes.

RULING GIVEN

Based on our understanding of the facts, we rule that supplies of [Product A and Product B] are zero-rated for GST/HST purposes.

EXPLANATION

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

As none of the exclusionary paragraphs of section 1 of Part III of Schedule VI apply to [Product A and Product B], the products are zero-rated, or subject to the GST/HST at the rate of 0%.

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

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 905-721-5218. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.

Yours truly,

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

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

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

[Addressee]

Case Number: 197026

Dear [Client]:

Subject: GST/HST RULING
Temporary importation of certain vehicles and related equipment

Thank you for your fax of January 31, 2019, concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to the temporary importation of […][X Vehicles] and related equipment.

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

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

STATEMENT OF FACTS

We understand the facts to be as follows:

1. […], […][the Company] is a non-resident located […][outside of Canada] […].

2. [The Company] is planning to temporarily import [X Vehicles] and related equipment to compete at various events across Canada from [mm/yyyy] to [mm/yyyy].

3. The [X Vehicles] and related equipment are being imported to take part in […][Events].

4. The [X Vehicles] and related equipment are not for sale, lease or further manufacturing or processing.

5. The Canada Border Services Agency (CBSA) has determined that the temporary importation of the [X Vehicles], related equipment […] qualify for temporary importation under tariff item no. 9993.00.00 (Footnote 1) of the schedule to the Customs Tariff and that these goods are described in item 32 of the schedule to the Temporary Importation (Excise Levies and Additional Duties) Regulations made under the Customs Tariff.

RULING REQUESTED

You would like to know whether the temporary importation of the [X Vehicles] and related equipment by [the Company] is a non-taxable importation for GST/HST purposes.

RULING GIVEN

Based on the facts set out above, we rule that the importations of the [X Vehicles] and related equipment by [the Company] are non-taxable importations for GST/HST purposes pursuant to section 213 of the ETA, section 8 of Schedule VII to the ETA, and subparagraph 3(i)(i) of the Non-Taxable Imported Goods (GST/HST) Regulations.

EXPLANATION

Generally, all goods imported into Canada are taxable for GST/HST purposes unless specifically relieved under section 213 of the ETA. Importations of goods relieved of tax under section 213 of the ETA are set out in Schedule VII to the ETA. Under section 8 of Schedule VII to the ETA, no GST/HST is payable in respect of prescribed goods imported in prescribed circumstances and under prescribed terms and conditions. The Non-Taxable Imported Goods (GST/HST) Regulations prescribes the circumstances under which certain goods may be imported without the imposition of the GST/HST.

Goods described in item 32 of the schedule to the Temporary Importation (Excise Levies and Additional Duties) Regulations that are imported in circumstances where the terms and conditions of those regulations have been met are non-taxable importations pursuant to subparagraph 3(i)(i) of the Non-Taxable Imported Goods (GST/HST) Regulations.

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

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-670-9169. 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,

Joseph Zeidan
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

FOOTNOTES

1 Further information concerning Tariff Item No. 9993.00.00 can be found in the CBSA publication Memorandum D8-1-1: Administration Of Temporary Importation (Tariff Item No. 9993.00.00) Regulations, a copy can be found at: http://cbsa-asfc.gc.ca/publications/dm-md/d8/d8-1-1-eng.html

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.

DATE: January 3, 2019

[Addressee]

Case Number: 161401

Subject: GST/HST Ruling
Supplies by […][Regional District A] to […][Regional Hospital District A]

We are writing further to our telephone conversation of [mm/dd/yyyy], […], concerning the application of the GST/HST to supplies of administrative services by […][Regional District A] to […][Regional Hospital District A]. […].

We apologize for the delay in this response.

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

STATEMENT OF FACTS

We understand the following:

[Regional District A]

1. In 1965, amendments to the Municipal Act of British Columbia provided for the creation of regional districts. Over the next five years, a total of 29 regional districts were incorporated. Regional districts are made up of municipalities, referred to as member municipalities, and unincorporated areas, referred to as electoral areas. Regional districts are local government service providers that exist to play three service-related roles:

• they are the local governments for their electoral areas, responsible for providing basic local services such as community planning, water supply, fire protection and nuisance regulation
• they provide local government inter-municipal or sub-regional services across jurisdictional boundaries of municipalities and electoral areas such as large scale recreation centres that benefit multiple municipalities, community and regional parks, regional growth management and regional airports
• they are responsible for providing regional services to their entire regional communities, such as, economic development, water supply, sewerage disposal, and solid waste management.

2. […].

3. […].

4. Pursuant to subsection 41(1) of the Local Government Act, on the recommendation of the minister, the Lieutenant Governor in Council may, by letters patent, incorporate the residents of an area into a regional district for the purpose of exercising powers conferred on the regional district under this Act or under any other enactment.

5. Pursuant to paragraph 41(2)(b) of the Local Government Act, the letters patent must specify the municipalities and electoral areas that comprise the regional district.

6. […][More information about the Local Government Act]

7. […]

8. […]

9. According to the Letters Patent, [Regional District A] comprises […][certain municipalities].

10. Section 185 of the Local Government Act states that “Recognizing that regional districts are an independent, responsible and accountable order of government within their jurisdiction, the purposes of a regional district include

(a) providing good government for its community,
(b) providing the services and other things that the board considers are necessary or desirable for all or part of its community,
(c) providing for stewardship of the public assets of its community, and
(d) fostering the current and future economic, social and environmental well-being of its community.”

11. Under section 193 of the Local Government Act, [Regional District A] is a corporation, and under section 194 of the Local Government Act, the governing body of [Regional District A] is its board. The financial plan is approved and adopted by the board by way of a budget bylaw in March and must be adopted prior to March 31st as per subsection 374(1) of the Local Government Act.

12. [Regional District A] has a board of […][#] directors comprising electoral area directors who are elected directly by rural area voters […] and municipal directors who are first elected to a municipal council and are then appointed by council to the regional district board […]. Annually, the board elects its chair who establishes committees to deal with issues such as land use planning, environmental management, water supply, etc.

13. [Regional District A] was determined to be a municipality as a special purpose provincially established organization pursuant to paragraph (b) of the definition of "municipality" in subsection 123(1) with an effective date of [mm/dd/yyyy].

14. [Regional District A] is registered for GST/HST purposes effective [mm/dd/yyyy], and claims the public service body (PSB) rebate for municipalities.

[…][Regional Hospital District A]

15. Regional hospital districts were created under the 1967 Regional Hospital Districts Act at the same time and with the same boundaries as regional districts. Their purpose is to contribute a local share of capital funding for hospital planning and construction. Funds are raised through property taxation to service or retire debt incurred by borrowing, to generate a reserve fund for future capital projects, or to pay for a capital project in a particular fiscal year. Regional hospital districts do no operate hospitals. That is the responsibility of the regional health authorities.

16. [Regional Hospital District A] was incorporated in [yyyy] under the Regional Hospital Districts Act.

17. According to paragraph […] of the Letters Patent dated [mm/dd/yyyy], the Board of Directors of [Regional Hospital District A] shall exercise the powers and carry out the duties assigned to regional hospital districts in the Regional Hospital Districts Act, the Regulations made thereunder and the Letters Patent.

18. Section […] of the Letters Patent states that the powers, duties and obligations of [Regional Hospital District A] are those matters enumerated in the Regional Hospital Districts Act, the Regulations and the Letters Patent, […].

19. Section […] of the Letters Patent provides, in part, that [Regional Hospital District A] is empowered and shall, subject to the approval of the Minister of Health Services and Hospital Insurance pursuant to clause 21(1)(c) of the Regional Hospital Districts Act, assume the annual debt charges (principal and interest) of the member municipalities with respect to debentures issued for the purpose of financing hospital projects.

20. […].

21. [Regional Hospital District A]’s principal activities are to finance […] capital construction projects and capital equipment purchases for health care facilities within [Regional District A]. The funding is cost-shared with the province […]. [Regional Hospital District A] does not operate any facilities. These activities are funded through property taxes and debenture debt. […]

22. Pursuant to subsection 20(1) of the Hospital District Act (formerly named the Regional Hospital Districts Act), the purposes of a regional hospital district are the following:

(a) to establish, acquire, construct, reconstruct, enlarge, operate and maintain hospitals and hospital facilities;

(b) to grant aid for the establishment, acquisition, reconstruction, enlargement, operation and maintenance of hospitals and hospital facilities;

(c) to assume obligations of any member municipality, or any improvement district not within the definition "municipality", or any hospital corporation, or any member treaty first nation, with respect to the repayment of money borrowed and provided for the financing of hospital projects and interest on it, or to provide reimbursement to a municipality, improvement district, hospital corporation or member treaty first nation for money provided for financing hospital projects that were raised or obtained otherwise than by borrowing;

(d) to act as the agent of the government in receiving and disbursing money granted out of the hospital insurance fund;

(e) to act as the agent of a hospital for receiving and applying all money paid to or for the hospital by the government of Canada;

(f) to exercise and perform the other powers and duties prescribed under this Act as and when required.

23. Pursuant to section 23 of the Hospital District Act, [Regional Hospital District A] board has the authority and responsibility for the preparation, approval and adoption, by bylaw, of [Regional Hospital District A] annual budget no later than March 31st each year.

24. The board of [Regional Hospital District A] is made up of elected officials from member municipalities and electoral areas of [Regional District A].

25. [Regional Hospital District A] was determined to be a municipality as a special purpose provincially established organization pursuant to paragraph (b) of the definition of "municipality" in subsection 123(1) with an effective date of [mm/dd/yyyy].

26. [Regional Hospital District A] is not registered for GST/HST purposes as it does not make taxable supplies, and revenue is wholly derived from property tax requisitions. Administrative expenses are incurred and [Regional Hospital District A] claims the PSB rebate for municipalities for the GST/HST paid on these expenses.

[…]

[Regional District A] provides administrative support services to [Regional Hospital District A] and invoices [Regional Hospital District A] for these services but does not charge the GST/HST. It is their position that [Regional Hospital District A] is a regional municipality […] and that GST/HST does not apply to supplies between them as the supplies are exempt under section 28 of Part VI of Schedule V.

[RULING REQUESTED]

You have asked whether the supplies of administrative support services by [Regional District A] to [Regional Hospital District A] are exempt under section 28 of Part VI of Schedule V.

[…]

Section 28 of Part VI of Schedule V exempts the following:

A supply between

(a) a municipal body and any of its para-municipal organizations,

(b) a para-municipal organization of a municipal body and any other para-municipal organization of the municipal body,

(c) a regional municipality and any of its local municipalities or any para-municipal organization of any of those local municipalities,

(d) a para-municipal organization of a regional municipality and any local municipality of the regional municipality or any para-municipal organization of the local municipality, or

(e) a regional municipality or any of its para-municipal organizations and any other organization (other than a government) the designated activities of which include the provision of water or municipal services within an area over which the regional municipality has jurisdiction,
but not including

(f) a supply of electricity, gas, steam or telecommunication services made by a municipal body or a para-municipal organization, or a branch or division thereof, that acts as a public utility, or

(g) any supply made or received by

(i) a provincially established designated body,

(ii) a para-municipal organization designated under section 259 of the Act or section 22 or 23, or

(iii) another organization referred to in paragraph (e), otherwise than in the course of the designated activities of the body or organization, as the case may be.

Section 1 of Part VI of Schedule V defines several terms for the purposes of Part VI of Schedule V. The following definitions are relevant in this case:

“local municipality” of a regional municipality means a municipality that has jurisdiction over an area that is within the area over which the regional municipality has jurisdiction;

“municipal body” means a municipality or a provincially established designated body.

“para-municipal organization” of a municipal body means an organization (other than a government) that is owned or controlled by the municipal body and that

(a) where the municipal body is a municipality,

(i) is designated under section 259 of the Act, or under section 22 or 23, to be a municipality for the purposes of that section, or

(ii) is established by the municipal body and determined, under paragraph (b) of the definition "municipality" in subsection 123(1) of the Act, to be a municipality for the purposes of Part IX of the Act, or

(b) where the municipal body is a provincially established designated body, is determined under that paragraph to be a municipality for the purposes of that Part,
and for the purposes of this definition, an organization is owned or controlled by a municipal body if

(c) all or substantially all of the shares of the organization are owned by the municipal body or all or substantially all of the assets held by the organization are owned by the municipal body or are assets the disposition of which is controlled by the municipal body so that, in the event of a winding-up or liquidation of the organization, those assets are vested in the municipal body, or

(d) the organization is required to submit to the municipal body the periodic operating and, where applicable, capital budget of the organization for approval and a majority of the members of the governing body of the organization are appointed by the municipal body;

Subsection 123(1) defines “municipality” to mean:

(a) an incorporated city, town, village, metropolitan authority, township, district, county or rural municipality or other incorporated municipal body however designated, and

(b) such other local authority as the Minister may determine to be a municipality for the purposes of this Part;

[RULING GIVEN]

[Regional District A] and [Regional Hospital District A] are municipalities under paragraph (b) of the definition "municipality" in subsection 123(1). Therefore, both entities meet the definition of “municipal body” as described above. However, neither entity is a para-municipality of the Province of British Columbia, as the Province is not a “municipal body”. Moreover, neither entity is a para-municipality of the other, as neither entity owns or controls the other, and neither entity established the other. Therefore, paragraphs 28(a), (b) and (d) do not apply.

Since neither entity is a para-municipality of the other, paragraph 28(e) could only apply if one of the entities were designated to be a municipality under subsection 259(1) in respect of provision of water or municipal services. Since neither entity has been so designated, paragraph 28(e) does not apply.

Finally, paragraph 28(c) could only apply if one entity were a regional municipality and the other entity were a local municipality within that regional municipality. […].

[Regional District A]

In British Columbia, the Local Government Act is the provincial statute that creates municipalities and regional districts and enables them to perform their assigned responsibilities and obligations. The Ministry responsible for regional districts is the Ministry of Municipal Affairs and Housing. [Regional District A] was incorporated under the Local Government Act and section 185 of that Act recognizes that regional districts are an independent, responsible and accountable order of government within their jurisdiction. Therefore, although “regional municipality” is not defined for the purposes of Part VI of Schedule V, it is our view that [Regional District A] is a regional municipality for purposes of section 28 of Part VI of Schedule V.

[Regional District A]’s member municipalities are “local municipalities”, as defined in section 1 of Part VI of Schedule V, as they are municipalities that have jurisdiction over an area that is within the area over which [Regional District A] has jurisdiction. Electoral areas are unincorporated jurisdictions whose citizens participate in electoral area governance. An electoral area would be a local municipality of [Regional District A] where it has been determined to be a municipality under paragraph (b) of the definition of municipality in subsection 123(1).

[Regional Hospital District A]

[Regional Hospital District A] was incorporated under the Regional Hospital Districts Act, now referred to as the Hospital District Act. The Hospital District Act is the provincial statute that creates and governs regional hospital districts, and the Ministry responsible for regional hospital districts is the Ministry of Health. The purpose of regional hospital districts is to contribute a local share of capital funding for hospital planning and construction. Funds are raised through property taxation to service or retire debt incurred by borrowing, to generate a reserve fund for future capital projects, or to pay for capital projects in a particular fiscal year.

Although the boundaries of regional hospital districts are typically the same as the boundaries of regional districts and their directors are usually the same directors who govern the regional district, [Regional Hospital District A] is not responsible for government over the area within its jurisdiction. [Regional Hospital District A]’s authority comes from the Hospital District Act under which its purpose is to provide funding for the establishment, acquisition, construction, reconstruction, enlargement operation and maintenance of hospitals and hospital facilities within its boundaries.

Therefore, [Regional Hospital District A] is not a regional municipality for purposes of section 28 of Part VI of Schedule V, and as [Regional District A] is a regional municipality, it is not a “local municipality”. Given the preceding, [Regional District A] is not a local municipality of [Regional Hospital District A]. Moreover, although [Regional District A] is a regional municipality, [Regional Hospital District A] is not a local municipality of [Regional District A]. [Regional Hospital District A] does not operate at a level of authority at the municipal level or as a lower tier municipality, as it is not responsible for government over an area within the area over which [Regional District A] has jurisdiction, at least not in the sense that “jurisdiction” was intended to be read in the context of the definition of “local municipality” (i.e., [Regional Hospital District A] only has “jurisdiction” over hospital-related funding and not governing). As a result, supplies between [Regional District A] and [Regional Hospital District A] are not exempt under paragraph 28(c) of Part VI of Schedule V.

As there are no other exempting or relieving provisions that apply, the supplies of administrative services by [Regional District A] to [Regional Hospital District A] are taxable, and the consideration is subject to the GST/HST.

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

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 905-984-2332.

Yours Truly,

Maria Forte-Long
Senior Rulings Officer
Municipal Sectors Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate

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

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

[Addressee]

Case Number: 169786

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 April 17, 2015, concerning […][the Association’s] entitlement to claim a public service bodies’ (PSB) rebate. We apologize for our delay in responding.

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

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

STATEMENT OF FACTS

We understand

1. […] (the Association) is an unincorporated association comprised of members drawn from various areas of the […][sector] in […][Province 1], […][Province 2], […][Province 3], and […][Province 4] ([…][Provinces]).

2. You have stated that the Association is a qualifying non-profit organization.

3. The Association receives contributions from the [Provinces] to […][carry out its activities in the Provinces].

4. The Association is not registered for GST/HST purposes.

5. The Association is not a selected public service body.

6. You provided us with a document titled […] (the Terms of Reference). The Terms of Reference were approved [mm/dd/yyyy].

7. The Terms of Reference describe the […][purpose] of the Association as follows: […]

8. The […][membership of the Association] is set out in the Terms of Reference as follows:

[…][Describes how the Association’s membership is comprised of equal representation from each of the Provinces]

9. The Terms of Reference state the following regarding Support Members: […]

10. In a telephone conversation on [mm/dd/yyyy], you clarified that the members of the Association representing […][Corporation A] are there to provide […][services] pursuant to the services agreement between [Corporation A] and the Association. They do not have any decision making authority.

11. The Terms of Reference state the following regarding meetings:

[…][Describes how meetings are held by electronic means]

12. In our [mm/dd/yyyy], phone conversation, you explained that the role of the co-chairs is to chair meetings and set the agenda. The co-chairs have been delegated the authority to sign documents on behalf of the Association, but they do not have any independent power.

13. The Terms of Reference state the following regarding decision making: […]

14. The Terms of Reference state the following regarding reporting: […]

15. The Association has no fixed place of activities.

16. The Association does not own any real property.

17. The Terms of Reference do not specify a head office of the Association.

18. The Association’s main activity is […][the conference], which is held every two years. The location of the [conference] varies.

19. You provided us with an agreement (the Agreement) between the Association and [Corporation A] dated [mm/dd/yyyy]. [Corporation A] was contracted to perform the services and work set out in Schedule A to the Agreement.

20. Schedule A to the Agreement states:

[…][Description of the services to be performed by Corporation A]

21. [Corporation A’s] headquarters is in […][Province 5].

22. The Association and [Corporation A] are separate entities.

23. Article […] of the Agreement states “The parties hereby agree and acknowledge that [Corporation A] is engaged as an independent contractor and is not nor shall it be deemed to be an agent of the [Association].”

RULING REQUESTED

You would like to know

1. In which province(s) is the Association resident? In particular, is the Association resident in all of the [Provinces], or none of them?

2. Is the Association entitled to claim a PSB rebate of the provincial part of the HST?

RULING GIVEN

Based on the facts set out above, we rule that

1. The Association is resident in [Province 1], [Province 2], [Province 3], and [Province 4].

2. The Association can claim a partial rebate of the provincial part of the HST based on the extent it intended to consume, use or supply the property or service in the course of its activities in each participating province in which it is resident.

EXPLANATION

Resident in a province

A PSB that is resident in a participating province may be eligible to claim a PSB rebate of the provincial part of HST paid or payable on eligible purchases and expenses using the applicable provincial rebate rate for that province.

A PSB is resident in every province in which it has a permanent establishment. Normally, a permanent establishment is a fixed place of activities. However, in addition to having a fixed place of activities, there are other circumstances where a PSB may have, or be deemed to have, a “permanent establishment” in a province.

As the Association does not have any fixed place of activities, it has a permanent establishment at the principal place where its activities are conducted.

Based on the facts provided, the principal places where the Association’s activities are conducted are [Province 1], [Province 2], [Province 3], and [Province 4]. Therefore, the Association has a permanent establishment in each of these provinces. As such, the Association is resident in [Province 1], [Province 2], [Province 3], and [Province 4] for purposes of the PSB rebate.

For more information, see GST/HST Info Sheet GI-121, Determining Whether a Public Service Body is Resident in a Province for Purposes of the Public Service Bodies' Rebate.

PSB rebate

Certain PSBs are eligible to claim a PSB rebate of a percentage of the GST and the federal part of the HST paid or payable on eligible purchases and expenses. A PSB is eligible for a PSB rebate if it is a charity, a qualifying non-profit organization or a selected public service body on the last day of a claim period or on the last day of the fiscal year that includes that claim period.

A “qualifying non-profit organization” is a non-profit organization whose percentage of government funding is at least 40% of its total revenue.

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

As a qualifying non-profit organization, the Association is entitled to claim a 50% PSB rebate of the GST and the federal part of the HST paid on eligible purchases and expenses. Whether a person meets the definition of qualifying non-profit organization is a question of fact that must be determined for each fiscal year. For further information, see “Claiming a rebate as a qualifying non-profit organization” in Guide RC4034, GST/HST Public Service Bodies’ Rebate.

A qualifying non-profit organization that is not a selected public service body (Footnote 1) and is resident in one or more participating provinces is also eligible for a partial rebate of the provincial part of the HST. The participating provinces include New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island, but do not include the Nova Scotia offshore area or the Newfoundland offshore area except to the extent that offshore activities, as defined in subsection 123(1), are carried on in that area. Per the above ruling, the Association is resident in […][more than one] participating province […].

A qualifying non-profit organization that is not a selected public service body and that is resident in two or more provinces, at least one of which is a participating province, must calculate its rebate of the provincial part of the HST based on the extent it intended to consume, use or supply the property or service in the course of its activities in each participating province in which it is resident.

For information on how to calculate the Association’s PSB rebate, see GST/HST Info Sheet GI-187, Public Service Bodies’ Rebate for Qualifying Non-profit Organizations Resident in Two or More Provinces, at Least One of Which Is a Participating Province.

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

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-670-7942. 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

FOOTNOTES

1 “Selected public service body” means a school authority, a university, or a public college that is established and operated other than for profit; a hospital authority; a municipality; a facility operator; or an external supplier.

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

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

[Addressee]

Case Number: 185888
Business Number: […]

Dear [Client]:

Subject: GST/HST RULING
Aeromedical Repatriation Services

Thank you for your letter of [mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to supplies made by […] (the “Corporation”). More specifically, you […][asked about] the application of the GST/HST to supplies of aeromedical repatriation services supplied by the Corporation to insurance companies in Canada.

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

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

STATEMENT OF FACTS

We understand the following:

1. The Corporation is a registrant for GST/HST purposes.

2. […][Information about the Corporation]

3. […][Information about the Corporation’s supplies].

4. […]

5. The Corporation provides medical repatriation services which involve arranging […] to transport an individual [the patient] from a foreign hospital to a health care facility in the individual’s home country. This would include […][transport] between the medical facilities and airports via ground transportation (ambulance, taxi, or limo), […][and commercial airline transportation in the company of] a medical escort.

6. […][More information about the services supplied by the Corporation]

7. […]. The medical escorts will have […][instructions] for providing care to the patient.

8. […]

9. […]

10. […]

11. […]

12. Medical repatriation services are the activities of returning an individual, who requires medical assistance to travel due to an injury or illness, to their home country. The services listed […] are components/elements of a medical repatriation of an individual. The Corporation offers […][a variety of services] but not all of these components/elements will be included in each supply made by the Corporation. The medical repatriation service […] is based on the needs of the patient being repatriated. The patient may not need to be in a stretcher or need medical equipment (such as an oxygen concentrator) while on the aircraft. […].

13. The Corporation makes its supplies as part of the medical repatriation of an individual [patient] where the individual is transported by air on commercial aircraft. The Corporation advised that individuals who are well enough to travel on commercial aircraft with a medical escort can be accommodated on commercial aircraft and the transfer can be completed more economically than by using a dedicated air ambulance.

14. The medical escorts provided by the Corporation consist of registered nurses, physicians and Advanced Cardiac Life Support trained paramedics. All of the medical escorts are fully licensed in their respective professions in the Province of Ontario.

15. The medical escorts monitor and provide care and assistance to the patient during the trip. Generally the Corporation supplies one medical escort for a patient transfer but in a small number of cases a second escort is required due to the medical needs of the patient.

16. […][Information about the Corporation]

17. […][Information about the Corporation’s staffing].

18. […][Proportion of domestic and international patient transfers]

19. In addition to transfers of patients by commercial aircraft, the patients can be transported with […][a medical escort] by train or cruise ship if the patient is unable to fly.

20. The Corporation deals with the medical departments of the commercial airlines to obtain the medical clearances that the patient would require to travel as well as clearances for the equipment and medications that the medical escort will be bringing.

21. Airlines have emergency medical kits onboard the aircraft. The medical escorts carry their own equipment when a patient is being transported. Each medical kit brought by the escorts are approved for transport by the airlines and they are confirmed on the patient’s reservation with the airline.

22. […][Information about medical equipment and supplies]

23. Commercial airlines have emergency medical oxygen equipment on board the aircraft but this equipment is for emergency use only. […] portable oxygen concentrators are FAA approved for use on commercial aircraft [when repatriation arrangements require oxygen].

24. The medical escorts also bring narcotics that the patient might require or to handle any in-flight emergencies. The narcotics are also approved by the airlines’ medical departments.

25. Some commercial air carriers are able to accommodate stretchers on their aircraft for patients who are unable to sit during the transfer. The Corporation works with the airlines’ medical departments to get the medical clearances and aircraft modifications to allow patients to be transported by stretcher.

26. Commercial airlines can make accommodations for patients that need to travel by air. Patients who require more space can be given an empty seat beside them. They can also be accommodated by using the full lie-flat seats that some airlines have in business and first class. If a patient is required to be on a stretcher, airlines can adapt the aircraft to accommodate the stretcher either by folding down seats that allow the stretcher to be placed overtop or by removing seats from the aircraft.

27. […][Description of commercial aircraft equipment for transporting critical care patients]

28. […]

29. […].

30. The Corporation bills the recipient of the supply [as appropriate, an amount] for:

• […][the medical escort services];
• […][the use of medical equipment, such as an oxygen concentrator];
• […][air and ground transportation for the medical escort];
• […][logistical services];
• […];
• […].

31. The Corporation charges a daily rate for the medical escort and a fee for the medical equipment required by the patient. […]

32. […][Billing information]

33. The services that the Corporation provides will depend on what is required to transport the patient. The person contracting for the service is not able to pick and choose between services in a package.

34. […][Information about an Agreement between the Corporation and ACo, an insurance company]

35. […][Information about supplies to be provided under the Agreement with ACo]

36. […][Information about the limitation of liability under the Agreement with ACo]

37. […][Information about charges and billing practices under the Agreement with ACo]

38. […][Information about rates and billing practices under the Agreement with ACo]

39. […][Other disclaimers and limitations of authority under the Agreement with ACo]

40. The Corporation […][provided documents with their GST/HST ruling request including] a Request for Quote (“RFQ”) that it received from an insurance company regarding the transfer of a patient requiring a medical escort from Canada to the United States.

41. The RFQ stated that the patient would require a Registered Nurse and a portable oxygen concentrator during the transport. It also stated that that circumstances might require that the medical escort cover some expenses […].

42. The Corporation responded to the RFQ […] [with a quote including] the daily fee for a Registered Nurse […] and the fee for the use of the portable oxygen concentrator. The quote provided by the Corporation also indicated that expenses would be billed on a cost-recovery basis.

43. […][Payment information]

44. […][Information about the Corporation].

45. The Corporation provides their services to insurance companies located both inside and outside of Canada. In some instances services are also provided to individuals as well.

46. […][Staffing information].

47. […].

48. […][Information about the Corporation]

RULING REQUESTED

You would like to know if the supplies made by the Corporation to insurance companies located in Canada are zero-rated international air ambulance services pursuant to section 15 of Part VII of Schedule VI.

RULING GIVEN

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

1. The services supplied by the Corporation are not supplies of international air ambulance services. The Corporation is making supplies of medical escort services. Therefore, the supplies made by the Corporation are not zero-rated pursuant to section 15 of Part VII of Schedule VI.

2. Supplies of medical escort services are exempt pursuant to section 6 of Part II of Schedule V when the services are rendered to an individual by a registered nurse.

3. Supplies of medical escort services are exempt pursuant to section 5 of Part II of Schedule V when the services are rendered to an individual by a medical practitioner.

4. Medical escort services rendered to an individual by a paramedic are taxable pursuant to section 165.

5. […].

EXPLANATION

Generally, supplies of property and services made in Canada are subject to the GST/HST, unless they are specifically exempt under Schedule V or zero-rated (taxed at 0%) under Schedule VI. Supplies that are exempt are not subject to the GST/HST.

International Air Ambulance Services

[…]. Section 15 of Part VII of Schedule VI zero-rates a “supply of an air ambulance service made by a person who carries on the business of supplying air ambulance services, where the transportation is to or from a place outside of Canada.”

In order for a supply to be zero-rated pursuant to section 15 the supply must meet the following conditions:

1. the supply is a supply of an air ambulance service,

2. the supply is made by a person who carries on the business of supplying air ambulance services, and

3. the transportation is to or from a place outside of Canada.

The term “air ambulance service” is not defined in the ETA. Where a term is not defined, the established principles of statutory interpretation provide that the usual and ordinary meaning of the term applies. To properly define “air ambulance service” it is necessary to determine the definitions of “ambulance” and “ambulance service”.

Ambulance is not defined in the ETA. The Cambridge Dictionary defines ambulance as “a special vehicle used to take sick or injured people to hospital”. The Tax Court of Canada discussed the meaning of “ambulance” and “ambulance service” in respect of ground ambulances in Angels of Flight Canada Inc. v. The Queen, 2009 TCC 279 (“Angels of Flight”). The decision stated that it is “relevant in this case to consider the nature of the requirements imposed by provincial law on ambulances with respect to vehicles, equipment and supplies carried and with respect to the training of staff. These are all relevant considerations as to the contemporary meaning of “ambulance” and “ambulance service”.” Therefore in addition to dictionary definitions consideration should be given to the provincial legislation governing ambulances and ambulance services.

The Ambulance Act of Ontario defines ambulance as “a conveyance used or intended to be used for the transportation of persons who,

• have suffered a trauma or an acute onset of illness either of which could endanger their life, limb or function, or
• have been judged by a physician or a health care provider designated by a physician to be in an unstable medical condition and to require, while being transported, the care of a physician, nurse, other health care provider, emergency medical attendant or paramedic, and the use of a stretcher”.

The dictionary definition and definition in the provincial legislation suggest that the meaning of “ambulance” is a special vehicle that is used to transport injured or ill individuals who require the care of a physician, nurse or other health care provider while being transported.

The Ambulance Act of Ontario defines “ambulance service” to mean “a service that is held out to the public as available for the conveyance of persons by ambulance”. “Ambulance service” is defined in The Dictionary of Canadian Law, third edition as “The service of transporting a patient by means of an ambulance vehicle, and may include the service of carrying the patient into and out of the ambulance vehicle and the service of attending and assisting the patient while being so transported or carried.” Therefore, based on the definitions of “ambulance service” from the dictionary and the Ambulance Act, an ambulance service is the transportation of a person who requires medical care by means of an ambulance.

The Ambulance Act of Ontario defines “air ambulance service” to include “all services provided by an ambulance service in connection with the transportation of persons by air”. When one looks at this definition in conjunction with the meanings of the terms “ambulance” and “ambulance service”, the common meaning of the term “air ambulance service” would be the service of transporting a patient by air in an ambulance. In this case it would be by using an air ambulance to transport injured or ill individuals who require the care of a physician, nurse or other health care provider while being transported.

In Angels of Flight the judge stated that where there is a highly equipped vehicle of the same sort as used for 911 calls, with very well trained professionals, this falls within “ambulance service”. In paragraph 62 of the decision the judge also states “a nurse accompanying a patient with an IV, whether in a standard car or in a standard van with a stretcher and little equipment, would not constitute the provision of an ambulance service.” This indicates that an ambulance service is required to be more than a patient being transported in a passenger vehicle with a medical escort and medical equipment.

The patients that are accompanied by the Corporation’s medical escorts are transported on commercial aircraft. An air ambulance service involves transporting a patient in an air ambulance, therefore it would be necessary for a commercial aircraft to be an air ambulance for the services supplied by the Corporation to be air ambulance services.

The addition of a medical escort along with medical equipment and supplies would not transform a commercial aircraft into an air ambulance. A commercial aircraft is designed to transport passengers from one location to another. An air ambulance is a special aircraft that is designed or configured to be used for transporting injured or ill individuals who require care of a physician, nurse or other health care professional during transport. Although a commercial aircraft can accommodate the transportation of a patient, even a patient who is in a stretcher, under the care of a medical escort, the commercial aircraft is not an air ambulance as it is still being used to transport passengers. The definition of air ambulance suggests a vehicle that is not providing general transportation services at the same time.

As we have concluded that commercial aircraft are not air ambulances, the transfer of a patient in a commercial aircraft would not be an air ambulance service. Therefore, section 15 of Part VII of Schedule VI would not apply to the supply made by the Corporation.

Section 15 also requires that the supply be made by a person who carries on the business of supplying air ambulance services and that the transportation is to or from a place outside of Canada. As the supplies made by the Corporation are not air ambulance services it is not necessary to determine if the Corporation’s supplies meet these conditions.

It is also important to note that an air ambulance service is the transportation of an injured or ill individual who requires the care of a physician, nurse or other health care provider in an air ambulance. An air ambulance service involves both the provision of health care and the transportation of an individual. A supply that only includes the provision of health care but not the transportation of the individual would not be an air ambulance service for purposes of the ETA.

In the Corporation’s case, the Corporation does not own, lease or operate any aircraft. The supplies made by the Corporation involve the transportation of an individual on a commercial airline but the Corporation is not supplying the transportation of the individual in an aircraft/air ambulance operated by the Corporation. A third party – the commercial airline – is supplying the transportation services while the Corporation is supplying a medical escort, […] and other logistical support. […]

The [Corporation’s response to the] RFQ […] also demonstrates that […][a] supply made by the Corporation does not [necessarily] include the transportation of the individual. The RFQ asks for a quote for the provision of a nurse medical escort and a portable oxygen concentrator. The insurance company requesting the quote also asks if the responding companies would be able to provide assistance with airline clearances but does ask for a quote on the cost of transporting the patient. The RFQ also states that unexpected and uncontrolled circumstances may necessitate the medical escort to cover some expenses […]. Receipts for these expenses should be submitted to the insurance company for reimbursement. The Agreement and […][the Corporation’s quote in response to the RFQ] demonstrate that the Corporation is providing medical escort services as well as logistical services rather than a service of transporting an individual in an aircraft/air ambulance operated by the Corporation.

Characterization of the Supply of Services Made by the Corporation

With our conclusion that the Corporation is not making supplies of air ambulance services we must determine the nature of the supplies made by the Corporation and the application of the GST/HST to those supplies. In determining the tax status of the Corporation’s supplies it is necessary to identify all of the elements that are being supplied, determine if each of the elements is its own supply or if the elements form a single supply, and to characterize the supply or supplies being made.

The Corporation itemizes its invoices, [as outlined in Fact # 30] showing a separate charge for each of the elements being supplied. […]

The Corporation also bills […][the recipient] for the expenses for the medical escort to travel to the patient’s location and return home afterwards. This expense would include the airfare for the medical escort, […] and any meals, accommodations or other travel expenses such as taxis. As discussed above, the amount paid to the Corporation for expenses incurred in its own right in the course of making supplies of medical escort services would form part of the consideration for the supply of the medical escort services. Expenses incurred in transporting the medical escort to and from the location of the patient as well as expenses incurred in the provision of services by the medical escorts would be incurred by the Corporation in the course of making supplies of medical escort services.

[…][Logistical services] are also billed to […][the recipient] by the Corporation. These expenses would include taxi, limousine, airport attendants and other expenses incurred during the transfer of the patient back to his or her home country. […][Information in the Agreement and the Corporation’s quote in response to the RFQ indicate] that the ground transportation expenses are also incurred by the Corporation in the course of making its supplies […]. […] the consideration paid for the ground transportation expenses will form part of the consideration for the supplies made by the Corporation.

Single/multiple supplies

The Corporation’s supplies […] [may] consist of [some or all] the following elements:

• the medical escort services;
• the use of medical equipment;
• […];
• […][logistical services].
• […];
• […].

It will be necessary to determine if the Corporation is making a single supply consisting of these elements […] or if the Corporation is making multiple supplies with each of the elements being a separate supply.

Where a transaction consists of several elements, there may be a single supply or multiple supplies. This distinction is important, for example, in cases where a combination of elements is supplied, some of which would be zero-rated or exempt for GST/HST purposes and some of which would not if supplied separately. It is a question of fact whether the person is making a single supply or multiple supplies.

The characterization of a transaction as a single supply or multiple supplies considers the interrelationships among the various elements of the agreement, the purpose of an agreement, the needs of the customer, and the economic reality of the transaction. There is a single supply where one or more elements constitute the supply and any remaining elements serve only to enhance the supply. Where the essential elements are part of a single composite supply, that single supply cannot be artificially split into separate supplies.

Multiple supplies occur when one or more of the elements can sensibly or realistically be broken out. Conversely, two or more elements are part of a single supply when the elements are integral components; the elements are inextricably bound up with each other; the elements are so intertwined and interdependent that they must be supplied together; or one element of the transaction is so dominated by another element that the first element has lost any identity for fiscal purposes.

When performing an analysis, it is important that the analysis be confined to the transaction at issue, rather than referring to other possible transactions containing the same or similar elements. This process should not involve artificially splitting something that commercially is a single supply.

For property with several components, an analysis would consider how the components work together, the needs of the recipient, and identify which components are ancillary or merely optional accessories or attachments.

Although concluding whether a single supply or multiple supplies are made always depends on the facts surrounding a particular transaction, including the terms of any relevant agreements, GST/HST Policy Statement P-077R2, Single and Multiple Supplies, provides additional information on determining whether a single supply or multiple supplies are being provided.

P-077R2 lists the following questions that may assist in this determination:

• Is the property or service provided by two or more suppliers?
• Is there more than one recipient?
• What did the supplier provide for the consideration received?
• Is the recipient made aware of the elements (in detail) that are part of the package?
• In the context of the particular transaction, does the recipient have the option to acquire the elements separately or to substitute elements?

In addition, an important question to consider is what has been supplied for the payment made. Policy Statement P-077R2 also explains that the way in which the consideration for a transaction is set out does not in itself determine whether there are one or more supplies. A single consideration does not automatically mean that there is one supply. Equally, separately identified consideration for certain elements does not necessarily mean that there are two or more supplies. Thus, one cannot rely solely on the breakdown of charges in an agreement or on an invoice to conclude that a supplier is making multiple supplies of different property and/or services.

The key factor to consider in making the determination as to what, and how many, supplies are made in a particular situation is the need/purpose of […][the recipient of the supply] when requesting the Corporation's services. From a supplier point of view, one must consider what the Corporation is being requested to do or to provide that satisfies the request or need of […][the recipient of the supply].

The Agreement with […][ACo] states that the Corporation will render medical escort services to its patients […]

The Corporation […][provided a quote in response to the RFQ which involved] a patient being moved from […][Canada to another country]. In this case […][the quote] from the Corporation included charges for the medical escort and portable oxygen concentrator that the patient would need while in transit. The RFQ also states that due to unexpected and uncontrolled circumstances it may be necessary for the medical escort to cover some expenses […].

[…][it is the CRA’s] view that the Corporation is making […] a single supply […][including several elements:] medical escort services, medical equipment, […] and logistical services, with a provision for reimbursement of expenses incurred in the course of making the supply. The dominant element of the supply made by the Corporation is the medical escort services. The […][recipients] come to the Corporation because their patients require a medical escort to be able to travel and their needs would not be satisfied without these services. The logistical services are inputs that are consumed in the provision of the medical escort services. […].

Part II of Schedule V to the ETA sets out the health care services that are exempt from the GST/HST. The Corporation’s supplies of medical escort services are rendered by registered nurses, physicians and paramedics. Section 6 of Part II of Schedule V exempts supplies of nursing services and section 5 of Part II of Schedule V exempts certain services rendered by medical practitioners.

Nursing Service

Section 6 of Part II of Schedule V exempts a supply of a nursing service rendered to an individual by a registered nurse, a registered nursing assistant, a licensed or registered practical nurse or a registered psychiatric nurse, if the service is rendered within a nurse-patient relationship. To be exempt, the service must be a nursing service rendered to an individual by a registered nurse within a nurse-patient relationship.

Nursing services would be services that are in the scope of practice for nurses. Almost all of the registered nurses on the Corporation’s staff list practise in Ontario. The College of Nurses of Ontario […][clarifies] that the practise of nursing must have the following three elements:

1. Applying nursing knowledge, skill and judgment.

2. Applying relevant nursing practice standards and guidelines.

3. Having a direct or indirect effect on the recipient of a health care service.

The services rendered to a patient during the transfer would meet these three criteria. The nurse would be applying nursing knowledge, skill and judgement during the transfer when monitoring the condition of the patient, deciding when to intervene, and managing the movements and transfers of the patient. In undertaking these actions the nurse is required to apply the relevant nursing practice standards and guidelines and will have a direct effect on the patient being transferred.

The publication also lists different types of activities that would indicate nursing services are being provided. This list includes activities such as providing treatment, assessing the health care needs of […][an individual], analyzing the findings of a health assessment, and determining the appropriate service, treatment or equipment. These are activities that a nurse would be engaged in during the transport of a patient. Therefore, supplies of medical escort services made by the Corporation are exempt supplies pursuant to section 6 of Part II of Schedule V when the service is rendered to an individual by a registered nurse, a registered nursing assistant, a licensed or registered practical nurse or a registered psychiatric nurse.

Physician Services

Section 5 of Part II of Schedule V exempts a “supply of a consultative, diagnostic, treatment or other health care service that is rendered by a medical practitioner to an individual.” A “medical practitioner” is defined in section 1 of that Part to mean “a person who is entitled under the laws of a province to practice the profession of medicine or dentistry”. The activities of monitoring and caring for a patient during transfer would be activities in a health care service rendered to an individual and would fall under the exemption in section 5 when rendered to an individual by a licensed physician.

The information provided by the Corporation indicated that the physicians contracted by the Corporation are entitled to practice the profession of medicine in Ontario. The physicians would be medical practitioners for purposes of section 5. Therefore supplies of medical escort services supplied by the Corporation and rendered to individuals by the physicians would be exempt supplies pursuant to section 5 of Part II of Schedule V.

The application of sections 5 and 6 of Part II of Schedule V are limited by sections 1.1 and 1.2 of that Part. Sections 1.1 and 1.2 deem supplies that are made for cosmetic purposes and supplies that are not qualifying health care supplies to not be included in Part II of Schedule V. A qualifying health care supply is defined in section 1 of that Part to mean a supply of property or a service that is made for the purpose of:

(a) maintaining health;

(b) preventing disease;

(c) treating, relieving or remediating an injury, illness, disorder or disability;

(d) assisting (other than financially) an individual in coping with an injury, illness, disorder or disability; or

(e) providing palliative health care.

Read together, the provisions provide that the exemptions under section 5 and 6 of that Part are dependent upon the purpose for which the supply is made. For the exemption to apply, the supply has to be made for at least one of the enumerated qualifying health care supply purposes.

The CRA considers that the services rendered by the nurses and physicians in the provision of medical escort services are performed for the purpose of maintaining the health of the patient during the transfer. As such the services would not be performed for cosmetic purposes and the supply would be a qualifying health care supply.

Paramedic Services

There are no provisions in Part II of Schedule V, or any other part of the ETA, to exempt the supply of paramedical services. As a result, a supply of paramedical services under the conditions discussed above is taxable for GST/HST purposes.

We understand that the medical escorts have […][instructions] that allows the medical escort to provide care in case of an in-flight medical emergency. The fact that a paramedic may perform certain services on the delegated authority of a physician does not change the nature of the supply. As discussed above, the exemption in section 5 applies to health care services rendered by medical practitioners, delegated services performed by paramedics are being rendered by the paramedic not the medical practitioner who allowed the delegation.

[…]

For more information regarding the place of supply rules please refer to GST/HST Memoranda Series Chapter 3.3 - Place of Supply and GST/HST Technical Information Bulletin B-103 - Place of supply rules for determining whether a supply is made in a province.

[…].

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-670-7932. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.

Yours truly,

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

[Addressee]

Case Number: 183420

Dear [Client]:

Subject: GST/HST RULING
Tax status of […][XYZ] meal replacement

Thank you for your letter of March 27, 2017, concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to […][XYZ] meal replacement (the Product). We apologize for the delay in responding.

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

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

STATEMENT OF FACTS

We understand the following:

1. […](the Company) manufactures packaged powder meals […].

2. The Product is marketed as a […][Product description].

3. Based on the Company’s website […] and the provided sample labels of the Product, serving size of the Product varies depending on the flavour – between […] grams to […] grams.

4. The ingredients include: […]

5. The Company’s website provides additional information, such as, serving suggestion and health guidance for consuming the Product.

6. The serving suggestion is: Fill a water bottle with […]ml of cold water and add the Product to the water. Shake for […] seconds until the Product is fully mixed. The consistency of the Product can be altered by the volume of water.

7. When purchased, the Product is accompanied with a “user manual”, which provides additional information on the Product.

8. The website provides consumers with a health guidance, which reads: “Children, women who are pregnant, nursing, or may become pregnant should consult their doctor before consuming [XYZ]”.

9. The Product can be purchased under a subscription program. Prices will vary depending on the quantities purchased.

10. […][Marketing description]

11. […]

RULING REQUESTED

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

RULING GIVEN

Based on the facts set out above, we rule that the Product is zero-rated.

EXPLANATION

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

Products that qualify and are labeled as “nutritional supplements” or “meal replacements” pursuant to the Food and Drugs Act (FDA) and Regulations are considered food or beverages for purposes of section 1 of Part III of Schedule VI.

Based on our understanding that the Product meets the requirements of the FDA and Regulations for meal replacement and the fact the Product is supplied and marketed as a meal replacement, the Product is zero-rated.

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

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 905-721-5081. 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,

Peter Pushkarna
Basic Groceries & Recapture Input Tax Credits Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

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

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

[Addressee]

Case Number: 185555
Business Number: […]

Dear [Client]:

Subject: GST/HST RULING
[…][The Product] – […][Flavour 1] and […][Flavour 2] [Basic Groceries]

Thank you for your letter of [mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to […][the Product], in the […][Flavour 1] & […][Flavour 2].

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

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

STATEMENT OF FACTS

We understand the following:

1. […](the representative) has been authorized by the manufacturer to obtain this ruling on its behalf.

2. The manufacturer is registered for GST/HST purposes.

3. Sample packages of [Flavour 1] and [Flavour 2] have been provided for our review.

4. The Product samples show the Product to be bite-sized, square pieces that are approximately […] cm in size. The sample also reveals that the Product is baked, crispy in texture, and has a savoury taste.

5. The Product is packaged loosely in a […] gram re-sealable bag that resembles current cracker chip bags.

6. The front of the bag denotes the Product as “[…]”, details the particular flavouring, and indicates that the Product does not contain artificial flavours. The front of the bag also depicts an enlarged image of the Product and identifies the Product as crackers.

7. The back of the bag notes the ingredients of the Product and describes the Product as being “[…]”.

8. [Flavour 1] of the Product has the following ingredients: […].

9. [Flavour 2] has the following ingredients: […].

10. The manufacturer’s Web site, […], states that the Product is […][Product details].

11. The Nutrition Facts displayed on the packaging is correlated to the consumption of […][more than six] “crackers”.

12. While the manufacturer does not control the placement of the Product, the intended placement is in the cracker aisle of supermarkets and grocery stores.

RULING REQUESTED

You would like to know whether the supply of the Product is zero-rated for GST/HST purposes.

RULING GIVEN

Based on the facts set out above, we rule that the supply of the Product is zero-rated for GST/HST purposes.

EXPLANATION

The supply of food and beverages marketed for human consumption (including sweetening agents, seasonings and other ingredients to be mixed with or used in the preparation of such food or beverages), is zero-rated, or subject to the GST/HST at the rate of 0%, unless excluded by the provisions contained in paragraphs (a) through (r) of section 1 of Part III of Schedule VI.

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

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

Paragraph 56 of GST/HST Memorandum 4.3, Basic Groceries, (GST/HST Memo 4.3) outlines the factors that are used to determine if a particular product is similar to a chip, crisp, puff, curl or stick as described under paragraph 1(f) of Part III of Schedule VI. These factors include the properties of the product (ingredients, flavours, texture, cooking process and appearance), its labelling, its packaging, and its marketing.

Though the Product is packaged loosely in a bag and is described as a “crisp”, the Product's main ingredients, flavours, and texture differ significantly from snack foods excluded under paragraph 1(f). As the Product is not excluded by any of paragraphs (a) to (r) of section 1 of Part III of Schedule VI to the ETA, supplies of the Product are zero-rated.

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

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 905-721-5218. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.

Yours truly,

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

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

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

[Addressee]

Case Number: 189221
Business Number: […]

December 20, 2018

Dear [Client]:

Subject: GST/HST RULING
Application of GST/HST to the service of assessing the replacement value of […][property]

Thank you for your letter concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to the service of assessing the replacement value of [property]. We apologize for the delay in our reply.

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

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

STATEMENT OF FACTS

Based on your letters and documentation and our telephone conversations, we understand the following:

1. […] (the Company) is located in [city, province], and is registered for GST/HST.

2. The Company entered into an agreement (the Agreement) with […] (the Insurer).

3. Under the Agreement, the Insurer pays a fee to the Company for the service of assessing the replacement value of damaged, lost, or stolen [property] for which a claim is made by an insured person under an insurance policy issued by the Insurer where the insured person is entitled to replace the [property]. The Agreement indicates that the fee is payable by the Insurer only where the insured person does not obtain the replacement of the [property] through the Company.

4. You indicated that […] the Insurer obtains the Company’s service of assessing the replacement value of [property] by […]. The Company may contact the insured person to collect additional information about the [property]. For damaged [property], the Company […][inspects the property]. For lost or stolen [property], the Company does not inspect the last-known place the [property] was situated before it was lost or stolen. The Company provides the Insurer with a report indicating the replacement value of the damaged, lost or stolen [property].

5. You advised that the Company’s employees perform the service of assessing the replacement value of [property] at the Company’s office in [city, province]. […]

RULING REQUESTED

You would like to know if the Company is required to charge GST/HST on the fee paid or payable by the Insurer for the Company’s supply of the service of assessing the replacement value of [property].

RULING GIVEN

Based on the facts set out above, we rule that the Company’s supply to the Insurer of the service of assessing the replacement value of damaged, lost or stolen [property] is a taxable supply and not an exempt supply of a financial service. The Company is required to charge GST/HST on the fee paid or payable by the Insurer for this taxable supply.

EXPLANATION

A GST/HST registrant is generally required to charge GST/HST on a taxable supply of property or a service made in Canada (other than a zero-rated supply that is taxable at 0%) but not on an exempt supply.

A supply of a financial service is exempt under Part VII of Schedule V to the ETA unless it is specifically zero-rated under Part IX of Schedule VI to the ETA.

A financial service is defined in subsection 123(1) to mean anything that is included in any of paragraphs (a) to (m) of that definition and is not excluded by any of paragraphs (n) to (t) of that same definition.

A financial service includes, under paragraph (j.1), the service of providing an insurer with an appraisal of the damage caused to property, or in the case of a loss of property, the value of the property, where the supplier of the appraisal inspects the property, or in the case of a loss of the property, the last-known place where the property was situated before the loss.

Subsection 123(1) provides that an “insurer” means a person who is licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada an insurance business or under the laws of another jurisdiction to carry on in that other jurisdiction an insurance business.

The Company’s supply of the service of assessing the replacement value of damaged, lost or stolen [property] to the Insurer is not included in paragraph (j.1) of the definition of financial service because it does not meet the conditions of that paragraph. Although the Company may inspect the damaged [property], it provides an assessment of the replacement value of the [property], not an appraisal of the damage caused to the [property]. Also, although the Company provides a service of assessing the replacement value of the lost or stolen [property], the Company does not inspect the last known place where the [property]was situated before the loss.

Therefore, the Company’s supply of a service to the Insurer of assessing the replacement value of damaged, lost or stolen [property] is a taxable supply and not an exempt supply of a financial service. The Company is required to charge GST/HST on the fee paid or payable by the Insurer for this taxable supply.

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

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (780) 495-6518. 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 Gibbard
Insurance and ITC Allocation Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate

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

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

[Addressee]

Case Number: 196260

Dear [client]:

Subject: GST/HST RULING
Temporary Importation of Racing […] Equipment

Thank you for your letter of December 18, 2018, concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to the temporary importation of racing […] equipment.

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

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

STATEMENT OF FACTS

We understand the facts to be as follows:

1. […] ([…][The Company]) is a non-resident located in […][Country X] […].

2. […][information related to the Company’s activities].

3. […], [the Company] intends to temporarily import into Canada the following goods: […].

4. The racing […] equipment [is] not for sale, for lease or for further manufacturing or processing while in Canada and will be exported from Canada upon the completion of the event.

5. The CBSA has determined that the temporary importation of the racing […] equipment, as outlined in fact number 3 above, are goods described in items 38 and 41 of the Schedule to the Temporary Importation (Excise Levies and Additional Duties) Regulations.

RULING REQUESTED

You would like to know whether the temporary importation of the racing […] equipment [is] non-taxable importations for GST/HST purposes.

RULING GIVEN

Based on the facts set out above, we rule that the temporary importation of the racing […] equipment [is] non-taxable importations for GST/HST purposes.

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

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-670-1343. 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,

Gabrielle Nadeau
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate