3 December 2007 GST/HST Interpretation 99212 - PROPOSED LAW/REGULATION Subsection 141.02(7) - election for transitional year

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 XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to your company's operations. Your questions have been forwarded to us for reply.

All legislative references are to the Excise Tax Act (ETA) and the regulations thereunder, unless otherwise specified.

Effective January 1, 2008, the rate of the GST will be reduced from 6% to 5% and the rate of the HST from 14% to 13%. The new rates will apply to supplies for which the GST/HST is paid on or after January 1, 2008, without having become payable before that date. Specific transitional rules apply to certain supplies, for example, real property. For more information on the transitional rules for the reduction of the GST/HST rate, please refer to GST/HST Notice 226, Proposed GST/HST Rate Reduction in 2008 on the Canada Revenue Agency Web site at www.craarc.gc.ca/E/pub/gi/notice226/README.html.

We understand XXXXX (the Company) is a nonresident tour operator XXXXX.

Interpretation Requested

You would like to know how to file the rebate claim when the Company has a large FIT program with individual travelers buying its packages. Specifically, you have asked:

1. Does the Company have to file for each individual room booked?

2. Does the Company apply for each hotel monthly?

3. Can the Company apply for the rebate monthly and include all receipts from all Canadian hotels for which it paid the GST during that period?

You are also unclear about how to complete Part B of the rebate application form, where the "Visit Information" is provided, including a starting date and an ending date. You have asked if you could put, for example, June 1, 2007, to June 30, 2007, as the dates of stay.

Interpretation Given

Under the new Foreign Convention and Tour Incentive Program (FCTIP), a GST/HST rebate is available to non-residents on supplies of eligible tour packages that include short-term and/or camping accommodation and on supplies of short-term and/or camping accommodation made to non-resident tour operators that resold the accommodation as part of an eligible tour package.

There is no restriction under the ETA on how frequently a non-resident may file a claim for the rebate under the FCTIP. However, each rebate claim must be for a minimum of $12 GST or $28 HST (the minimum will be $10 GST and $26 HST for supplies on which the tax is paid on or after January 1, 2008, without having become payable before that day). There is no maximum amount that may be claimed on a single rebate application.

A non-resident can only make one rebate claim for a particular purchase of an eligible tour package, or for short-term and/or camping accommodation resold as part of an eligible tour package, as the case may be. A separate rebate claim does not have to be made for each individual room, or for each hotel. However, the supporting documentation must be sufficient to match the rooms to the itineraries of the FIT tours provided by the Company.

The Company can apply for the rebate monthly and include all receipts from all Canadian hotels for which it paid the GST during that period.

Non-resident tour operators must file their rebate claims using Form GST115, GST/HST Rebate Application for Tour Packages. The instructions to complete Part B of the Form GST115 indicate that tour operators should complete the section as follows:

•   enter the earliest arrival date of the eligible tour packages or of the short-term and/or camping accommodation included in the claim;

•   enter the latest departure date of the eligible tour packages or of the short-term and/or camping accommodation included in the claim;

•   attach a list of the various arrival and departure dates and/or dates of short-term accommodation; and

•   enter the total number of nights of short-term accommodation and/or camping accommodation included in eligible tour packages or purchased and resold in eligible tour packages.

The dates indicate the range included in the total claim, and may not correspond to a single tour package or accommodation provided. The requested list attached to the rebate claim provides a breakdown that will match the individual tours included in the claim, and that can be compared to the receipts for the accommodation. The number of nights to be indicated on the rebate application form is the total for all tour packages and accommodation included in the rebate claim.

If the Company files a claim for the month of June 2007, and includes all the receipts from all the Canadian hotels for which it paid the GST during that month, it would enter the dates as June 1, 2007 and June 30, 2007, only if those dates corresponded to the actual dates of the tours. For example, if the first payment in June 2007 were for accommodation provided for the period June 1 to June 3, then indicating June 1, 2007 as the arrival date would be correct. However, if the first payment were for accommodation provided from May 30 to June 1, then indicating June 1, 2007 as the arrival date would be incorrect. The arrival date indicated on the rebate form should be May 30, 2007, even though the payment was made on June 1.

Separate rebate claims from a single non-resident tour operator may have overlapping arrival or departure dates, so long as the claims are for different tours or accommodation.

The foregoing comments represent our general views with respect to the subject matter of your request. 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, do not bind the Canada Revenue Agency with respect to a particular situation. Future changes to the ETA, regulations, or our interpretative policy could affect this interpretation.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 952-7909. 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,

Jacqueline Russell, CGA
Services and Intangibles Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

2007/12/03 — RITS 98844 — FCTIP and Power of Attorney