Section 2
Government Funding
Cases
High-Crest Enterprises Limited v. The Queen, 2015 TCC 230, nullified on procedural grounds 2017 FCA 88
Although assisted–living facilities (or additions thereto) normally are subject to HST on their fair market value when substantially completed, ETA s. 191.1(2) effectively deems the HST to be payable on the greater of most costs and the fair market value where the builder received government funding "for the purpose of making residential units in the complex available to [seniors]."
Owen J found that although the form of government assistance for an addition to a Nova Scotia nursing home was its agreement to subsidize operating costs relating to the additional residents and not the construction costs:
[T]his does not alter the fact that the dominant purpose of the Department in…agreeing to make these payments was to secure additional long‑term care beds for seniors in Nova Scotia. The immediate result of the payments may have been the provision of the Services but that was not the purpose behind the payments.
See summary under ETA, s. 191.1(1) - government funding.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 191.1 - Subsection 191.1(1) - Government Funding | government funding only of operating costs did not detract from its objective of increasing beds | 244 |
| Tax Topics - General Concepts - Purpose/Intention | government funding only of operating costs did not detract from its purpose of increasing beds | 365 |
| Tax Topics - Statutory Interpretation - Certainty | interpretation with reasonably certain application is preferred | 176 |
Cartier House Care Centre Ltd. v. The Queen, 2015 TCC 278
Paris J found that an independent contractor, who provided personal care services to a B.C. for-profit residential care home, was thereby making an exempt supply of "homemaker services" on the basis inter alia that the regional health authority made payments to the operator of the home for the purpose of the acquisition of such services.
In response to a submission by the Crown that if the same finding had been made respecting amounts paid by a regional health authority to a non-profit operator, so that such amounts were found to have been paid for the purpose of the operator acquiring homemaker services, this purpose would preclude the amounts from being government funding as defined in the Regulations (so that the non-profit operator would not be entitled to a PSB rebate), Paris J stated:
From my reading of Part II of Schedule V, supplies of accommodation and services made to residents of assisted living and residential care facilities would appear to be supplies of "institutional health services" "provided in a health care facility" and therefore exempt supplies by virtue of section 2 of Part II of Schedule V. As such, funds received by a non-profit operator of an assisted living or residential care facility from a grantor as consideration for making such property and services available for consumption or use by the residents of the facility would still fall within the definition of "government funding" in the Regulations and the non-profit operator's eligibility for the rebate would not be affected.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Schedules - Schedule V - Part II - Section 1 - Home Care Service | "personal care" included ADL assistance | 409 |
| Tax Topics - Excise Tax Act - Schedules - Schedule V - Part II - Section 1 - Institutional Health Care Service | accommodation an institutional health care service | 232 |
| Tax Topics - Excise Tax Act - Schedules - Schedule V - Part II - Section 13 | personal care services provided by independent contractors were exempted | 485 |
| Tax Topics - Excise Tax Act - Section 138 | s. 138 did not apply where the allocation of consideration among the components was apparent | 254 |
| Tax Topics - Statutory Interpretation - Interpretation/Definition Provisions | general phases in definition not limited by following specific enumeration | 185 |
| Tax Topics - Statutory Interpretation - Noscitur a Sociis | noscitur a sociis did not apply to general phases preceding list | 206 |
Administrative Policy
22 December 2020 GST/HST Interpretation 209955 - – Public Service Body Rebate – Whether subsidies under certain programs are considered government funding] […]
Are the Canada emergency wage subsidy (“CEWS”) and the 10% temporary wage subsidy for employers (“TWS”) programs considered government funding for purposes of s. 2 the Public Service Body Rebate (GST/HST) Regulations?
After noting that s. 2 excluded a “refund, rebate or remission of, or credit in respect of, taxes” and referenced a purpose of “financially assisting the particular person in carrying out the purposes of the particular person” and further indicating that the purpose of the two programs was to “re-hire workers previously laid off as a result of COVID-19, help prevent further job losses, and better position businesses to resume normal operations following the crisis,” CRA found that the CEWS was not government funding under s. 2, given that it “is a refund in respect of income taxes imposed under the ITA” and it “is not paid for the purpose of financially assisting the NPO in carrying out the purposes of the NPO. “
Regarding the TWS, it also noted that
an eligible employer does not reduce its deductions from its employees’ pay and remits less to the Receiver General. The difference (i.e., the amount of the TWS) is effectively money kept in the eligible employer’s pocket. Therefore, the TWS cannot be considered an amount of money that is paid or payable to the particular person (the eligible employer) by a grantor.
and then concluded that the TWS also was not government funding because it is “not an amount of money that is paid or payable to the NPO by a grantor,” it “is a deemed remittance on account of the Eligible Employer’s withholding income tax liability” and it “is not paid for the purpose of financially assisting the NPO in carrying out the purposes of the NPO.”
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 259 - Subsection 259(2) | CEWS and TWS did not count towards 40% government funding | 195 |
Section 3
Subsection 3(1)
Paragraph 3(1)(a)
Administrative Policy
Excise and GST/HST News - No. 109, June 28, 2021
In finding that the CEWS was not government assistance, and also not included in total revenue under B of the formula in s. 3, CRA stated:
The definition of government funding excludes a refund, rebate, or remission of, or credit in respect of, taxes imposed under any statute. Under the Income Tax Act (ITA), the CEWS takes the form of a deemed overpayment of liability under Part I of the ITA by an eligible entity, which is then refunded to the eligible entity. The Minister of National Revenue has statutory authority under the ITA to refund the deemed overpayment. Therefore, the CEWS is a refund of taxes imposed under the ITA and excluded from the definition of government funding. Furthermore, the CEWS is not paid for the purpose of financially assisting NPOs in carrying out its purpose. As such, the CEWS is not included in the government funding amount in the percentage of government funding calculation.
In addition, the CEWS is not included in the total revenue amount in the percentage of government funding calculation. The CEWS is not a gift, because it is a statutory obligation under the ITA for the Minister to refund the deemed overpayment to eligible CEWS applicants. Therefore, the CEWS will have no impact on the percentage of government funding calculation, as it is not included in the numerator or the denominator.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 211.12 - Subsection 211.12(2) | CRA will use “discretion” in its first 12 months of administering the new e-commerce rules | 91 |
| Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Financial Service - Paragraph (l) | CRA will follow Zomaron on the same facts (re GST/HST exemption for signing up merchants for credit card processing) | 338 |
Section 5
Administrative Policy
GST/HST Notice 253 Harmonized Sales Tax for Ontario and British Columbia - Questions and Answers for Public Service Bodies September 2010
Allocation of rebate claims between activities
43. What PSB rebate rate does a PSB in Ontario or B.C. that falls into two PSB categories (e.g., the PSB is both a charity and a hospital authority) use to apply for a PSB rebate of the HST?
You may be a charity, public institution, or qualifying NPO that is also a hospital authority, a municipality, a facility operator, an external supplier or a school authority, a university, or a public college that is established and operated other than for profit. In this situation you may have to calculate your PSB rebate using more than one rebate rate.
You may acquire property or services for use in different activities. If so, you claim your rebate to the extent you intended to use, consume or supply property or services in each activity type. If you are in more than one activity type and you acquire property or services to be used primarily (more than 50%) as one type of PSB, the rebate rate is based on the primary use of those items.
Section 5.4
Subsection 5.4(2)
Administrative Policy
25 February 2020 GST/HST Ruling 202245 - Subsection 259(7) - selected public service body recovering costs from other selected public service bodies
An Ontario hospital typically is entitled to a high rebate of GST/HST on its non-creditable costs in the course of its hospital activities, and to a lower rebate respecting other purchases. A group of Ontario hospitals and similar facilities entered into a group procurement arrangement under which one hospital contracted as principal with an outside supplier of property, but provided such property mostly to the other hospitals (but also partly for its own use) in their hospital or similar activities, and was reimbursed by them on an equitable basis.
But for ETA s. 259(7), the purchasing hospital would only have been entitled to rebates at the low rate on its purchases. CRA ruled that pursuant to s. 259(7), it was entitled to rebates at the high rate given that the other hospitals used the acquired property “exclusively in the course of their hospital authority activities.”
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 259 - Subsection 259(7) | hospitals could access the high hospital GST/HST rebate rate under a collective property procurement arrangement | 413 |