14 June 1999 GST/HST Interpretation HQR0001750 - Consideration

As requested in the e-mail of April 20, 1999 from XXXXX to Alyson Trattner, we have reviewed the GST application ruling issued on December 31, 1996 to XXXXX concerning the application of the GST to claims made pursuant to the XXXXX. In that ruling, the XXXXX is not entitled to an additional rebate or input tax credit for the GST payable on XXXXX eligible for the XXXXX In a letter dated October 24, 1997, XXXXX is requesting a review of this ruling. According to them, pursuant to section 261 to the Excise Tax Act (ETA) XXXXX should be entitled to recover the GST levied that was paid in error. Principally, they argue that as a result of an XXXXX claim being paid, the consideration for the supply is subsequently reduced and the GST originally charged is also overstated.

The XXXXX

Issue

The issue is whether a rebate paid to a XXXXX under the XXXXX on its purchases XXXXX reduced the value of the consideration for the supply for GST purposes.

Answer

For GST purposes, a rebate paid to a XXXXX under the XXXXX does not reduce the value of the consideration for the supply.

Analysis

Under subsection 165(1) of the ETA, every recipient of a taxable supply made in Canada shall pay tax in respect of the supply calculated at the rate of 7% on the value of the consideration for the supply. Section 123 of the ETA provides that "consideration" includes any amount that is payable for a supply by operation of law. Section 154 to the ETA indicates that the consideration for a supply of property or a service includes any tax, duty or fee imposed under an Act of Parliament or the legislature of a province in respect of the supply.

The value of the consideration for the XXXXX purchased by XXXXX includes the market price, the XXXXX[.] Because the XXXXX applies to the supply at the moment of the purchase, the rebate paid subsequently under the XXXXX does not reduce the value of the consideration for the supply. Therefore, the ruling previously issued is correct. XXXXX XXXXX not entitled to an additional rebate or input tax credit for the GST payable of XXXXX[.] Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-8812.

Isabelle Breault