GST/HST Rulings and
Interpretations Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Road
Vanier, Ontario
XXXXX K1A 0L5
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Attention: XXXXX XXXXX
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November 27, 1997
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Subject:
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GST/HST APPLICATION RULING
Tax Status of Airport Improvement Fees and Related Issues
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Dear XXXXX
Thank you for your facsimile of March 21, 1997, and your two subsequent letters, with attachments, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to Airport Improvement Fees. We apologize for the delay in our response.
We understand the facts as follows.
Statement of Facts
1. XXXXX entered into a Memorandum of Agreement ("MOA") with the XXXXX
2. The MOA permits accession by other Canadian airports XXXXX and other Canadian or foreign air carriers XXXXX
3. The MOA is primarily intended to establish a consultation process which ensures the involvement of Air Carriers in the planning of airport facility expansions. It also provides the authority under which Air Carriers must collect airport improvement fees ("AIF(s)") from their passengers on behalf of Airports for future airport facility expansions.
4. Subject to certain limitations, where a particular Airport has established an AIF, the AIF is imposed on all departing passengers originating their journey at that Airport.
5. Where the MOA requires a signatory Air Carrier to collect AIFs from its passengers on behalf of a particular Airport, the Airport must levy a supplementary charge on each non-signatory Air Carrier that makes use of its facilities. The amount of the charge imposed on a particular Air Carrier must be equal to or greater than the amount of the gross fees that would have been collected by the particular Air Carrier on behalf of the Airport if it had acceded to the MOA.
6. The MOA does not preclude an Airport from collecting AIFs using a method other than that outlined in the MOA, provided it does not involve the participation of, or impose any additional costs on, the Air Carriers.
7. All of the Airports are incorporated under Part II of the Canada Corporations Act, they are all non-profit organizations within the meaning assigned by subsection 123(1) of the Excise Tax Act, and they are all registered for the GST.
Rulings Requested
You would like to confirm that AIFs collected by Air Carriers on behalf of Airports are subject to tax in every case, and that the rate of tax applicable to a particular AIF is based on the location of the Airport to which the AIF pertains.
Rulings Given
Based on the facts set out above, we rule that
1. Where an Airport is situated in a participating province (i.e., New Brunswick, Newfoundland, or Nova Scotia), any AIFs collected by an Air Carrier on behalf of the Airport under the MOA are subject to the HST at 15%.
2. Where an Airport is situated in a non-participating province (i.e., anywhere in Canada other than New Brunswick, Newfoundland, or Nova Scotia), any AIFs collected by an Air Carrier on behalf of the Airport under the MOA are subject to the GST at 7%.
This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act, or to departmental interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.
Should you have any further questions or require clarification on the above matter, please do not hesitate to call me at (613) 952-9588.
Yours truly,
John W. Smith
Industries Unit
General Operations and Border Issues Division
GST/HST Rulings and Interpretations Directorate
Legislative References: 123(1) municipality, non-participating province, non-profit organization, participating province; 136(1); 144.1; 165; Schedule V; Schedule VI
NCS Subject Code(s): R 5; 11950-1
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