25 March 2002 GST/HST Interpretation 39617 - INTERPRETATION LETTER Professional Fees Paid by Government

Dear XXXXX

This letter is in respect of the Goods and Services Tax (GST)/ Harmonized Sales Tax (HST) treatment of professional membership fees where they are paid by XXXXX[.] In particular, we refer you XXXXX to a letter sent to XXXXX of your office dated XXXXX[.] Subsection 165(1) of the ETA provides that every recipient of a taxable supply made in Canada shall pay to Her Majesty in right of Canada tax in respect of the supply. Pursuant to the definition of "recipient" under subsection 123(1) of the ETA, where consideration for a supply is payable under an agreement, the "recipient" is the person who is liable under that agreement to pay the consideration. Therefore, an individual who is required to pay membership dues and fees pursuant to the terms of their membership in a professional organization is the "recipient" of the supply of the membership and is liable to pay the GST/HST. Where an employer pays the fees on behalf of the individual, the liability to pay the GST/HST is not removed from the individual. Accordingly, whether or not XXXXX chooses to pay the professional membership fees of its employees, the fees will remain subject to the GST/HST[.]

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The foregoing comments represent our general views with respect to the subject matter. 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.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact Roy Osudar at 954-3551 or Brent Fleming at 952-0370.

Yours truly,

P. Bertrand
Director
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate

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