CRA finds that charges to a company for a negotiated municipal sewage plant expansion were for a taxable supply

In order to be permitted to expand its processing facility, a company had to negotiate an agreement with the municipality to cover 70% of the costs of an expansion to the municipal sewage treatment plant. CRA found that such charges were consideration for a taxable supply of wastewater treatment services made by the municipality, and that such supply was not an exempted supply of municipal services under ETA s. V-VI-21 as the company failed to satisfy one of the stipulated conditions, namely, that the municipal “service is … one which the owner or occupant has no option but to receive” (presumably meaning that the company always had the “choice” of not proceeding with its expansion or somehow otherwise avoiding the additional sewage discharge).

Neal Armstrong. Summary of 3 July 2024 GST/HST Ruling 242566r under ETA s. V-VI-21.