15 October 1998 GST/HST Ruling HQR0001212 - Application of the GST/HST to Service Charges for Customer Parking

                                                                        GST/HST Rulings and Interpretations
 Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Road
Vanier, Ontario
XXXXX                                                                                 K1A 0L5

                                                                        Case: HQR0001212
File: 11755-14

Dear XXXXX

Thank you for your letter of April 1, 1998, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to your operations.

Based on your letter and our telephone conversation of September 17, 1998, our understanding of the facts is as follows:

XXXXX, which has a stated value of XXXXX, is sold at par by XXXXX (the Association) to downtown businesses. The businesses then give XXXXX to patrons as a customer loyalty. The patron redeems XXXXX towards either the cost of their parking or the cost of their fare on XXXXX XXXXX[.] If the parking charge including GST is less than the value of XXXXX, the patron will receive change in cash from the parking operator. When the parking operator and XXXXX redeem XXXXX to the Association, the Association will reimburse them at a rate of XXXXX of the value. The other XXXXX is a service charge on which the Association charges 7% GST. The Association remits the GST collected on the XXXXX service charge. This service charge is in respect of the administration and promotion of the program.

Ruling Requested

You have requested that we review the GST procedure currently being used by the Association.

Ruling Given

Based on the information provided, we rule that GST is correctly being applied to the XXXXX service charge.

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST 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 transactions for which you requested a ruling.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-9577 or Duncan Jones at (613) 952-9210.

Yours truly,

Marilena Guerra
Rulings Officer
Financial Institutions and Real Property Division
GST/HST Rulings and Interpretations Directorate
Policy and Legislation Branch