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.
[Addressee]
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 122025
Business Number: [...]
October 15, 2010
Dear [Client]:
Subject:
GST/HST RULING
GST/HST Ruling on advance payments for seasonal campsites
Thank you for your fax of March 1, 2010, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to advance payments for supplies of campsites.
HST applies at the rate of 15% in Nova Scotia, 13% in Ontario, New Brunswick, and Newfoundland and Labrador, and 12% in British Columbia. GST applies at the rate of 5% in the remaining provinces and territories.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
Statement of Facts
We understand that the facts are as follows:
1. [...] [the Company] is a seasonal and overnight recreational campground in Ontario.
2. [The Company] enters into contracts with seasonal campers for supplies of campsites for the period of May 7, 2010 to October 11, 2010. The contracts provide that payment for the rental of a campsite is due in advance on May 1, 2010.
3. You understand that if the amount payable under the contract is paid by a seasonal camper before May 2010, the GST at the rate of 5% applies to the payment.
4. You do accept partial payments, from your seasonal campers, which are paid prior to May 2010 with a balance payable after April 30, 2010.
Ruling Requested
You would like to know how to apply the tax where a seasonal camper pays part of the amount payable under the contract before May 1, 2010, and the rest of the amount on or after that date. For example, a seasonal camper enters into a contract for $1,000 which is due under the contract on May 1, 2010, for the period of May 7 to October 11, 2010, and the camper pays $800 on April 30, 2010, and the remaining $200 in May 2010.
Ruling Given
Based on the facts set out above, we rule that:
• the GST at 5% applies to the partial payment made before May 2010;
• the GST at 5% also applies to the portion of the outstanding balance paid after April 2010 that can reasonably be attributed to the period before July 2010; and
• the HST at 13% applies to the portion of the outstanding balance that can reasonably be attributed to the period after June 30, 2010.
In your example, the GST at 5% applies to the payment of $800, the GST at 5% also applies to the portion of the $200 that can reasonably be attributed to the period of May 7 to June 30, 2010 (inclusive) and the HST at 13% applies to the portion of the $200 that can reasonably be attributed to the period of July 1 to October 11, 2010 (inclusive).
Explanation
[The Company's] contract for a supply of a campsite for the period of May 7 to October 11, 2010, is a written agreement for the supply of a campsite made by way of lease, licence or similar arrangement. For GST/HST purposes, the consideration for the supply of the campsite becomes due on the day the camper is required to pay the consideration under the agreement. [The Company's] contract provides that the camper is required to pay the amount for the rental of the campsite on May 1, 2010. Therefore, the consideration for the supply of the campsite becomes due on that date.
Where any part of the consideration for the supply of a campsite made by way of lease, licence or similar arrangement is paid or becomes due before May 1, 2010, a supplier would not charge the HST; however, the supplier would charge and collect the GST at 5%. We note in the situation you describe that part of the consideration is paid before May 1, 2010. Therefore, this rule applies. In the example provided, the GST at 5% applies to the $800 payment. The GST must be included in the GST/HST return for the reporting period that includes April 30, 2010.
Where any part of the consideration for the supply of a campsite made by way of lease, licence or similar arrangement becomes due or is paid without having become due on or after May 1, 2010, GST applies to that part of the consideration that can reasonably be attributed to a period that occurs before July 2010 and HST applies to that part of the consideration that can reasonably be attributed to a period on or after July 1, 2010. Given that the consideration for the supply of a campsite becomes due on May 1, 2010, this rule applies to any amount that is not paid before May 1, 2010. Therefore, in the example provided, GST at 5% applies to the portion of the $200 payment made in May 2010 that can reasonably be attributed to the period before July 2010 (that is, May 7 to June 30, 2010) and HST applies to the portion of the $200 payment that can reasonably be attributed to the period that occurs on or after July 1, 2010 (that is, July 1 to October 11, 2010). The GST and the federal part of the HST payable in respect of the $200 partial payment must be included in the GST/HST return for the reporting period that includes the date the payment was made in May 2010. The provincial part of the HST must be included in the GST/HST return for the reporting period that includes July 1, 2010.
The transitional rules for supplies of property, including real property, made by way of lease, licence or similar arrangement are included in section 42 of the New Harmonized Value-added Tax System Regulations. The application of these rules to supplies of real property is explained in GST/HST Info Sheet GI092, Harmonized Sales Tax: Leases of Real Property in Ontario and British Columbia.
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.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-957-8222. 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,
Francine Ménard
Real Property Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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