GST/HST Rulings and
Interpretations Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Road
Vanier, Ontario
XXXXX K1A 0L5
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Subject:
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GST/HST INTERPRETATION
Bingo Association Proceeds
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Dear XXXXX
Thank you for your letter of November 29, 1996, and additional information of May 15, 1997, concerning the application of the Goods and Services Tax (GST) to pooled gaming proceeds disbursed by bingo associations to charitable gaming organizations conducting gaming events in XXXXX
Interpretation Requested
It is our understanding that GST is paid on amounts netted out of gaming proceeds for supplies of hall rental, products and services made by the bingo associations to the charitable gaming organizations. You have asked whether the exemption for gambling proceeds described in the publication entitled "Information For Charities" applies to these amounts.
The publication states as follows:
Gambling: No GST applies to the gambling proceeds you receive from sales of lottery, break open and raffle tickets, casino nights, bingo or raffle games and other games of chance.
"Gambling proceeds" is the money received from selling raffle tickets, bingo cards, etc., minus the amount of money you pay out as prizes.
The GST does not apply to bingo games and casino nights run by charities. ...
If a charity rents the commercial hall, it would normally pay a portion of the proceeds from the game to the bingo hall owner for use of the hall. The GST would apply to the payment to the commercial bingo hall owner because the owner is making a taxable supply of the right to use the facility to the charity. The owner must therefore collect GST on the fee charged for the use of the hall.
If the commercial bingo hall owner runs the event on behalf of a charity (and pays a portion of the proceeds to the charity), the bingo game would be taxable. Both the admission to the event and the supply of the right to play (for example, the bingo cards) are taxable. This is because the supplier is not the charity but the commercial bingo hall operator. However, no GST would apply to the proceeds paid to the charity by the commercial operator.
Interpretation Given
It is the Department's view that net proceeds from a licensed gaming event disbursed by a bingo association to a licensee charitable and religious organization that is a charity or non-profit organization for GST purposes are exempt from GST as those amounts represent gaming revenues belonging to the licensee.
Analysis
As noted in your letter, the authority for regulation of bingos is found under section 207 of the Criminal Code of Canada. Pursuant to paragraph 207(1)(b) of the Criminal Code of Canada,"... it is lawful for a charitable or religious organization ... to conduct and manage a lottery scheme (which, by definition, includes bingo games)...if the proceeds...are used for a charitable or religious purpose.
The Lieutenant Governor in Council of the XXXXX has specified the XXXXX as the provincial authority for the licensing of bingo games in XXXXX The Commission establishes provincial policy for the operation of bingo games as set out in its XXXXX revised by the Commission in October 1996 and has the authority to issue, amend, suspend or revoke a licence. Another provincial body, the XXXXX is responsible for regulating licensed gaming.
Pursuant to the XXXXX
• a "licensee" is a charitable or religious organization or the board of a fair or exhibition and its officers, employees, agents, members or volunteers, which has been licensed by the Commission to conduct and manage licensed gaming events;
• a "licensed gaming event" is a bingo event, casino event or ticket raffle;
• the "licensee is responsible for the conduct and management of the bingo event in accordance with the licence and the XXXXX , in adherence with the Criminal Code of Canada, hold the licensee responsible for the management and conduct of a bingo, the XXXXX provide that an association may be formed by licensees to facilitate the conduct and management of bingo events for its members. Where an association carries out one or more of the responsibilities of the licensees, the association is bound by the terms of the licences in the same manner and to the same extent as the licensees. Where gross revenue is pooled by the licensees in a bingo association, the portion due to each licensee shall be paid within thirty (30) days of the end of the month in which the gross revenue is raised.
With respect to gross revenues from a licensed gaming event, it is the Department's position that a bingo association is acting as an agent in collecting these revenues (and paying bingo prizes) on behalf of its licensee member. A supply by a non-profit organization or a charity of a right to participate in a game of chance is exempt from GST pursuant to section 5.1 of Part VI of Schedule V and section 1 of Part V.1 of the same Schedule to the Excise Tax Act (ETA), respectively.
Accordingly, there is no tax applied to the sale of the bingo cards, and there is no tax applied to the distribution of bingo revenues to the member clubs. However, GST may be exigible with respect to advances or reimbursements paid by member clubs to the association for the services the association provides in operating bingo events.
The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the Excise Tax Act, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST Memoranda Series, do not bind the Department with respect to a particular situation.
Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-0420.
Yours truly,
Lorrie Grannary
Charities, NPO's and Educational Services Unit
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate
c.c.: J. A Venne
J.M. Place
L. Grannary
XXXXX
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