13 August 1999 GST/HST Interpretation HQR0001909 - Coin-operated Amusement Machines

Dear XXXXX

This is further to our meeting of June 23, 1999 and your letter of that same day requesting clarification of our interpretation of subsection 165.1(2) of the Excise Tax Act as explained in our April 27, 1999 letter to the XXXXX[.]

Interpretation Requested

You have asked us to clarify whether subsection 165.1(2) of the ETA can apply to a supply made by an amusement machine that can be altered, either by re-programming the machine or by resetting internal switches in the machine, to offer supplies for consideration exceeding twenty-five cents.

Interpretation Given

As we stated at our meeting, it is the Department's position that in analyzing whether or not subsection 165.1(2) of the ETA applies to supplies made through a particular amusement machine at any particular point in time, one must look at what that machine is offering at that time, not what the machine could be altered to offer. For example, subsection 165.1(2) would apply to a supply made through an amusement machine that is programmed or set to only offer a single game for a total consideration of twenty-five cents even if that machine is capable of being re-programmed or reset to offer a single game for fifty cents. However, subsection 165.1(2) would not apply to any supplies made through that amusement machine while the machine is programmed or set to offer a supply for consideration exceeding twenty-five cents.

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the Excise Tax Act, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST/HST Memoranda Series, do not bind the Department with respect to a particular situation.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at 954-9700.

Yours truly,

Ken Mathews, CMA
Services and Intangibles Unit
General Operations and Border Issues Division
GST/HST Rulings and Interpretations Directorate