Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
XXXXX
XXXXX
XXXXX
XXXXX
Case Number: 106916
Business Number: XXXXX
Attention: XXXXX
XXXXX
18th February 2009
Subject:
GST/HST RULING
XXXXX XXXXX.
Dear XXXXX:
We are in receipt of the letter of your authorized representative XXXXX XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to supplies made XXXXX XXXXX XXXXX. (the Society).
All legislative references are to the Excise Tax Act (ETA), unless otherwise specified.
Statement of Facts
We understand that:
1. The Society was incorporated to organize, manage, promote and conduct the XXXXX (XXXXX) XXXXX
2. Your representative has indicated that the Society meets the definition of a "non-profit organization" as that term is defined in subsection 123(1).
3. The Society's GST/HST number is XXXXX.
4. The Society will enter into various agreements with a variety of businesses to be recognized as sponsors of XXXXX.
Sponsor Agreements
5. Your representative has provided us with a "Sponsor Agreement". This agreement provides for a supply of rights, privileges, options and opportunities to a XXXXX
6. XXXXX of the Sponsor Agreement sets out the rights, privileges, options and opportunities that the Society may grant to a sponsor:
XXXXX
- XXXXX
- XXXXX
- XXXXX
- XXXXX
- XXXXX
- XXXXX
XXXXX
- XXXXX.
- XXXXX.
- XXXXX.
- XXXXX.
- XXXXX.
- XXXXX.
- XXXXX.
- XXXXX.
XXXXX
- XXXXX.
- XXXXX.
- XXXXX.
XXXXX
- XXXXX.
- XXXXX.
- XXXXX.
- XXXXX.
- XXXXX.
- XXXXX.
- XXXXX.
- XXXXX.
- XXXXX.
- XXXXX.
- XXXXX.
- XXXXX.
- XXXXX.
- XXXXX.
7. The sponsor does not have the right to grant or sub-license in any form whatsoever its rights and status as a XXXXX sponsor to any third party or affiliate without the prior express written consent of the Society.
8. To facilitate the supply of the media rights set out above, the Society will enter into an agreement with a XXXXX broadcaster (XXXXX Broadcaster) to supply XXXXX broadcasts XXXXX. In addition, there may be XXXXX broadcast agreements. The XXXXX Broadcast Agreement ensures that the XXXXX Broadcaster will work closely with the Society to allow signage and visual advertising at XXXXX venues with respect to those entities that have entered into Sponsorship Agreements. The XXXXX Broadcaster has XXXXX advertising packages available for Games sponsors.
9. XXXXX to the XXXXX Agreement, XXXXX, details the conditions under which the right to use the XXXXX Marks are granted. This Appendix provides
- The general conditions of use,
- How the XXXXX Marks are to be used on Products,
- The use of XXXXX Marks in advertising and promotion, and
- The protection of the XXXXX Marks.
10. The sponsor agrees that any Product on which there is a XXXXX Mark shall not be sold at any time after XXXXX.
11. The consideration for the supply made by the Society to the signatory of the Sponsor Agreement includes both cash and value-in-kind.
XXXXX
12. Your representative has also provided us with the "XXXXX" package. This package sets out the different levels of sponsorship that are available to sponsors. We understand that all agreements for sponsors at these levels are similar in nature and include the following sponsor levels:
- XXXXX
- XXXXX,
- XXXXX
- XXXXX
- XXXXX
13. The rights, privileges, options and opportunities supplied by the Society and the nature of the value in kind supplied by the sponsor, will vary in proportion to the level and value of each Sponsorship Agreement. However, the supplies made by the Society under each level of sponsorship agreement are of the same nature and kind as those described in paragraphs 6 to 10 above.
Ruling Requested
You would like to know:
1. If the supply made by the Society under the Sponsor Agreement at each of the following sponsor levels is deemed not to be a taxable supply pursuant to section 135 of the ETA:
- XXXXX,
- XXXXX
- XXXXX
- XXXXX
- XXXXX
2. You would also like to know if the goods and services provided to the Society as consideration for the rights, privileges, options and opportunities supplied at the XXXXX Sponsor levels XXXXX are deemed to be a supply for GST/HST purposes.
Ruling Given
Based on the facts set out above, we rule that:
1. The supply of the rights, privileges, options and opportunities by the Society under the Sponsor Agreement to a XXXXX are supplies to a person who is the sponsor of an activity of the Society for use by the sponsor exclusively in publicizing the sponsor's business. As a result the supply by the Society shall be deemed not to be a supply under section 135 XXXXX and is therefore not subject to GST/HST.
2. The deeming provision in section 135 only applies to supplies made by the Society; it does not apply to any supplies of goods and services provided to the Society as consideration for the Society's supply of the rights, privileges, options and opportunities described in paragraphs 6 to 10.
This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.
Interpretation Given
3. We can also provide an interpretation with respect to the supply of the rights, privileges, options and opportunities by the Society under a Sponsor Agreement at other sponsorship levels. Such a supply by the Society shall be deemed not to be a supply under section 135 XXXXX (and therefore not subject to GST/HST) provided that:
a) the nature of the rights, privileges, options and opportunities supplied by the Society under each level of sponsorship agreement is the same as those described in paragraphs 6 to 10 above;
b) these rights, privileges, options and opportunities are supplies to a person who is the sponsor of an activity of the Society for use by the sponsor exclusively in publicizing the sponsor's business; and
c) the total value of the rights, privileges, options and opportunities supplied by the Society are proportional to the value of the respective sponsorship level agreed to.
Explanation
Under section 135 XXXXX, where a public sector body (which includes an non-profit organization such as the Society) makes
(a) a supply of a service, or
(b) a supply by way of licence of the use of a copyright, trade-mark, trade-name or other similar property of the body,
to a person who is the sponsor of an activity of the body for use by the person exclusively in publicizing the person's business, the supply by the body of the service or the use of the property shall be deemed not to be a supply, except where it may reasonably be regarded that the consideration for the supply is primarily for a service of advertising by means of radio or television or in a newspaper, magazine or other publication published periodically or for a prescribed service.
Although XXXXX to the Sponsorship Agreement does provide for the Society to supply some goods and services to the Sponsors, we find that these goods and services are elements that are part of the single supply of the right to use the Society's copyright, trade-mark, trade-name or other similar property.
The Sponsor Agreement's dominant and principal purpose is to set the parameters for the sponsor to use the Society's copyright, trade-mark, trade-name and other similar property. The supply is not primarily for a service of advertising by means of radio or television or in a newspaper, magazine or other publication published periodically or for a prescribed service. This position is true for all the supplies made at each sponsorship level. Therefore the supply of the rights, privileges, options and opportunities described for each of the sponsorship levels is deemed not to be a supply in accordance with section 135 and therefore is not subject to GST/HST.
While section 135 deems certain supplies by a public sector body to a sponsor not to be a supply, it does not deem any property or service provided by a sponsor to a public sector body not to be a supply.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-952-0329. 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,
Michael Mavis
Charities, Non-Profit Organizations and Educational Services Unit
Public Service Bodies and Governments Division Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
Email this Content