4 December 2002 GST/HST Interpretation 41613 - Application of the HST to the Purchase of Air Travel by a Government

Dear XXXXX

Thank you for your letter XXXXX concerning the application of the Harmonized Sales Tax (HST) to supplies of passenger transportation services to a XXXXX government made by travel agents acting on behalf of air carriers.

We are unable to provide you with a ruling at this time, pursuant to paragraph 20(h) of GST/HST Memoranda Series 1.4, Goods and Services Tax Rulings, as your request deals with a question that is primarily one of fact and all the pertinent facts cannot be established at this time. However, we are pleased to offer you the following interpretation.

Our understanding of the situation from your letter, your electronic mail transmissions of XXXXX and XXXXX and our telephone conversation of XXXXX is as follows:

XXXXX is a travel agency that makes travel arrangements for the Government XXXXX XXXXX. In some instances, XXXXX will make arrangements for employees of the government of XXXXX that include airline tickets for continuous journeys that originate in one of the participating provinces of Nova Scotia, New Brunswick or Newfoundland.

In these instances, the Government of XXXXX is established as being solely liable to pay the consideration for the airline tickets. It also provides sufficient documentation that the supply is being made to the Government of XXXXX and paid for with Crown funds. As a result, XXXXX, as an agent, will not charge the normally applicable HST on the supply of the airline tickets from the air carrier to the Government of XXXXX.

Interpretation Requested

You would like to know if XXXXX is correct in not charging the Government of XXXXX the HST on supplies of airline tickets for continuous journeys that originate in the participating provinces. Specifically, when the Government of XXXXX is solely liable for paying the consideration for the airline tickets and provides sufficient documentation that the supply is being made to the Government of XXXXX and paid for with Crown funds.

Interpretation Given

Pursuant to section 125 of the Constitution Act, no lands or property belonging to the Government XXXXX are liable to any form of taxation including the GST/HST. This relief from taxation extends to all XXXXX government departments as well as entities that the Governments XXXXX and Canada agree make up the XXXXX government. If a person makes a taxable supply to an approved XXXXX government entity, they do not collect the HST on the supply provided that documentary evidence is available to demonstrate that the XXXXX government entity is solely liable for the purchase of the supply and that the purchase is made using Crown funds.

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 Canada Customs and Revenue Agency with respect to a particular situation.

XXXXX 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,

Trent MacDonald
Government Sectors Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate