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
Case Number: 112649
Business Number: XXXXX
March 12, 2010
Dear XXXXX:
Subject:
GST/HST RULING
Tax Status of Remuneration received as Chair of Committee
Thank you for your letter of XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the remuneration you received as chair of a committee.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
Statement of Facts
We understand that:
1. You were appointed to the Independent Review Committee (Committee) by the board of XXXXX.
2. The XXXXX requires that investment funds that are reporting issuers, such as XXXXX, have an independent review committee, effective November 1, 2007.
3. The role of the Committee is a quasi-regulatory function. The Committee is to review activities of the fund for potential conflicts-of-interest and ethical issues.
4. The Committee's authority is granted by the securities legislation of the applicable jurisdiction, in this case XXXXX.
5. Initially the members are appointed and their remuneration is set by the manager of the fund as required by the XXXXX. Following this the members can reappoint themselves and set their own remuneration, however the amount has to be reasonable. The amount must reflect the number, nature, and complexity of the investment funds, the industry best practices, as well as the best interests of the investment fund. These requirements are set by regulation and not by any contract of services or contract for services.
6. The initial compensation was set by XXXXX at $XXXXX annually as well as $XXXXX per meeting. Usually XXXXX or XXXXX meetings are held each month.
7. XXXXX is required to cover all Committee-related expenses.
8. Each term of office is between XXXXX and XXXXX years. A member may not be reappointed for a term or terms of office that, if served, would result in the member serving on the independent review committee for longer than XXXXX years, unless the investment fund manager agrees to the reappointment.
9. The very nature of the Committee requires that its members be independent. The XXXXX describes independent as being a member who has no material relationship with the investment fund manager, the investment fund, or an entity related to the fund. A material relationship is defined as a relationship that could reasonably be perceived to interfere with the member's judgment regarding a conflict of interest matter. The members of the Committee, once appointed, are free to (re)appoint members, hold meetings, set compensation, request information it determines is useful or necessary, engage independent counsel, and, of course, prepare reports for the management, security holders, and securities regulatory authorities. The members are able to decide how and when they are going to carry out their duties, subject to the XXXXX.
10. You have been registered for GST since XXXXX in order to account for the GST you have collected from XXXXX. All the GST collected has been reported.
Ruling Requested
You would like to know whether or not the compensation received from XXXXX is subject to GST and whether you should remain registered.
Ruling Given
Based on the facts set out above, we rule that the compensation that you receive from XXXXX for your work on the Committee is considered income from an office and is therefore not subject to GST.
Based on the information provided, you will no longer need to be registered. You will shortly receive written notice that your registration number will be cancelled by the CRA effective XXXXX. All GST collected during the period XXXXX to XXXXX is due before XXXXX. You may wish to provide a copy of this ruling to XXXXX in order to avoid future payments of GST by XXXXX.
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.
For your convenience, find enclosed a copy of GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 954-2488. 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,
Doug Campbell CGA
General Operations Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
XXXXX
UNCLASSIFIED
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