CRA indicates that licences of real estate by a municipality are GST/HST-taxable

A registrant (Aco) provides various municipalities with a program of installing something (“X”), whose description is redacted, in their public spaces, pursuant to agreements that confer on it the right to so use those lands, and require it to make payments to each such municipality, which it funds out of a portion of the sponsorship payments it receives from local businesses.

Before concluding that the amounts paid to each municipality were consideration for a taxable supply, CRA noted that:

• ETA s. 146(e) deems the supply by a municipality of a right to enter or access municipal property to be made in the course of a commercial activity unless the supply is specifically exempted.
• S. 20(l) of Sched. V, Pt. VI excludes the supply of such rights from the licence exemption in s. 20(c).
• The exemption in Sched. V, Pt. VI, s. 25 for supplies of real property made by various public service bodies does not extend to such supplies by a municipality.

Neal Armstrong. Summary of 25 May 2021 GST/HST Ruling 204710 under s. 146(e).