22 February 2005 Excise Interpretation 57756 - Application of the Air Travellers Security Charge (ATSC) to Certain Charter Flights

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.

I refer to Michael Moskovic's XXXXX and to our meeting XXXXX concerning the application of the Air Travellers Security Charge (ATSC) to charter flights. This memorandum outlines the ATSC treatment in the following fact situation:

Scenario

1. The air transportation service is acquired in Canada, and involves domestic air travel between listed airports.

2. Registered Air Carrier "A" sells air transportation to individuals or groups and invoices them.

3. "A" enters into an agreement with Registered Air Carrier "B" for "B" to provide the air transportation service.

4. Tickets are not issued by Air Carrier "A" or "B".

5. "B" provides the air transportation service between listed airports.

6. "B" invoices "A" for this service.

Legislative Provisions

Section 4 of the Air Travellers Security Charge Act (ATSCA) states:

"If no ticket is issued for all or part of a journey, and it is reasonable to consider that a ticket would ordinarily be issued by a person for the journey or for that part, as the case may be, such a ticket is, except for the purposes of paragraph 11(2)(c), deemed to have been issued by the person."

Subsection 14(1) of the ATSCA states:

"Subject to subsections (2) and (3), every designated air carrier from whom all or part of an air transportation service is acquired by a person who is required by this Act to pay a charge in respect of that service shall, as an agent of Her Majesty, collect the charge not later than the time the charge becomes payable by the person."

Subsection 14(3) of the ATSCA adds:

"If a ticket for an air transportation service acquired in Canada is issued to a person by a designated air carrier that does not provide any part of the air transportation service, the air transportation service is deemed to have been acquired by the person from that designated air carrier."

Application of the ATSCA

Section 4 is a deeming provision that applies where no tickets have been issued for an individual's journey. If no ticket is issued for a continuous journey, but would ordinarily be issued, this section deems the issuance of a ticket. In our example, section 4 applies and a ticket is deemed to have been issued by "A".

The general rule of subsection 14(1) is subject to subsections 14(2) and (3). Subsection 14(2) does not apply in this circumstance, as it involves an air transportation service, acquired in Canada, which is provided by two or more carriers. In our example, only one registered air carrier provides the air transportation service. Therefore, the application of the ATSC in this case falls squarely under the umbrella of subsection 14(3), which identifies the issuing carrier as the party liable for the ATSC.

In our example, tickets are not issued. This happens often in charter arrangements. The same ATSC principles apply to both charter flights and regularly scheduled flights. The issuing air carrier ("A") is liable for the ATSC.

The foregoing comments represent our general views with respect to this fact situation. Proposed amendments to the ATSCA, if enacted, could have an effect on the interpretation provided herein. Should you or your team members have any questions or require any additional information, feel free to call me anytime at 957-8154 or Michael Moskovic at 957-9877.

2005/01/19 — RITS 56458 — Launch of Existing XXXXX Brands in Promotional XXXXX