12 February 1998 GST/HST Interpretation 1998-02-12 - Catering Services and Admissions Supplied by a Charity

                                                                        GST/HST Rulings and Interpretations
Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Avenue
Vanier, Ontario
XXXXX                                                                                 K1A 0L5
XXXXX
4th Avenue, S.E.
Calgary (Alberta)
T2G 0L1

Dear XXXXX

Thank you for your memorandum of August 1, 1997 concerning the application of the Goods and Services Tax (GST)Harmonized Sales Tax (HST) to catering services and admission fees supplied by XXXXX

You have received a ruling request from XXXXX which provided you with the following facts:

1 XXXXX is a registered charity and is also registered for GST purposes.

2.  XXXXX operates a historical park site in XXXXX It provides a number of different services within the confines of the park including food, retail and amusement services.

3. The cost of admission to the park exceeds $1.00 in all cases. A patron may purchase an admission to the park which will entitle them to view only the exhibits and historical buildings as well as enjoy any free entertainment offered. There are also amusement rides in the park. A patron may purchase tickets for these rides separately or they can purchase an admission with rides included.

4.  XXXXX operates a number of restaurants and concessions in the park which supply food and beverages to the park patrons and employees.

5. The park also offers catering packages. The catering services typically include:

(a) the rental of the premises. The client may choose from the XXXXX ;

(b) food and beverages. In addition to the meals, the client may request that the park make available the ice cream parlour, a popcorn wagon or other concessiontype items such as cotton candy. There would be a specified price per unit contained in the contract which the client would pay to purchase these.

In addition, clients may add any of the following to their catering contract:

midway rides made available to the guest;
a train which transports guests from the parking lot to the park and back;
entertainment; a landau;
special setup requests for purposes of ceremonies, pictures, etc.;
additional services such as portisans, stage platforms and handwash stations.

In addition, I received the following information from XXXXX

Catering services are normally charged to the purchaser on a per person basis for meals, along with a 15% gratuity. Beverages and bar services are charged on a per drink basis for soft drinks and alcoholic beverages, and on a per bottle basis for wine and water. Separate charges may also be levied for wine stewards.

Each specific room facility has a minimum servingattendee requirement. If the minimum attendee number is attained, there is no charge. However, if the minimum number of attendees is not attained, a separate charge for the room rental is levied for the catered events.

Following are the questions you submitted, and our replies.

Question 1

Please confirm that the supply of meals and beverage at the restaurants and concessions are supplies of tangible personal property.

Reply

Supplies of meals at a restaurant are supplies of tangible personal property. Since it is unlikely that any exemption applies to such supplies (section 1 of Part V.1 won't apply because of paragraph 1(d)), supplies of restaurant meals are generally taxable.

Question 2

Please confirm that the supply of admissions are taxable pursuant to paragraph 1(e) of Part V.1 of Schedule V and the supply of the rides is a supply of the right to participate in the ride which is exempt according to the general exemptions of section 1.

Reply

You are correct in stating that the supply of an admission in respect of a place of amusement by a charity which exceeds one dollar is taxable; however, since section 1 of Part V.1 is an exempting, not a taxing provision, we suggest that you do not use the terminology "taxable pursuant to paragraph 1(e)." Rather, we suggest you indicate that the "admissions are taxable since it is apparent that no exemption applies (section 1 of Part V.1 doesn't apply because of paragraph 1(e)).

The definition of "place of amusement" includes "any place, structure, apparatus machine or device the purpose of which is to provide any type of amusement or recreation". Therefore, rides would also be excluded from the general exemption as they also fall under the definition of place of amusement. The rides would therefore likely be taxable (unless the price for the rides are less than a dollar).

Question 3

What would be the tax status of the combined supply of the admission and rides for one price ?

Reply

As mentioned earlier, paragraph 1(e) of Part V.1 excludes admissions exceeding one dollar from the general exemption. "Admission" in respect of a place of amusement means "a right of entry or access to..." and the definition of "place of amusement" includes "any place, structure, apparatus machine or device the purpose of which is to provide any type of amusement or recreation." Therefore, admissions and rides provided for one price will be excluded from the general exemption and will be taxable.

Question 4

The supply of catering service is exempt in accordance with paragraph 1(d). With reference to the catering contracts supplied by XXXXX what components are to be included under the definition of catering ?

Does the catering contract include all of the services and property supplied under the contract or is it the meals and the rental of the premises or is it the provision of the meals only ?

Reply

The supply of catering service is exempt in accordance with paragraph 1(d) as you noted. However, since the term "catering services" is not defined in the Excise Tax Act, our administrative policy would follow the commonly understood interpretation of the term in context of the Act. On this basis, catering services would usually entail characteristics such as food or beverages processed or arranged to the customer's specification, delivery, some or all of the necessary amenities and a per serving charge.

In this particular case, the catering services would likely include the food, beverages and the room where catering services take place. However, the supply of ice cream parlour, popcorn wagon or other types of concession would not be included as catering services. It is also unlikely that the following supplies would be included as "catering services" even if they were included in one fee charged for "catering". That is, under our "Single and Multiple" Supplies Policy, these would likely be viewed as supplies that are separate and distinct from "catering":

midway rides;
train transporting guests from the parking lot;
entertainment;
landau;
special setup requests;
additional services such as portisans, stage platforms and washhand stations.

Each of the above supplies would have to be examined separately to determine whether they qualify under one of the other exemptions for charities.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-4157.

Yours truly,

Gabrielle Nadeau
Charities, NonProfit Organizations and Educational Services Unit
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate

NCS Subject Code(s)              G