File: 11595-2
This is further to our letter of October 3, 1995 concerning the above-noted subject and the telephone conversation of February 29, 1996 between P. Roach of this office and XXXXX of your office.
Further to discussions with the Department of Finance, it is our understanding that the proposed amendment to the Financial Services (GST) Regulations, which clarifies that clearing and settlement services in respect of financial instruments are taxable administrative services, will not apply to the type of arrangement that exists between XXXXX. As a result, it is our view that the Category 2 arrangement described in our letter, i.e., XXXXX purchases charge vouchers from the supplier at a discount or commission and then is paid the face value of the credit card voucher by XXXXX is an exempt supply. XXXXX would be considered a "person at risk" as defined in the Financial Services (GST) Regulations as they acquire the charge vouchers. Accordingly, the discount or commission does not come within the scope of the exclusion from financial services by virtue of paragraph (t) of the definition of "financial service" in subsection 123(1) of the Excise Tax Act.
If you have any questions, please contact R. Osudar at (613) 952-9220 or P. Roach at (613) 952-9214.
Your truly,
J. Sitka
A/Director
Financial Institutions/Corporate Reorganizations
GST Rulings and Interpretations
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