1 August 1996 GST/HST Interpretation 11895-1[3] - Seeking Clarification of Our Interpretation of Subsection 141(1) of the Excise Tax Act (the Act) as it Applies to Operations of

XXXXX

I refer to your letter of August 30, 1995, seeking clarification of our interpretation of subsection 141(1) of the Excise Tax Act (the Act) as it applies to operations of XXXXX[.] Our interpretation is based upon the following information:

1. The XXXXX (the commission), determined as a municipality pursuant to paragraph (b) of the definition of municipality in subsection 123(1) of the Act, is defined as a para-municipal organization of a municipal body in section 1 of Part VI of Schedule V to the Act.

2. XXXXX.

3. The commission makes exempt supplies of XXXXX to the municipal body and para-municipal organizations of the municipal body under section 28 of Part VI of Schedule V to the Act.

4. The commission also makes taxable supplies of XXXXX.

Interpretation Requested

The commission uses the XXXXX it acquires from XXXXX to make both taxable and exempt supplies of XXXXX[.] May subsection 141(1) be applied to the activities of the commission?

Interpretation

Under subsection 141(1), where substantially all of the consumption or use of property by a person is in the course of the person's commercial activities, all of the consumption or use of the property by the person shall be deemed to be in the course of those activities. It is our opinion that the XXXXX acquired from XXXXX is used by a commission when it is stepped down (transformed) into XXXXX[.] Therefore, subsection 141(1) will only apply where the commission can provide evidence that substantially all of the use of the acquired property or service of the commission is used in the course of the commission's commercial activities.

The foregoing comments represent our general views with respect to the subject matter of your letter. Unannounced proposed or future amendments to the legislation may result in changes to our interpretation. These comments are not rulings and, in accordance with the guidelines set out in GST Memoranda Series (1.4) issued by Revenue Canada, and do not bind the Department with respect to a particular situation.

Should you have any questions, please contact Ms. Joanne Houlahan, Manager, Public Service Bodies at (613) 954-7945 or Mr. Owen Newell, Policy Officer, Municipalities at (613) 954-4280.

Yours truly,

J.A. Venne
Director
Special Sectors
GST Rulings and Interpretations