GST Memoranda

G300-4-6 Public Sector Bodies (GST 300-4-6)

GST 300-4-6

Ottawa, May 31, 1991

TAX ON SUPPLIES

EXEMPT SUPPLIES

PUBLIC SECTOR BODIES

This memorandum in the EXEMPT SUPPLIES sub-series explains, for purposes of the Goods and Services Tax (GST), what public sector bodies are and provides detailed information on supplies made by public sector bodies, which are exempt from the GST under the Excise Tax Act.

LEGISLATIVE REFERENCES

Excise Tax Act - sections 123, 146, 162, 183, 189, 259 and Schedule V, Part VI, Public Sector Bodies

Public Service Body Rebate Regulations

TABLE OF CONTENTS

Definitions 2
Exempt Supplies 7
Public Sector Bodies 7
Exempt Supplies of Public Sector Bodies 8
General Exemption for Charities 8
Volunteer Exemption for Charities 11
Certain Fund-Raising Activities by Volunteers 12
Gambling Activities 13
Nominal Consideration 13
Amateur Performances and Events 14
Recreational Services 15
Relief of Poverty, Suffering or Distress 15
Homemaker Services 16
Memberships 16
Library Borrowing Privileges 17
Standard Governmental and Municipal Services 18
Municipal Transit Service 20
Intra-Municipal and Intra-Regional Supplies 20
Real Property Supplies 21
Labour Organizations 22
Remembrance Day Poppies and Wreaths 22

DEFINITIONS

The following definitions have either been taken from the Excise Tax Act as amended by S.C. 1990, c. 45 (Bill C-62) or represent departmental interpretations of terms relevant to the administration of that Act.

"Act" means the Excise Tax Act;

"charity" means a registered charity or registered Canadian amateur athletic association, within the meaning of the Income Tax Act;

"commercial activity" means:

(a) any business carried on by a person;

(b) any adventure or concern of a person in the nature of trade; and

(c) any activity engaged in by a person that involves the supply of real property or of a right or interest in respect of real property by that person;

but does not include:

(d) any activity engaged in by a person to the extent that it involves the making of an exempt supply by the person;

(e) any activity engaged in by an individual without a reasonable expectation of profit; or

(f) the performance of any duty or activity in relation to an office or employment;

"direct cost" of a film, slide show or similar presentation or of a supply of tangible personal property or a service means the total of all amounts each of which is the value of consideration paid or payable by the supplier

(a) of admissions in respect of the presentation, or

(b) of the property or service,

for an article or material (other than capital property of the supplier) that was purchased by the supplier, to the extent that the article or material is to be incorporated into or is to form a constituent or component part of the property or is to be consumed or expended directly in staging the presentation, supplying the service or in the process of manufacturing, producing, processing or packaging the property, and includes

(c) in the case of a supply of property or a service that was previously purchased by the supplier, the value of consideration paid or payable by the supplier for the property or service, and

(d) in the case of a film, slide show or similar presentation, the total of all amounts each of which is the value of consideration paid or payable by the supplier of admissions in respect of the presentation for the rental of, or right to use, any film, slide or similar property or projector or similar equipment used for the presentation,

and, for the purposes of this definition, the consideration paid or payable by a supplier for property or a service shall be deemed to include the amount, if any, by which the tax payable by the supplier in respect of the property or service exceeds the total of all amounts each of which is an input tax credit of the supplier or a rebate under Part IX of the Excise Tax Act that the supplier has claimed or is entitled to claim in respect of the property or service;

"exempt supply" means a supply included in Schedule V to the Excise Tax Act;

"government" means Her Majesty in right of Canada or a province and includes the Northwest and Yukon Territories;

"homemaker service" means a household or personal service, such as cleaning, laundering, meal preparation and child care, that is provided to an individual who, due to age, infirmity or disability, requires assistance;

"hospital authority" means an organization or that part of an organization that operates a public hospital that is certified as such by the Department of National Health and Welfare;

"input tax credit" means a credit claimable by a registrant for the Goods and Services Tax paid or payable by the registrant in respect of the acquisition or importation of any property or service for consumption, use or supply in the course of commercial activities of the registrant;

"Minister" means the Minister of National Revenue;

"municipality" means

(a) an incorporated city, town, village, metropolitan authority, township, district, county or rural municipality or other incorporated municipal body however designated, and

(b) such other local authority as the Minister may determine to be a municipality for the purposes of this Part;

"municipal transit authority" means a public passenger transportation service (other than a charter service or a service that is part of a tour) that is supplied by a transit authority all or substantially all of whose supplies are of public passenger transportation services provided within a particular municipality and its environs;

"non-profit organization" means a person (other than an individual, an estate, a trust or a charity) that was organized and is operated solely for a purpose other than profit, no part of the income of which is payable to, or otherwise available for the personal benefit of, any proprietor, member or shareholder thereof unless the proprietor, member or shareholder is a club, a society or an association the primary purpose and function of which is the promotion of amateur athletics in Canada;

"person" means an individual, partnership, corporation, trust or estate, or a body that is a society, union, club, association, commission or other organization of any kind;

"personal property" means property that is not real property;

"primarily" means in excess of 50 per cent;

"property" means any property, whether real or personal, movable or immovable, tangible or intangible, corporeal or incorporeal, and includes a right or interest of any kind, a share and a chose in action, but does not include money;

"public college" means an organization or that part of an organization that operates a post-secondary college or post- secondary technical institute

(a) that is funded by a government or a municipality, and

(b) the primary purpose of which is to provide programs of instruction in one or more fields of vocational, technical or general education;

"public sector body" means a government or a public service body;

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

"recipient", in respect of a supply, means the person who pays or agrees to pay consideration for the supply or, if no consideration is or is to be paid for the supply, the person to whom the supply is made;

"registrant" means a person who is registered under section 241, or who is required to apply to be registered, under section 240 of the Excise Tax Act;

"school authority" means an organization or that part of an organization that operates in a province or territory an elementary or secondary school in which it provides instruction that meets the standards of educational instruction established by the government of the province or territory;

"selected public service body" means

(a) a hospital authority,

(b) a school authority that is established and operated otherwise than for profit,

(c) a university that is established and operated otherwise than for profit,

(d) a public college, or

(e) a municipality;

"service" means anything other than

(a) property,

(b) money, and

(c) anything that is supplied to an employer by a person who is or agrees to become an officer or employee of the employer in the course of or in relation to the office or employment of that person;

"small supplier", at any time, means a person who is at that time a small supplier under section 148 of the Excise Tax Act;

"supply" means, subject to sections 133 and 134 of the Excise Tax Act, the provision of property or a service in any manner, including sale, transfer, barter, exchange, licence, rental, lease, gift or disposition;

"tax" means the Goods and Services Tax payable under Part IX of the Excise Tax Act;

"taxable supply" means a supply that is made in the course of a commercial activity but does not include an exempt supply;

"transit authority" means

(a) a division, department or agency of a government, municipality or school authority, the primary purpose of which is to supply public passenger transportation services, or

(b) a non-profit organization that

(i) receives funding from a government, municipality or school authority to support the supply of public passenger transportation services, or

(ii) is established and operated for the purpose of providing public passenger transportation services to disabled individuals;

"university" means a recognized degree-granting institution and an organization or that part of an organization that operates a college affiliated with such an institution or that operates a research body of such an institution;

"zero-rated supply" means a supply included in Schedule VI to the Excise Tax Act.

EXEMPT SUPPLIES

1. Exempt supplies are supplies on which there is no liability for the GST. A person who makes only exempt supplies is not required to register for the GST and is not entitled to claim input tax credits. Generally, a person who is registered and who makes both taxable and exempt supplies is not entitled to claim input tax credits for the GST paid or payable on purchases to the extent that they relate to the making of exempt supplies. However, where a person that is not a financial institution supplies financial services, an input tax credit is allowed in respect of the provision of these financial services to the extent that they are related to that person's commercial activity.

2. GST MEMORANDUM 300-4, "EXEMPT SUPPLIES", and GST MEMORANDUM 400, "INPUT TAX CREDITS", provide more information on these subjects.

PUBLIC SECTOR BODIES

3. With the exception of small suppliers (i.e., suppliers whose annual revenue from taxable supplies does not exceed $30,000), public sector bodies are required to register for purposes of the GST and collect tax on taxable supplies made by them in the course of their commercial activities. This would mean that the GST must be collected by the public sector bodies that provide the supplies listed below. Section 146 of the Act lists a number of specific supplies made by governments and municipalities, boards, commissions or other bodies established by governments or municipalities that are considered to be made in the course of that entity's commercial activities, unless they are otherwise exempt, for example,

(a) testing and inspection services,

(b) providing rights to individuals for recreational hunting and fishing,

(c) granting rights to remove minerals, or forestry, water or fishery products to consumers or non-registrants,

(d) supplying licences, permits or quotas with respect to imports of alcoholic beverages, and

(e) the right to enter, to have access to or to use government property.

4. Supplies that are made by public sector bodies that do not fall within any of the exclusions in sections 162 and 183 of the Act or the exemptions set out in section 189 and in Schedule V to the Act are taxable supplies made in the course of commercial activities.

EXEMPT SUPPLIES BY PUBLIC SECTOR BODIES

5. Schedule V of the Act lists certain supplies that are exempt; some of these exemptions apply to public sector bodies which provide such supplies. Part VI of Schedule V to the Act lists certain supplies made by public sector bodies that are exempt from the GST. Some exemptions apply only to public service bodies; others apply to public sector bodies.

General Exemption for Charities

6. All supplies of personal property and services made by charities are exempt from the GST, except for the list of supplies set out in paragraphs 2(a) to 2(m) of Part VI of Schedule V to the Act. The supplies included in this list are of a type generally made by commercial businesses.

7. It is important to note that any particular supply excluded from the general exemption for charities may still be exempt under one of the overriding exemptions provided in other sections of Schedule V to the Act. Two examples of overriding exemptions are provided in sections 3 and 6 of Part VI of Schedule V and deal, respectively, with volunteer activities (see paragraphs 9 to 12 of this memorandum) and supplies made for nominal consideration (see paragraphs 17 to 22 of this memorandum).

8. The following supplies of personal property and services are excluded from the general exemption for charities:

(a) a supply of property or a service which is zero-rated and made for more than nominal consideration;

(b) a supply of property or a service deemed under Part IX of the Act to have been made by the charity;

(c) property (other than capital property of the charity or property that was acquired, manufactured or produced by the charity for the purpose of making a supply of the property) which was previously used (otherwise than in making the supply) in commercial activities carried on by the charity;

(d) capital property of the charity which was previously used (otherwise than in making the supply) in commercial activities carried on by the charity;

(e) tangible property acquired, manufactured or produced by the charity for the purpose of making a supply of the property (other than tangible property that was previously used by a person other than the charity, or donated property) or any service supplied by the charity in respect of such property, other than such property or such a service supplied by the charity under a contract for catering;

(f) short-term rentals (less than one month) of personal property made by way of lease, licence or similar arrangement in conjunction with short-term rentals of commercial real property (e.g., the rental of a photo lab and processing equipment);

(g) property or a service made by the charity under a contract for catering for an event or occasion (e.g., weddings) sponsored or arranged by another person who contracts with the charity for catering;

(h) an admission to a place of amusement (including museums, recreational complexes, theatres and bingo halls) or a membership where the membership

(i) entitles the member to supplies of admissions in respect of a place of amusement that would be taxable supplies if they were made separately from the supply of the membership, or to discounts on the value of the consideration for such supplies, or

(ii) includes a right to participate in a recreational or athletic activity, or use facilities, at a place of amusement except where the value of the supplies, discounts or right described in subparagraphs (i) or (ii) is insignificant in relation to the consideration for the membership. (A special exemption for admissions to places of amusement at which the principal activity is the placing of bets or the playing of games of chance is provided under section 5, Part VI of Schedule V to the Act.);

(i) services of performing artists in a performance where the supply is made to a person who makes taxable supplies of admissions in respect of the performance, e.g., a symphony orchestra supplies its services to an opera company;

(j) a service involving, or a membership or other right entitling a person to, instruction or supervision in any recreational or athletic activity;

(k) sales of raffle or break-open tickets. (A special exemption for these is provided under section 5.1 of Part VI of Schedule V, Exempt Supplies.);

(l) a service of instructing individuals in, or administering examinations for any course where the supply is made by a vocational school, a school authority, a public college or a university. (Specific exemptions for educational services are contained in Part III of Schedule V, Exempt Supplies.); and

(m) an admission to seminars, conferences or similar events provided by a public college or university.

Volunteer Exemption for Charities

9. A supply made by a charity of any property or service is exempt from the GST if the supply is made in the course of a business of making supplies of such property or such a service, or of similar property or services carried on by the charity, and if, overall, the day-to-day administrative and other functions involved in carrying on the business are performed exclusively (meaning 90 per cent or more) by volunteers.

10. A supply made by a charity of any property or service is exempt from the GST if the supply is made in the course of an activity engaged in by the charity, otherwise than in the course of, or as part of, a business and if, overall, the day-to-day administrative and other functions involved in carrying on the activity are performed exclusively (meaning 90 per cent or more) by volunteers.

11. A supply made by a charity of any property or service is exempt from the GST if a charity establishes a program that does not otherwise meet the overall volunteer test set out above but, in the course of that program, the charity supplies property or services that consist of a series of classes or other activities of which the non-administrative functions are performed exclusively by volunteers (meaning 90 per cent or more).

12. These exemptions do not apply in the case of:

(a) supplies of zero-rated goods and services that are not zero-rated because of the nominal consideration rules;

(b) supplies considered to have been made (deemed supplies) by the charity as a result of the change of use of property;

(c) supplies of personal property (including capital property) previously used in a commercial activity of the charity;

(d) admissions in respect of a place of amusement at which bets are placed or a game of chance is conducted; however, a special exemption for such admissions is provided under section 5 of Part VI of Schedule V to the Act (see "Gambling Activities" below);

(e) sales of real property.

Certain Fund-Raising Activities by Volunteers

13. Other public sector bodies such as non-profit organizations undertake fund-raising activities similar to those of charities. Sales of tangible personal property other than alcoholic beverages and tobacco made by such organizations are exempt from the GST if:

(a) such public sector bodies do not carry on the business of selling such property;

(b) all the salespersons are volunteers;

(c) the consideration for each item sold does not exceed $5 in value; and

(d) the property is not sold at an event at which supplies of property of the kind or class supplied by such public sector bodies are made by persons who carry on the business of selling such property.

Gambling Activities

14. The supply made by a public sector body of an admission to a place of amusement where the principal activity is the placing of bets or the playing of games of chance is exempt from the GST if:

(a) the administrative functions and other functions performed in operating the game and taking the bets are carried out exclusively (i.e., 90 per cent or more) by volunteers; and,

(b) in the case of a bingo or casino, the game is not conducted in premises or at a place, including any temporary structure, that is used primarily for the purposes of conducting gambling activities.

15. A supply made by a charity or non-profit organization (other than a prescribed person, i.e., the Atlantic Lottery Corporation, the British Columbia Lottery Corporation, the Manitoba Lotteries Foundation, the Ontario Lottery Corporation, la Société des loteries et courses du Québec and the Western Canada Lottery Corporation) of a right to play or participate in a game of chance (other than a prescribed game of chance) is exempt from the GST. A right to play or participate in a game of chance operated by the above-mentioned lottery corporations and by the Interprovincial Lottery Corporation is a prescribed game of chance. The supply made by a charity or non-profit organization of a prescribed game of chance is excluded from this exemption.

16. A supply made by a charity or non-profit organization (other than persons mentioned in paragraph 15 of this memorandum) of a service of taking a bet on a game of chance (e.g., casinos) is exempt from the GST.

Nominal Consideration

17. A supply made by a public service body of tangible personal property or a service made in the course of a business is exempt from the GST if the consideration for the supply is equal to the usual charge by the public service body for such a supply of tangible personal property or a service and does not exceed its direct cost.

18. A supply of any service (other than a supply included in section 6 of Part VI of Schedule V to the Act) made by a public service body in the course of special events or activities is exempt from the GST if the total revenue from those supplies made during the course of the entire special event or activity could not reasonably be expected to exceed the total direct costs of providing the services.

19. A supply made by a public sector body of an admission to a film, slide show or similar presentation is exempt from the GST if the total revenue from all admissions to the presentation could not reasonably be expected to exceed the total direct costs of putting on the presentation.

20. A supply made at any time by a public sector body of an admission to a place of amusement is exempt from the GST if the maximum consideration for a supply at that time of such an admission to that place does not exceed $1.

21. A supply made by a public sector body of any property or service is exempt from the GST if all or substantially all (i.e., 90 per cent or more) of the supplies of such property or service are made for no consideration (free of charge).

22. A supply by way of lease as well as a supply of used capital property are excluded from the exemption granted to public service bodies in section 6 of Part VI of Schedule V to the Act. On this basis, the exemption does not apply to leases entered into after March 27, 1991. Similarly, the exemption is not available where consideration for a supply of used capital property becomes due, or is paid without becoming due, after March 27, 1991.

Amateur Performances and Events

23. The supply of tickets to spectators for a performance, athletic event or competitive event is exempt from the GST if:

(a) all or substantially all (i.e., 90 per cent or more) of the performers, athletes or competitors are not remunerated, directly or indirectly, for their participation (other than a reasonable amount as prizes, gifts, or compensation for travel or other expenses incidental to the performers', athletes' or competitors' participation in the performance or event, or grants paid by a government or a municipality to the performers, athletes or competitors); and

(b) the performance, athletic event or competitive event is not specially represented or advertised to be a performance, athletic event or competitive event featuring professional (paid) participants.

24. This exemption respecting the supply of tickets to spectators for performances or events does not apply to performances or events in which individuals who are professional competitors compete for cash prizes (e.g., a pro-am golf tournament).

Recreational Services

25. The supply made by a public sector body of a membership in, or services supplied as part of, a program that is established and operated by the public sector body and that consists of a series of supervised instructional classes or activities involving athletics, outdoor recreation, music, dance, arts, crafts or other hobbies or recreational pursuits is exempt from the GST if:

(a) it can reasonably be expected, given the nature of the classes or activities or the degree of skill or ability required to participate in the program, that it will be provided primarily to children fourteen years of age or under (this exemption does not apply if the program involves overnight supervision throughout a substantial portion of the program); or

(b) the recreational program is provided primarily for underprivileged or mentally or physically disabled individuals.

26. As well, the supply made by a public sector body of board and lodging or recreational services at a recreational camp or similar place under a program or arrangement for providing the board and lodging or services is exempt from the GST if it is provided primarily to underprivileged or mentally or physically disabled individuals.

Relief of Poverty, Suffering or Distress

27. The supply made by a public sector body of food, beverages or short-term accommodation (less than one month) is exempt from the GST if it is made in the course of an activity the purpose of which is to relieve the poverty, suffering or distress of individuals and is not fundraising.

28. The supply made by a public sector body of prepared food and beverages to aged, infirm, disabled or underprivileged individuals in their place of residence under programs which are established for that purpose is exempt from the GST.

Homemaker Services

29. The supply of a homemaker service that is provided to an individual in the individual's place of residence is exempt from the GST if the supply is made by:

(a) a government or municipality; or

(b) a non-profit organization that receives an amount paid by a government or municipality in respect of the supply.

30. A supply of a homemaker service provided by a registered charity is also exempt.

31. In addition, the supply of a homemaker service that is provided by a person, including a for-profit business, that receives an amount in respect of the supply from a government, municipality, or an organization delivering a government or municipal program for purposes of funding homemaker services is exempt from the GST where consideration for the supply becomes due, or is paid without becoming due, after March 31, 1991.

Memberships

32. The supply of a membership in a public sector body is exempt from the GST where there is no significant benefit to each member other than:

(a) an indirect benefit that is intended to accrue to all members collectively;

(b) the right to receive services supplied by the public sector body that are in the nature of investigating, conciliating or settling complaints or disputes involving members;

(c) the right to vote at or participate in meetings;

(d) the right to receive or acquire property or services supplied to the member for consideration that is not part of the consideration for the membership and that is equal to the fair market value of the property or services at the time the supply is made;

(e) the right to receive a discount on the value of the consideration for a supply to be made by the public sector body where the total value of all such discounts to which a member is entitled by reason of the membership is insignificant in relation to the consideration for the membership; or

(f) the right to receive periodic newsletters, reports or publications

(i) the value of which is insignificant in relation to the consideration for the membership, or

(ii) that provide information on the activities of the public sector body or its financial status, other than newsletters, reports or publications, the value of which is significant in relation to the consideration for the membership and for which a fee is ordinarily charged by the public sector body to non-members.

33. This exemption respecting memberships in a public sector body does not apply to memberships in a club the main purpose of which is to provide dining, recreational or sporting facilities.

34. As well, the supplier of memberships may file with the Minister an election under section 17 of Part VI of Schedule V to the Act to have all its otherwise exempt supplies of memberships treated as taxable supplies.

35. The supply of memberships in organizations in which persons are required to be members in order to maintain a professional status recognized by statute (e.g., memberships in a provincial law society) is exempt from the GST unless the organization elects under section 18 of Part VI of Schedule V to the Act to have all its otherwise exempt supplies of memberships treated as taxable supplies.

36. Memberships in charities are exempt under the provisions of section 2 of Part VI of Schedule V to the Act. Therefore, the elections under sections 17 and 18 of Part VI of Schedule V to the Act to have exempt memberships treated as taxable supplies are not available to charities.

Library Borrowing Privileges

37. The supply made by a public sector body of a right that confers borrowing privileges at a public lending library is exempt from the GST.

Standard Governmental and Municipal Services

38. The following supplies made by a government, municipality, or board, commission, or other body established by a government or municipality are exempt from the GST:

(a) a supply of a service of registering any property or filing any document in a property registration system;

(b) a supply of a service of filing or procuring a document in a court and a supply of a service of filing a document in accordance with statutory requirements;

(c) a supply of a licence, permit, quota or similar right (other than such a right supplied in respect of the importation of alcoholic beverages); the application fees for such rights; and fees collected by a government regulatory body from the holders of such rights for purposes of recovering the costs of administration of the regulatory program;

(d) a supply of a service of providing information in respect of, or of any certificate or other document evidencing, the vital statistics, residency, citizenship or right to vote of any person, the registration of any person for any service provided by the government or any other status of any person;

(e) a supply of

(i) a service of providing information in respect of, or

(ii) any certificate or document evidencing,

the title to, any right or estate in, or any encumbrance in respect of, property;

(f) a supply of a service of providing information under the Access to Information Act as well as the fees levied by provinces or municipalities under similar access to information legislation;

(g) a supply of a law enforcement service or a fire protection service made to a government or a municipality or to a board, commission or other body established by a government or municipality;

(h) a supply of garbage collection services, but not including a supply of a service that is not part of the basic garbage collection service supplied by the government or municipality on a regularly scheduled basis; and

(i) the supply of a right to deposit refuse at a refuse disposal site;

but not including

(j) a supply to a consumer of a right to hunt or fish;

(k) a supply of a right to take or remove minerals, forestry products, water or fishery products, where the right is supplied to

(i) a consumer, or

(ii) a person who is not a registrant and who acquires the right in the course of a business of making supplies of the minerals, forestry products, water or fishery products to consumers, or

(l) a supply of a right to enter, to have access to or to use property of the government, municipality or other body.

39. A supply of a municipal service provided by or on behalf of a government or municipality to owners or occupants of real property situated in a particular geographic area where the owners or occupants have no option but to receive the service, other than a supply of a service of testing or inspecting any property for purposes of verifying or certifying that the property meets particular standards of quality or is suitable for consumption, use or supply in a particular manner is exempt from the GST.

40. The exemption described in paragraph 39 of this memorandum applies only where the recipient of the supply (i.e., the person paying consideration for the supply) is the property owner or occupant. Accordingly, where the service is provided by a third party on behalf of the municipality, the supply is exempt if billed to the property owner or occupant, but taxable if billed to the municipality. This ensures that property owners and occupants do not pay tax on basic municipal services. At the same time, municipalities are entitled to claim a partial rebate of the tax paid in respect of a supply of basic municipal services that they purchase from a third party for purposes of re-supply to owners and occupants.

41. A supply of unbottled water, or a supply of a service of installing, repairing or maintaining a public water distribution, sewerage or drainage system that is for the use of all occupants and owners of real property situated in a particular geographic area, but not including a supply of a service of repairing or maintaining any part of the system which is for the sole use of the owners or occupants of a particular parcel of real property where a separate charge is made for that supply, when supplied by a government, a municipality, or an organization designated by the Minister to be a municipality for purposes of these supplies is exempt from the GST.

42. The exemption described in paragraph 41 of this memorandum applies only where the supply is made by a municipality or an organization (e.g., a government) designated by the Minister to be a municipality for that purpose. Accordingly, where the supply is made by a third party that is not designated as a municipality, the supply is taxable. In these circumstances, the supplier is entitled to input tax credits. Moreover, where the recipient of the supply is a municipality, it will be entitled to a partial rebate of the tax paid in respect of the supply.

Municipal Transit Service

43. The supply of a municipal transit service or public passenger transportation service designated by the Minister to be a municipal transit service is exempt from the GST.

Intra-Municipal and Intra-Regional Supplies

44. A supply between a municipality and a municipal entity that owns or controls and that is designated as a municipality, or between two entities that are owned or controlled by the same municipality, and that are both designated as municipalities, is exempt from the GST.

45. A supply between a regional, county or metropolitan government, or an entity that it owns or controls, and that is designated as a municipality, and a municipality, or an entity designated as such, that operates within the territorial boundaries of that regional, county or metropolitan government is also exempt from the GST.

46. However, transactions between two municipalities that do not share a common territory are subject to the GST, unless one of the exemptions in Schedule V to the Act applies.

Real Property Supplies

47. The supply of real property made by a public service body other than a financial institution or a government is exempt from the GST, except for the following:

(a) sales of residential complexes or interests therein;

(b) supplies of real property deemed under Part IX of the Act to have been made;

(c) sales of real property made to individuals, other than sales of real property on which is situated a structure that was used by the public service body

(i) as an office, or

(ii) in the course of commercial activities or of making exempt supplies;

(d) supplies of real property used primarily in commercial activities immediately before the sale;

(e) short-term accommodation (less than one month) made by a non-profit organization, municipality, university, public college or school authority (where the supplier is a charity or a hospital authority it is exempt from the GST);

(f) real property (other than short-term accommodation) made by way of lease, licence or similar arrangement for a period of less than one month where the supply is made in the course of a business carried on by the public service body;

(g) a supply of real property for which an election to be treated as a taxable supply under section 211 of the Act has been made; or

(h) parking spaces supplied by way of lease, licence, or similar arrangement in the course of a business carried on by the public service body.

48. As noted in paragraph 47(c) of this memorandum, the exemption respecting real property found in section 25 of Part VI of Schedule V to the Act does not apply to a sale of vacant land to an individual. In this case, the supply is taxable.

49. Furthermore, the sale of vacant land to a trust, all the beneficiaries of which are individuals, is taxable where the agreement of sale is entered into after March 27, 1991.

Labour Organizations

50. A supply made by a particular non-profit organization that is established primarily for the benefit of organized labour is exempt from the GST if the supply is made to:

(a) a trade union, association or body referred to in paragraphs 189 (a) to (c) of the Act that is a member of or affiliated with the organization; or

(b) another non-profit organization that is established primarily for the benefit of organized labour.

51. A supply made by a person referred to in paragraph 50, subparagraph (a) or (b) of this memorandum, to any such organization is also exempt from the GST.

Remembrance Day Poppies and Wreaths

52. The supply of Remembrance Day poppies and wreaths by Vetcraft Shops, The Dominion Command, Provincial Commands, and local branches of the Royal Canadian Legion is exempt from the GST.

NOTE: This memorandum is not a legal document. It contains general information and is provided for convenience and guidance in applying the Excise Tax Act and Regulations. If interpretation problems occur, please refer to the legislation or contact the nearest Revenue Canada Excise office.

REFERENCES

OFFICE OF RESPONSIBILITY:

Policy and Legislation

LEGISLATIVE REFERENCES:

Excise Tax Act

HEADQUARTERS FILE:

N/A

SUPERSEDES GST MEMORANDUM:

N/A

OTHER REFERENCES:

N/A

SERVICES PROVIDED BY THE DEPARTMENT ARE AVAILABLE IN BOTH OFFICIAL LANGUAGES.

THIS MEMORANDUM IS ISSUED BY TECHNICAL INFORMATION, EXCISE BRANCH UNDER THE AUTHORITY OF THE DEPUTY MINISTER OF NATIONAL REVENUE, CUSTOMS AND EXCISE.