Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
GST/HST Rulings Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 230467
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
Tax status of […][an application] fee [imposed by a municipality]
Thank you for your letter of July 15, 2021, concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to a […] fee charged for filing certain requests.
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
We understand the following:
1. […][The Municipality] is a municipality [in the Province] as defined in subsection 123(1) and is registered for GST/HST purposes.
2. [Provincial Act A] requires a municipality to prepare and adopt […][a plan A] and to submit it to the […](‘Minister’) for approval.
3. [The Municipality’s] […][plan A] contains policies and objectives for future land uses, and designates areas of the [Municipality] for various land uses. […][plan A] also establishes that [the Municipality’s] […][areas] are to be used exclusively for business and economic activities.
4. […][Provincial Act A] and […][Provincial Act B] require that municipalities review and amend their […] plan to conform to the Province’s […] [plan B] which sets out policies that protect […] areas critical to the local and provincial economy. [The Municipality] satisfies this provincially mandated review by undertaking a periodic [plan B] conformity exercise and […][review].
5. The Province ’s [plan B] policies state that […][areas] may be converted to […] uses, and lists the tests that need to be considered before any […].
6. The Minister is the approval authority for the [review] exercise and has established a deadline of on or by [mm/dd/yyyy] for [the Municipality] to achieve the required conformity under [Act B].
7. [The Municipality’s] [plan A] policies provide […] for […] Areas in addition to those set out in [plan B]. [Plan A] policy states that a redesignation of land from an [area] designation to any other designation or the introduction of a use that is otherwise not permitted in an [area] is a […] and removal of land from an [area], and is only permitted through a [review].
8. On [mm/dd/yyyy], [the Municipality] commenced the current [review] exercise that is required to bring [plan A] into conformity with [plan B]. [The Municipality] defined a […][timeframe] during which it received formal written requests from landowners to convert lands designated as [areas].
9. Once a […] request is received from a landowner, [The Municipality’s] staff will evaluate the request against the […] policies of [plan B] and [plan A], and then prepare recommendations to [the Municipality’s] […] by way of a staff report and expressed as an amendment to [plan A]. Once amendments to [plan A] are adopted by [the Municipality’s][…], the updated [plan A] is sent to the Minister for final approval.
10. If the Minister approves a [plan A] amendment, the landowner gains [plan A] permission and is informed of the decision in writing by [the Municipality]. A landowner that decides to proceed with the […] will then require additional [Municipal ] approvals such as rezoning through an application to amend the zoning By-law and, if approved, obtain any required site plan approval and building permit approval.
Application fee
11. [The Municipality] has determined that the [review] exercise will result in approximately $[…] in various internal costs to [the Municipality] to process each […] request, and has decided to recover this cost by imposing a […] fee on each […] request that is submitted.
12. On [mm/dd/yyyy], [the Municipality] enacted and passed By-law [#] to amend the […], to establish […][a fee] of $[…] per […] request received from [mm/dd/yyyy] to [mm/dd/yyyy], inclusive. The fee is payable at the submission stage and its payment is not contingent on the outcome of the review process.
13. The [fee] was brought forward under the authority of section [#] of […][Act C] and in accordance with […]. Pursuant to section [#], [the Municipality] has authority to pass by-laws imposing fees or charges on persons for services or activities provided or done by or on behalf of it.
14. The [fee] is waived in circumstances where an application for [plan A] […] has been received for the same address and the […] application fee has been paid. An application for an […] follows a similar, but separate, process from a […] request process.
15. [The Municipality] does not charge GST/HST on the [fee] as it considers the fee to be consideration for an exempt supply.
RULING REQUESTED
You would like to know whether the [fee] charged by [the Municipality] is subject to GST/HST.
RULING GIVEN
Based on the facts set out above, we rule that the [fee] charged by [the Municipality] is consideration for an exempt supply pursuant to paragraph 20(c) of Part VI of Schedule V, and is not subject to GST/HST.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the ruling(s) given in this letter provided that: none of the issues discussed in the ruling(s) are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 416-200-6519. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Marlon Latchana
Municipal Sectors Unit
Public Service Bodies and Governments Division
GST/HST Rulings Directorate
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