17 August 2005 GST/HST Ruling 63045 - GST/HST Status of the Import of a Tractor

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:

This is in reply to your letter XXXXX, in which you requested information regarding municipal designation. This is also further to your telephone conversation of XXXXX with Mrs. Sharon Cahill of this office.

This information applies to organizations that may be designated as 'municipalities' pursuant to subsection 259(1) of the Excise Tax Act (the "ETA") for the purpose of claiming the municipal rebate.

The Minister of National Revenue may designate an organization to be a municipality but only in respect of activities specified in the designation that involve the making of supplies (other than taxable supplies) by the organization of municipal services. The supply of long-term residential accommodation to tenants on a rent geared-to-income basis by a non-profit organization (or a charity) that receives government funding to assist it in providing this accommodation qualifies as a municipal service for designation purposes. We consider the supply of long-term residential accommodation to mean the rental of self-contained housing units (private living quarters which include cooking facilities and a bathroom) for periods of one month or more. The government funding must be payable to subsidize the cost of those housing units that are supplied on a rent geared-to-income basis. Note that government funding in these situations includes funding provided by a municipality. The activities described above must be undertaken within a program to provide housing to low to moderate-income households.

Please note that this designation does not apply to any other activities that the organization may be engaged in such as the supply of residential units that are not on a rent geared-to-income basis or for which no subsidy is payable (sometimes referred to as market rent) and the supply of commercial space. For purposes of municipal designation, a supply that includes accommodation as one element but also includes other elements such as meals, or personal care services, or laundry, or housecleaning may not be considered an eligible supply of long-term accommodation.

An organization which has been designated to be a municipality may be entitled to the municipal rebate of 100 percent of the Goods and Services Tax ("GST") and the federal portion of the Harmonized Sales Tax ("HST") paid on property and services acquired by it, but only to the extent that the property or services acquired are intended for use, consumption or supply in the course of the activities for which it has been designated.

Application

An organization may request municipal designation by applying, in writing, with supporting documents, to:

Director
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
Canada Revenue Agency
Ottawa ON K1A 0L5

Supporting documentation

The organization must provide documentation that supports that it meets the above-described criteria. These documents include:

•   A copy of the Certificate and Articles of Incorporation for the organization;

•   A copy of a dated and signed agreement that describes that the organization is providing rent-geared-to-income housing for which the organization receives funding from a government, including a municipality; and,

•   A copy of a document that attests to the number of rent-geared-to-income units for which the organization receives funding from a government, including a municipality, relative to the total number of units in the project. This information is generally provided to the funding source annually. We will require this information for at least the latest/current year.

Effective date of designation

Generally, a municipal designation for purposes of section 259 is effective the beginning of the month in which the designation is approved. However, we may, on a case-by-case basis, consider an effective date up to four years prior to this time. The organization must request a retroactive effective date and support the reason for a retroactive application. In addition, the organization must ensure that its supporting documentation demonstrates that it met the above-described criteria during the prior period.

Determination of eligible households

We will also require documentation that supports that the selection of eligible households that benefit from the supply of long-term residential accommodation on a rent geared-to-income basis supported by government funding is within a program that is geared to low to moderate-income households. This may be demonstrated by policies, guidelines and/or operating manuals that apply to the eligibility process.

Entitlements and obligations

Note that the ETA contains other provisions that set out conditions that apply to this rebate, including the calculation of amounts eligible for rebate and filing frequency. In addition, entities that provide residential accommodation, as well as charities and qualifying non-profit organizations may be eligible to claim other rebates. GST/HST technical enquiries may be directed to a GST/HST Rulings Centre at 1-800-959-8287 (service in English) or 1-800-959-8296 (service in French)

Should you have any further questions or require clarification on this matter, please do not hesitate to contact Mrs. Cahill at 613-954-4280. Collect calls are accepted.

Yours truly,

Danielle Laflèche
Director
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate.

2005/06/23 — RITS 41337 — Meaning of the Terms "Program" and "Recreational" for Purposes of 16/III/V to the Excise Tax Act