14 February 1997 GST/HST Interpretation HQR0000115 - GST Treatment of Payments Made Under

Dear XXXXX

We are writing in response to XXXXX letter of July 11, 1995 in which he inquired about the GST treatment of payments made under the XXXXX. For our reference XXXXX provided us with a copy of the XXXXX master agreement, two letters from XXXXX dated XXXXX and his analysis of the case. We apologize for the delay in responding to your inquiry.

After reviewing the XXXXX master agreement, it appears that the program described therein meets the requirements of "public purpose" as defined in our grants and subsidies policy. However, we cannot determine whether a specific payment made under XXXXX to XXXXX is consideration for a supply since the master agreement does not contemplate a particular project. This determination can only be made on a case-by-case basis as XXXXX enters into subagreements for approved projects.

As a result, we suggest that your response to XXXXX provide only a basic description of XXXXX an interpretation that the program has a public purpose and a statement that the Department would be pleased to provide a ruling on payments made to XXXXX under a subagreement for specific research or operational projects.

We would like to point out that, in a case where payments made under a particular XXXXX subagreement are found not to be consideration for a supply, the ability for a XXXXX company to claim ITCs would be subject to subsection 141.01 of the Excise Tax Act as amended.

I hope that the above information will be of assistance to you. Should you require additional information, please feel free to contact the undersigned at (613) 952-9215.

Sincerely,

Fernand Koutsimouka
Government Unit
Public Service Bodies and Governments
GST Rulings and Interpretations.