1 February 1996 GST/HST Interpretation 11705-4 - The Requirements for the Disclosure of Tax Under the Excise Tax Act (the Act)

                                                                        Facsimile #: (613) 990-1233

                                                                        File no.: 11705-4(FP)

                                                                        S. 223(1)

                                                                        XXXXX

Dear XXXXX

This is in response to your meeting with this Department on February 6, 1992 and your phone conversation with François Paris of my staff on February 8, 1996 regarding the requirements for the disclosure of tax under the Excise Tax Act (the Act).

In order to minimize the costs of administering taxes on services they provide, as well as recognizing the nominal level of taxable services they make, some banks wish to disclose the federal and Quebec sale taxes as a single amount on the invoices/receipts provided to their customers. You want to know if the disclosure of a single, combined GST/PST amount is acceptable to the federal government, given that the Quebec government is in agreement with such a practice.

Subsection 223(1) of the Act provides that:

"Where a registrant makes a taxable supply, the registrant shall indicate to the recipient, either in prescribed manner or in the invoice or receipt issued to, or in an agreement in writing entered into with, the recipient in respect of the supply,

(a) the consideration paid or payable by the recipient for the supply and the tax payable in respect of the supply in a manner that clearly indicates the amount of the tax; or

(b) that the amount paid or payable by the recipient for the supply includes the tax payable in respect of the supply."

The focus in this instance is on paragraph 223(1)(a), a provision which requires that the amount of tax "clearly" appears on the invoice. Although the respective amounts of GST and QST do not appear separately under your proposed invoicing method, it appears that the proposed method is acceptable given that, the respective rates of the two taxes is, and has always been, public knowledge, as has the fact that the QST is imposed on an amount that includes the GST.

The purpose of the provision in question was to inform the recipient of a supply whether GST was payable on the supply. Your proposed invoicing method meets that requirement since the recipient is made aware of the application of the GST to the supply and can therefore determine the amount of GST payable by multiplying the total amount of the consideration for the taxable supply by the fraction 7/113.955. Any other information which may be required for purposes of claiming input tax credits (a requirement which derives from the application of subsections 223(2) and 169(4) along with the information presented in the Input Tax Credit Information Regulations.

This interpretation is based upon our current understanding of the Excise Tax Act and regulations thereunder in their present form and do not take into account the effects of any proposed or future amendments thereto or future changes in interpretation. Further, while we trust that our comments are of assistance to you, we would advise that they do not constitute a GST ruling and are, therefore, not binding upon the Department in respect of any particular fact situation.

Should you have any further questions, please do not hesitate to contact Serge Bernier at 952-9580, Lalith Kottachchi at 952-9588, Gerry O'Reilley at 952-9589, François Paris at 952-8812 or Anny Roy at 954-2560.

Yours truly,

H.L. Jones
Director
General Applications Division
GST Rulings and Interpretations
Policy and Legislation Branch

GAD #: 2718 (GEN)