GAD : 907(REG)
11842-4-1(ICAO)
XXXXX April 3, 1995
Dear XXXXX
This is further to your telephone conversation of March 30, 1995, with Joanne Hoople, Tax Policy Officer of my unit, concerning the application of GST to real property transactions involving an official of the XXXXX . As you informed us that these transactions are due to take place early next week, I am sending this letter by facsimile to ensure its timely arrival.
We understand that a "diplomat" of XXXXX intends to purchase land for personal use and to engage a contractor to construct a personal residence on the land he has acquired. As Ms. Hoople indicated, we agree with your interpretation that the purchase of the land is an acquisition which cannot be relieved of GST by diplomatic rebate. Paragraph (b) of Article 34 of Schedule I to the Foreign Missions and International Organizations Act, passed by the House of Commons October 4, 1991, and entered into force December 16, 1991, states that a "diplomatic agent shall be exempt from all dues and taxes, personal and real, national, regional or municipal except dues and taxes on private immovable property situated in the territory of the receiving State ..."
We further agree, based on recent headquarters experience with a similar case, that the second transaction represents the diplomat's purchase of a service (a supply of materials and labour) and is therefore to be provided relief from GST. The diplomat must pay the GST in both cases; however, he can obtain a full rebate of the GST paid on the contractor's services if he is eligible for such a diplomatic rebate.
In addition, we would add that pursuant to subsection 256 of the Excise Tax Act, a GST new housing rebate may be available. This section provides for a partial rebate of GST paid on land and improvements to said land where a qualifying individual constructs, or engages another person to construct, a residential complex for use as their primary place of residence. Additionally, section 263 of the Excise Tax Act ensures that where an amount of GST paid has been previously rebated under the Excise Tax Act or any other Act of Parliament, a rebate shall not be paid in respect of the same amount. In other words, where a diplomat receives a diplomatic rebate in respect of GST amounts paid relating to construction services, said amounts will not be considered when calculating the GST new housing rebate. Consequently, a housing rebate of 36% of the GST paid on the land may be available if the requirements of subsection 256 are satisfied.
You may wish to confirm the "diplomat's" eligibility for GST relief. In all likelihood, the person is one of the following: a permanent representative to the Organization as described in article 12 of the Headquarters Agreement between the Government of Canada and XXXXX in force since February 20, 1992, or a senior official of the Organization as cited in article 19 of the same agreement. The results for either of these personnel are the same since, according to the provisions of the articles cited above, each classification is accorded the "privileges and immunities, subject to corresponding conditions and obligations, as are granted to diplomatic agents. In either case, the individual's name and accreditation number would already be entered into the XXXXX electronic database for rebate purposes, upon the prior instruction of the Office of Protocol of the federal department of Foreign Affairs. " If, for any reason, he should not be an accredited official, his claim for diplomatic rebate would be rejected by the system and the New Housing Rebate under section 256 would take on added significance.
Should you have any further questions, please contact Philippe Nault at 954-7952 or Joanne Hoople at 952-8533 with respect to relief for diplomatic representatives; or John Bain at 954-8852 x with respect to the New Housing Rebate.
Yours truly,
Marilyn Viger
Manager
Tax Policy - Governmental
Sectors and Federal/Provincial Relations
GST Rulings and Interpretations
Policy and Legislation
| c.c.: |
XXXXX Stan Farber
John Bain
XXXXX
Philippe Nault
Joanne Hoople |
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