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.
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Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 121546
Attention: XXXXX
April 12, 2010
Dear XXXXX:
Subject:
GST/HST INTERPRETATION - Application of the HST in British Columbia to the Supply of a Right of Interment
Thank you for your XXXXX of XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to a right of interment supplied by the XXXXX.
The Government of Canada and the Government of British Columbia have signed a Comprehensive Integrated Tax Coordination Agreement for the implementation of HST in British Columbia. The HST is proposed to come into effect in British Columbia on July 1, 2010, at a rate of 12%, consisting of a 5% federal part (equivalent to the existing GST) and a 7% provincial part.
Legislation required to implement the HST in British Columbia has received Royal Assent by the Parliament of Canada. Required provincial legislation has been introduced but is still under consideration by the Legislative Assembly of British Columbia. However, many of the rules which would apply to transactions that straddle the July 1, 2010 implementation date will be contained in regulations made under the Excise Tax Act (ETA). Although the Government of British Columbia has announced details of the rules which may eventually apply, the required regulations have not yet been made.
The following interpretation is based on the transitional rules for the HST in British Columbia as announced in Information Notice No. 1, General Transitional Rules for British Columbia HST, released by the Government of British Columbia on October 14, 2009, and revised on April 6, 2010. This interpretation should not be taken as a statement by the Canada Revenue Agency (CRA) that the transitional rules will be made in their current form.
Based on your XXXXX, we understand as follows:
• XXXXX provided is a general sample of a typical XXXXX for the supply of an interment right entered into by municipalities in British Columbia.
• Although the XXXXX provided is specific to the XXXXX, supplies of interment rights are generally subject to provincial guidelines.
• XXXXX provides that the contract is not deemed final until signed by both parties and payment of fees. Payment is due upon signing of the contract.
• Subject to the payment of applicable fees, the XXXXX may grant to any person a right of interment for a particular lot. Such right of interment provides for the right to inter the person named on the right of interment certificate in a particular lot specified on the certificate. The remains, once interred, remain in the particular lot in perpetuity.
Interpretation Requested
You would like to know when the HST will apply to the fee for the right of interment supplied by the XXXXX.
Interpretation Given
GST/HST Notice No. 247, Harmonized Sales Tax for Ontario and British Columbia - Questions and Answers on General Transitional Rules for Personal Property and Services (available at: http://www.cra-arc.gc.ca/E/pub/gi/notice247/README.html) outlines the application of the transitional rules to prepaid funeral and cemetery arrangements. As stated on page 4, Prepaid Funeral and Cemetery Arrangements, the HST would not apply to any consideration for the portion of a funeral or cemetery service that is performed on or after July 1, 2010, if the service is supplied according to an arrangement in writing that was entered into before July 2010, provided that it was reasonable, at the time the arrangement was entered into, to expect that all or part of the consideration for the service would be paid (or put into a trust) before the service is performed. This rule would also apply to property (e.g., cemetery/funeral products such as a coffin, headstone, casket or a monument) relating to the funeral, burial, or cremation of an individual if the property is provided under an arrangement for the provision of funeral or cemetery services that is relieved under this rule. This rule is not applicable in this case as the XXXXX is only in respect of the right of interment and is not an XXXXX for the provision of funeral or cemetery services.
Generally, for GST/HST purposes, a lot or plot in a cemetery, a crypt, a niche, or any other similar place used for the interment of human remains are considered a form of real property. Cemetery operators generally provide interment rights by way of lease, licence or similar arrangement. Given the specific use and purpose of the lot, plot, crypt or niche, and the fact that an individual acquiring it may have little or no control over it, supplies of such real property are generally supplies made by way of licence. GST/HST Technical Information Bulletin B-093, Application of the GST/HST to Cemetery Products and Services (available at: http://www.cra-arc.gc.ca/E/pub/gm/b-093/README.html) sets out CRA's interpretive policy with respect to the application of the GST/HST to supplies of interment rights.
The tax status of a supply of an interment right may differ depending upon the person who is making the supply (e.g., charities, public institutions or public service bodies). Pages 12 to 14 of TIB B-093 provide detailed information regarding the supply of an interment right and related services provided by such persons.
In particular, the supply of an interment right by a municipality by way of lease, licence or similar arrangement is a taxable supply of real property. The GST/HST on the supply of real property made by way of lease, licence or similar arrangement is payable on the earlier of the day the consideration for the supply is paid and the day the consideration for the supply becomes due. Where the consideration is paid or becomes due on more than one day, as in the case of a series of payments, the GST/HST is payable separately on the value of each payment on the earlier of the day on which the payment is paid and the day on which the payment becomes due.
GST/HST Notice No. 246, Harmonized Sales Tax for British Columbia - Questions and Answers on General Transitional Rules for Housing and Other Real Property Situated in British Columbia (available at: http://www.cra-arc.gc.ca/E/pub/gi/notice246/README.html) sets out the transitional rules applicable to real property. Under the transitional rules, the HST would generally apply to any consideration that becomes due, or is paid without having become due, on or after May 1, 2010, for a supply of real property by way of lease, licence or similar arrangement, to the extent that the payment is attributable to a lease interval, or any part of a lease interval, that begins on or after July 1, 2010. The HST would not apply to a supply of real property by way of lease, licence or similar arrangement if the lease interval begins before July 2010 and ends before July 31, 2010. Given that the right of interment is a right granted in perpetuity (i.e., the remains once interred remain in perpetuity), it is our view that the HST would apply on the total consideration as the amount attributable to the period before July 1, 2010, if any, would be negligible in comparison to the infinite duration of the licence granted under the XXXXX.
Therefore, the HST would apply to the supply of an interment right made by a municipality by way of lease, licence or similar arrangement, where the fee becomes due, or is paid without having become due, after April 2010. Where the fee becomes due, or is paid without having become due, after April 2010 and before July 1, 2010, the XXXXX would be required to account for the provincial part of the HST in its GST/HST return for the reporting period that includes July 1, 2010.
The foregoing comments represent our general views with respect to the transitional rules as announced in Notice No. 1 as revised by the Government of British Columbia on April 6, 2010, as they relate to the subject matter of your request. Any change to the wording of the transitional rules or any regulations regarding the HST in British Columbia, if made, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service(available at: http://www.cra-arc.gc.ca/E/pub/gm/1-4/README.html), do not bind the CRA with respect to a particular situation.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 952-9212. Should you have additional questions on the interpretation and application of the GST/HST, please contact a GST/HST Rulings officer at 1.800.959.8287.
Yours truly,
Carmela Antonelli
Real Property Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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