3 February 1997 GST/HST Interpretation HQR99 - Assessment Reports

I refer to the August 16, 1996, memorandum from XXXXX of your office requesting a review of paragraph 20(e) of Part VI of Schedule V to the Excise Tax Act (the Act) as it applies to assessment reports issued by the XXXXX (the Township). I apologize for the delay in responding to this request.

The Township has been advised that its supply of assessment reports are taxable at 7%. Samples of the assessment reports were provided to your office on XXXXX, and included with XXXXX incoming request. The sample reports include Township inspection reports from a structure fire and kitchen fire requested by an insurance company, Township fire department and building inspection reports in respect of a liquor licence additional facilities application, and a Township wood stove fire inspection report issued to a homeowner for insurance purposes.

Under paragraph 20(c) of Part VI of Schedule V to the Act, supplies of a licence, permit, quota or similar right, and the supply of any service in respect of an application for such a right when made by a municipality are exempt. A right supplied in respect of the importation of alcoholic beverages is excluded from this exempting provision. Under paragraph 146(a) of the Act, a supply of a service of testing or inspecting any property for the purpose of verifying or certifying that the property meets particular standards of quality or is suitable for consumption, use or supply in a particular manner is taxable. However, in situations where the inspection service is invoiced as part of the supply of a permit, the inspection service would be an exempt supply of a permit under paragraph 20(c) of Part VI of Schedule V to the Act. In those situations where a separate fee is charged by the Township for the inspection services, the supply of the services is taxable at seven percent.

Paragraph 20(e) of Part VI of Schedule V to the Act, prior to the proposed amendment as promulgated in Bill C-70, exempts a supply of a service of providing information or any certificate or other document evidencing title to, any right or estate in or any encumbrance in respect of property. The proposed amendment adds to the list of exempt services in paragraph 20(e), the supply of information, or any certificate or other document, in respect of the zoning of real property or any assessment in respect of property. Under the proposed amendment, for example, the supply of information or a certificate which provides a property value assessment used in the determination of property taxes, is exempt.

In reviewing the documentation provided by the Township, the supply of the inspection service and the reports, which provide explanations or causes for the structure, kitchen, and wood stove fires, are taxable supplies of inspection services under paragraph 146(a) of the Act. It is our view that the inspection services and report are not a service of providing information or documentation evidencing title to, a right or estate in or an encumbrance in respect of property under paragraph 20(e). In order for the services and reports to qualify as exempt supplies under the proposed amendment to paragraph 20(e), the report must be an assessment in respect of the property. It is our view that the assessment was performed following a fire whereby the causes of the fire were documented in a report to support the findings. This information, although in respect of property, is not an assessment of the value of the property or an estimation of the cost of replacement of damaged property, but is information provided to insurance companies or individuals explaining the causes of the damage.

Under XXXXX liquor licenses can only be issued to applicants by XXXXX[.] Subsection XXXXX specifies through prescribed regulations the facilities requirements for a licence to be issued. The prescribed facilities requirements must meet those requirements as specified under XXXXX[.] The administration of XXXXX have been delegated to XXXXX[.] The inspection services and reports supplied by the Township fire department and building department to an applicant for a licence allowing for the licensing of additional facilities are taxable supplies under paragraph 146(a) of the Act.

Should you have any questions, please contact Mr. Ken Syer, A/Manager, Municipalities Unit at (613) 952-9590, or the undersigned at (613) 954-4280.

O.W. Newell, CGA
Policy Officer
Municipalities and Health Care Services
GST Rulings and Interpretations
Public Service Bodies and Governments