GST/HST Notices - Notice 292
December 2015

Definitions

1. What is a “public service body” (PSB)?

A public service body means a non-profit organization, a charity, a municipality, a school authority, a hospital authority, a public college or a university.

2. What is a “charity”?

A charity means a registered charity or a registered Canadian amateur athletic association for income tax purposes. A charity can issue official donation receipts for income tax purposes. For GST/HST purposes, a charity does not include a public institution.

3. What is a “public institution”?

A public institution means a registered charity for income tax purposes that is also a school authority, a public college, a university, a hospital authority or a local authority determined by the Minister of National Revenue to be a municipality.

4. What is a “qualifying non-profit organization”?

A qualifying non-profit organization is a non-profit organization whose percentage of government funding in a particular fiscal year (or in the two previous fiscal years) is at least 40% of its total revenue. For more information, refer to Guide RC4034, GST/HST Public Service Bodies' Rebate. For instructions on calculating the percentage of government funding, see Form GST523-1, Non-Profit Organizations – Government Funding.

5. What is a “selected public service body”?

For purposes of the PSB rebate, a selected public service body means a hospital authority, a school authority that is established and operated otherwise than for profit, a university that is established and operated otherwise than for profit, a public college that is established and operated otherwise than for profit, a municipality, a facility operator or an external supplier.

6. What are “non-selected public service body activities”?

Non-selected public service body activities are activities other than

• those activities for which a person was designated as a municipality; or
• activities engaged in by the person in the course of
  • fulfilling responsibilities as a local authority;
  • operating a public hospital, an elementary or a secondary school, a post-secondary college or technical institute, a recognized degree-granting institution or a college affiliated with, or research body of, such a degree-granting institution; or
  • making facility supplies, ancillary supplies or home medical supplies or operating a qualifying facility to make facility supplies.

New public service bodies’ rebate for municipalities

7. How will the proposed partial rebate of the provincial part of the HST to municipalities, Inuit community governments and local service districts be administered?

Municipalities, Inuit community governments, the Nunatsiavut Government^{Footnote 1} and local service districts that are resident in Newfoundland and Labrador would be eligible to claim a partial public service bodies’ rebate (PSB rebate) of the provincial part of the HST. The CRA would administer this rebate in the same manner as it administers other PSB rebates.

8. When will the proposed partial rebate of the provincial part of the HST available to municipalities, Inuit community governments, the Nunatsiavut Government and local service districts be paid?

The proposed partial rebate of the provincial part of the HST available to municipalities, Inuit community governments, the Nunatsiavut Government and local service districts will be paid only after required legislative changes to the Excise Tax Act and its regulations are enacted.

9. Who qualifies as a “municipality” for GST/HST purposes?

For GST/HST purposes, a municipality means an incorporated city, town, village, metropolitan authority, township, district, county or rural municipality, or other incorporated municipal body, however designated.

In addition, the Minister of National Revenue may grant either total or partial municipal status to a local authority or other person by:

• determining a local authority to be a municipality (this means that all the GST/HST legislative provisions that relate to municipalities would apply to the local authority as a whole); or
• designating a person to be a municipality for certain municipal services that the person provides. (Municipal designation only applies to those municipal activities for which the person has been designated. This restriction recognizes that the designated activities represent the only capacity in which the person is like a municipality.)

For more information on determining or designating a local authority to be a municipality, refer to Guide RC4049, GST/HST Information for Municipalities.

10. Is an Inuit community government in Newfoundland and Labrador a municipality for purposes of the GST/HST?

While not technically a municipality as that term is described in the answer to question 9, an Inuit community government that is resident in Newfoundland and Labrador and the Nunatsiavut Government would be treated as a municipality for purposes of claiming the PSB rebate of the provincial part of the HST. This is in accordance with the terms of the Labrador Inuit Tax Treatment Agreement, which was made between the federal government, the government of Newfoundland and Labrador and the Inuit of Labrador. The Inuit community governments are listed in the Labrador Inuit Land Claims Agreement.

11. How do an Inuit community government in Newfoundland and Labrador and the Nunatsiavut Government recover the federal part of the HST?

The Labrador Inuit Tax Treatment Agreement identifies the conditions under which a refund of the GST or the federal part of the HST may be claimed for self-government activities of an Inuit community government in Newfoundland and Labrador and the Nunatsiavut Government. To claim the 100% self-government refund, an Inuit community government in Newfoundland and Labrador and the Nunatsiavut Government must file Form GST66, Application for GST/HST Public Service Bodies' Rebate and GST Self-Government Refund.

12. How do an Inuit community government in Newfoundland and Labrador and the Nunatsiavut Government recover some of the provincial part of the HST?

To claim a rebate of the provincial part of the HST, an Inuit community government in Newfoundland and Labrador and the Nunatsiavut Government would complete Form RC7066 SCH, Provincial Schedule – GST/HST Public Service Bodies' Rebate. See question 25 for additional information.

13. Is a local service district in Newfoundland and Labrador a municipality for purposes of the GST/HST?

A local service district in Newfoundland and Labrador is not a municipality for purposes of the GST/HST, but the Minister of National Revenue may grant either total or partial municipal status to a local service district by:

• determining the local service district to be a municipality; or
• designating the local service district to be a municipality for certain municipal services that it provides and/or for purposes of claiming the PSB rebate.

14. Is an organization that has been determined to be a municipality entitled to claim a PSB rebate of the HST?

A determined municipality resident in Newfoundland and Labrador is eligible for a 100% PSB rebate of the GST and the federal part of the HST. It would also be eligible for a PSB rebate of the provincial part of the HST at the applicable rate(s) for a municipality for claim periods ending on or after January 1, 2016. An organization that has been determined to be a municipality is considered to be a municipality for all GST/HST purposes. All of the activities of a determined municipality are considered to be done in the course of fulfilling its responsibilities as a local authority. Refer to question 19 for information on the rebate rates.

15. How does a local service district in Newfoundland and Labrador become a determined municipality for GST/HST purposes?

A local service district resident in Newfoundland and Labrador that is not already a determined municipality for GST/HST purposes should send a written request to the CRA for municipal determination for GST/HST purposes. Requests, with supporting documents, should be mailed to:

Director
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
Canada Revenue Agency
11^th floor, Tower A, Place de Ville
320 Queen Street
Ottawa, ON K1A 0L5

For information on organizations that may be determined to be a municipality, see Guide RC4049, GST/HST Information for Municipalities.

16. Is an organization that has been designated as a municipality entitled to claim a PSB rebate of the HST?

A designated municipality resident in Newfoundland and Labrador is eligible to claim a 100% PSB rebate of the GST and the federal part of the HST in respect of its designated activities. It would also be eligible for a PSB rebate of the provincial part of the HST in respect of its designated activities at the applicable rate(s) for a municipality for claim periods ending on or after January 1, 2016.

If an organization that is a charity, qualifying non-profit organization or public institution has been designated as a municipality also engages in non-selected public service body activities, the organization is eligible to claim a PSB rebate of 50% of the GST and the federal part of the HST and would be eligible to claim a PSB rebate of 50% of the provincial part of the HST in respect of those non-selected public service body activities. Refer to questions 2 to 6 for the definitions of the following terms: charity, public institution, qualifying non-profit organization, selected public service body and non-selected public service body activities.

17. How does a local service district in Newfoundland and Labrador become a designated municipality for GST/HST purposes?

A local service district resident in Newfoundland and Labrador that is not already a designated municipality should send a written request to the CRA for municipal designation for certain municipal services it provides. Requests, with supporting documents, should be mailed to:

Director
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
Canada Revenue Agency
11^th floor, Tower A, Place de Ville
320 Queen Street
Ottawa, ON K1A 0L5

For information on organizations that may be designated to be a municipality, see Guide RC4049, GST/HST Information for Municipalities.

18. Who is eligible to claim a PSB rebate of the provincial part of the HST in Newfoundland and Labrador prior to 2016? What are the rebate rates?

In general, charities and qualifying non-profit organizations that are not selected public service bodies and that are resident in Newfoundland and Labrador are eligible to claim a 50% PSB rebate of the provincial part of the HST paid or payable in the course of their activities. Charities, public institutions and qualifying non-profit organizations resident in Newfoundland and Labrador that are selected public service bodies are eligible to claim a 50% PSB rebate of the provincial part of the HST paid or payable, but only in respect of their non-selected public service body activities. For more information on PSB rebate eligibility and restrictions, refer to Guide RC4034, GST/HST Public Service Bodies' Rebate.

19. Who will be eligible to claim a PSB rebate of the provincial part of the HST in Newfoundland and Labrador as of January 1, 2016, and what would be the rebate rates?

The PSB rebate of 50% of the provincial part of the HST paid or payable on non-selected public service body activities available to charities, public institutions and qualifying non-profit organizations that are resident in Newfoundland and Labrador would not change.

Effective January 1, 2016, a 25% PSB rebate of the provincial part of the HST would also be made available to municipalities, Inuit community governments, the Nunatsiavut Government and local service districts resident in Newfoundland and Labrador. In general, this rate would apply for the purpose of determining a rebate of a person for claim periods ending on or after January 1, 2016. However, it would not apply for the purpose of determining

• a rebate of a person in respect of tax that became payable by the person before January 1, 2016;
• an amount that is deemed to have been paid or collected by the person before January 1, 2016; or
• an amount that is required to be added in determining the person’s net tax as a result of a branch or division of the person becoming a small supplier division before January 1, 2016 or as a result of the person ceasing to be a registrant before January 1, 2016.

Effective January 1, 2017, the PSB rebate rate for municipalities, Inuit community governments, the Nunatsiavut Government and local service districts resident in Newfoundland and Labrador would increase to 57.14% This rate would generally apply for the purpose of determining a rebate of a person for claim periods ending on or after January 1, 2017. However, it would not apply for the purpose of determining

• a rebate of a person in respect of tax that became payable by the person before January 1, 2017;
• an amount that is deemed to have been paid or collected by the person before January 1, 2017; or
• an amount that is required to be added in determining the person’s net tax as a result of a branch or division of the person becoming a small supplier division before January 1, 2017 or as a result of the person ceasing to be a registrant before January 1, 2017.

20. Does a PSB have to register for the GST/HST to receive a PSB rebate of the HST?

It is not necessary for a PSB to be registered for the GST/HST to claim a PSB rebate of the HST.

21. How is the PSB rebate calculated?

The PSB rebate is calculated and claimed on a claim period basis. The rebate calculation is based on non-creditable tax charged for the claim period. Non-creditable tax charged for a particular claim period only includes GST/HST that was payable, or that was paid without having become payable, during that claim period. GST/HST payable in one claim period cannot be included in the non-creditable tax charged for a subsequent claim period. Therefore, you can only claim a rebate of an amount of GST/HST on the application for the claim period in which the GST/HST was paid or payable.

If a PSB has already claimed a rebate for a claim period and later discovers additional GST/HST that was paid or payable during that claim period, an adjustment must be made to the previously filed rebate claim. The additional tax cannot be included in the rebate application for a different claim period.

22. What is non-creditable tax charged?

Generally, non-creditable tax charged is the GST/HST paid or payable on eligible purchases and expenses that you cannot recover in any way, other than by claiming the PSB rebate.

23. What are the claim periods of a PSB?

If a PSB is a GST/HST registrant, its claim periods are the same as the reporting periods for its GST/HST returns. A PSB files its PSB rebate applications with the same frequency as its GST/HST returns (monthly, quarterly or annually).

If a PSB is not a registrant for purposes of the GST/HST, its claim periods are a six-month period covering either the first six months or the last six months of its fiscal year. A PSB that is not a registrant cannot claim a rebate more than twice a year. For example, a non-registrant organization with a December 31 fiscal year-end can file one rebate application for the period from January 1 to June 30 and another for the period from July 1 to December 31 in each fiscal year.

24. Can a PSB that qualified for a PSB rebate in the past but did not file an application claim a PSB rebate for those periods?

A PSB that is a registrant for purposes of the GST/HST has up to four years from the due date of its GST/HST return for the claim period in which tax was paid or became payable to file a PSB rebate application.

A PSB that is not a registrant for purposes of the GST/HST has up to four years from the last day of the claim period in which tax was paid or became payable to file a PSB rebate application.

Any PSB that has not claimed rebates for several claim periods must file a separate rebate application form for each claim period. The PSB should not consolidate rebates for multiple claim periods into one rebate application.

25. What form does a PSB have to use to apply for a PSB rebate of the provincial part of the HST paid?

To claim the PSB rebate, a PSB must complete Form GST66, Application for GST/HST Public Service Bodies' Rebate and GST Self-Government Refund, for each claim period in which it is eligible for a rebate, and send it to the CRA.

To claim a rebate of the provincial part of the HST, a PSB must also complete Form RC7066 SCH, Provincial Schedule – GST/HST Public Service Bodies' Rebate, and attach it to Form GST66. The PSB completes only the lines that apply to the province(s) in which it is resident and its activity type(s). The total provincial amount claimed on the provincial schedule is entered on line B of Part E of Form GST66.

After receiving the PSB's first rebate application, the CRA will start sending the PSB the following personalized rebate applications, which it will use for all their future rebate claims: Form GST284, Application for GST/HST Public Service Bodies' Rebate and GST Self-Government Refund, and Form GST284 SCH, Provincial Schedule – GST/HST Public Service Bodies' Rebate. The provincial schedule, Form GST284 SCH, must be attached to the rebate application, Form GST284, and both must be sent to the CRA.

A PSB that is a GST/HST registrant claiming a PSB rebate on its GST/HST return can send the provincial schedule and the application with its return.

A PSB that is a GST/HST registrant can file PSB rebate applications using My Business Account or GST/HST NETFILE. A PSB that is a non-registrant can file PSB rebate applications using My Business Account.

26. Does a PSB that claims PSB rebates of the federal and provincial parts of the HST have to track the federal and provincial parts of the HST separately?

Yes, a PSB has to track the federal and provincial parts of the HST separately to claim a PSB rebate.

There are some purchases where the provincial part of the HST is not paid (for example, where a point-of-sale rebate would be available). Where this is the case, no PSB rebate of the provincial part of the HST is available.

27. Does a PSB have to enter the PSB rebate of the federal part of the HST and the provincial part of the HST separately on the form, or can it calculate and report the federal and provincial PSB rebate at a combined rate on the form?

A PSB has to calculate and report the PSB rebate of the federal and provincial parts of the HST separately on the PSB rebate application form. Therefore, a PSB must separately track the federal and provincial parts of the HST to make a PSB rebate claim.

28. Have any special rules been proposed as a result of the introduction of a PSB rebate of the provincial part of the HST for municipalities resident in Newfoundland and Labrador?

To facilitate an orderly transition to the new municipal rebate and to protect the integrity of the tax system, transitional rules will include an anti-avoidance rule that could limit, in certain specific cases, the availability of the new municipal rebate in respect of property disposed of by a municipality and subsequently reacquired by the municipality.

For more information on this new rule, refer to GST/HST Memorandum 16.4, Anti-avoidance Rules.

Special quick method of accounting for PSBs

29. What is the special quick method of accounting for PSBs?

The special quick method of accounting for PSBs is a simplified accounting option available to some PSBs that are GST/HST registrants.

When a PSB uses the special quick method of accounting for PSBs, it collects the GST/HST on the taxable (other than zero-rated) property or services it supplies. To calculate the amount of the GST/HST to be remitted, the PSB multiplies the amount of its GST/HST-included supplies for the reporting period by the remittance rate, or rates, that apply in its situation.

30. What are the benefits of the special quick method of accounting for PSBs?

The special quick method of accounting for PSBs reduces paperwork and makes it easier to calculate the GST/HST remittances and file GST/HST returns, by eliminating the need to keep track of the actual GST/HST paid on purchases or to separate purchases that are for commercial activities versus those for making exempt supplies.

31. How does an eligible PSB make the switch to the special quick method of accounting for PSBs?

A PSB must apply to use this method by completing Form GST287, Election or Revocation of the Election by Public Service Bodies to Use the Special Quick Method of Accounting, and sending it to its tax services office. If a PSB has branches or divisions, its election to use this method would apply to all of its branches or divisions, whether or not they file separate GST/HST returns. Once the PSB decides to use the special quick method of accounting for PSBs, it is required to use the method for at least one year. A PSB can keep using the special quick method without having to file a new election, as long as it remains eligible.

32. Why is the special quick method of accounting for PSBs not available to most charities?

The special quick method of accounting for PSBs is not available to most charities because charities are required to use the net tax calculation for charities. For more information on how a charity calculates its net tax, refer to GST/HST Info Sheet GI-066, How a Charity Completes Its GST/HST Return.

33. Will the remittance rates under the special quick method of accounting for PSBs change as a result of the proposed municipal PSB rebate of the provincial part of the HST in Newfoundland and Labrador?

Yes, the proposed municipal PSB rebate of the provincial part of the HST in Newfoundland and Labrador would have an impact on the remittance rates under the special quick method of accounting for PSBs. The proposed remittance rates for a municipality with a permanent establishment in Newfoundland and Labrador are indicated in the tables below.

The remittance rates above would apply for the purpose of determining the net tax of a municipality for reporting periods of the municipality that begin after December 31, 2015. For reporting periods that begin before January 1, 2016 and end after December 31, 2015, the remittance rates and rules that apply before the proposed changes come into effect would continue to apply in respect of a supply for which consideration becomes due or is paid before January 1, 2016.

The remittance rates above would apply for the purpose of determining the net tax of a municipality for reporting periods of the municipality that begin after December 31, 2016. For reporting periods that begin before January 1, 2017 and end after December 31, 2016, the remittance rates and rules that apply before the proposed changes come into effect would continue to apply in respect of a supply for which consideration becomes due or is paid before January 1, 2017.

34. Does a PSB that uses the special quick method of accounting for PSBs have to collect the HST?

Yes, a PSB that uses the special quick method is required to collect the HST on the taxable (other than zero-rated) property or services it supplies in a participating province.

35. Can a PSB that uses the special quick method of accounting for PSBs claim a PSB rebate?

There is nothing that precludes a PSB from claiming a PSB rebate to recover some of the HST paid or payable on its eligible purchases and expenses when it uses the special quick method of accounting for PSBs.

36. Where can I get more information on the special quick method of accounting for PSBs?

For more information on the special quick method of accounting for PSBs, refer to Guide RC4247, The Special Quick Method of Accounting for Public Service Bodies.

Further information