9 November 2004 GST/HST Interpretation 55206 - Meeting Rooms

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.

Dear XXXXX:

Thank you for your letter XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to a taxi business. Your request has been transferred XXXXX to the Services and Intangibles Unit of the General Operations and Border Issues Division for response.

Our understanding of the relevant facts is the following:

•   Section 2 of the Municipal Act, 2001 of Ontario provides that: "Municipalities are created by the Province of Ontario to be responsible and accountable governments with respect to matters within their jurisdiction and each municipality is given powers and duties under this Act and many other Acts..."

•   Subsection 150(1) of the Municipal Act provides that: "..., a local municipality may license, regulate and govern any business wholly or partly carried on within the municipality even if the business is being carried on from a location outside the municipality."

•   Pursuant to Subsection 155(1) of the Municipal Act, "a by-law under section 150 for licensing, regulating and governing the owners and drivers of taxicabs may,

(a) establish the rates or fares to be charged...

(b) provide for the collection of the rates or fares charged for the conveyance; and

(c) limit the number of taxicabs or any class of them."

•   The City XXXXX has passed XXXXX to provide for licensing, regulating and governing taxicab brokers, taxicab owners and taxicab drivers of motor vehicles used for hire and for limiting the number of taxicab owner licences.

•   XXXXX.

Interpretation Requested

You wish to know whether the fares charged in the City XXXXX can be considered to be regulated under the laws of Canada or a province, as required in the definition of "taxi business" found in the Excise Tax Act (ETA).

Interpretation Given

In order for a business to be a "taxi business", it must meet the definition of this term found in subsection 123(1) of the ETA. This subsection requires, amongst other things, that the taxi fares be "regulated under the laws of Canada or a province." In this case, the Province of Ontario has delegated its authority to regulate taxi fares to the City XXXXX. When a province delegates its power to regulate fares to municipalities, this is considered to be the regulation of fares "under the laws of ... a province", as required. This is because in enacting such delegating legislation, the province has exercised its power to regulate taxi fares. Thus taxi fares in XXXXX, Ontario are considered to be regulated under the laws of a province whether or not the City has passed a by-law on the subject of taxi fares.

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the ETA, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST/HST Memoranda Series, do not bind the Canada Revenue Agency with respect to a particular situation.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-9700.

Yours truly,

Michèle Routhier, CMA
Technical Analyst
Services and Intangibles Unit
General Operations & Border Issues Division
Excise and GST/HST Rulings Directorate

2004/11/02 — RITS 55568 — Supplies by Social Workers - Proposed Section 7.2 of Part II of Schedule V to the Excise Tax Act