Public service bodies' rebate

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• Eligible purchases and expenses
• Purchases and expenses not eligible
• How to apply for the rebate
• Organizations not registered for GST/HST
• Organizations registered for GST/HST
• Simplified method for calculating the rebate

A special GST/HST rebate allows certain non-profit organizations to recover 50% of the GST and federal part of the HST paid or payable on eligible purchases and expenses for which they cannot claim ITCs.

Note
You do not have to be registered for GST/HST to claim this rebate.

You qualify for the rebate for a particular fiscal year if the percentage of government funding you receive for the fiscal year, or for the previous two fiscal years, is at least 40% of your total revenue. For instructions on calculating the percentage of government funding, see Form GST523, Non-Profit Organizations - Government Funding.

Most non-profit organizations are also eligible for a 50% rebate of the provincial part of HST if they are residents of a participating province. If your non-profit organization is not resident in a participating province, but you buy goods or services in a participating province, you may be entitled to a separate rebate of 8%, the provincial part of HST. For more information, see our guide RC4034, GST/HST Public Service Bodies' Rebate or contact us.

Eligible purchases and expenses

As a qualifying non-profit organization, you can claim a rebate of 50% of the GST/HST you pay or owe on your eligible purchases and expenses, for which you cannot claim ITCs. Eligible purchases and expenses for the public service bodies' rebate include the following:

• general operating expenses such as rent, utilities, and administration expenses for which you cannot claim ITCs;
• allowances and reimbursements you pay to employees;
• goods and services used, consumed, or supplied in your exempt activities; and
• capital property. However, you cannot claim the rebate when you change the use of capital property from primarily commercial activities to primarily non commercial activities, since the rebate is considered in calculating the basic tax content as explained in "From commercial to non-commercial use".

Purchases and expenses not eligible

Certain purchases are not eligible for the public service bodies' rebate, including:

• club memberships if the main purpose of the club is to provide recreational, dining, or sporting facilities;
• tobacco products and alcoholic beverages you supply and for which you are not required to collect GST/HST (except when the alcohol or tobacco is included in the price of a meal);
• property and services you buy to provide long-term residential accommodation unless more than 10% of the accommodation is restricted to seniors, youths, students, individuals with a disability, or individuals with limited finances who qualify under a means or income test;
• property and services used primarily (more than 50%) for the supply of a parking space made available to residential tenants unless more than 10% of the accommodation is restricted to seniors, youths, students, individuals with a disability, or individuals with limited finances who qualify under a means or income test;
• property and services acquired primarily for the purpose of making a supply of real property to another person for use by that person in leasing residential property on an exempt basis (including incidental parking). This restriction does not apply if that other person is a public sector body and more than 10% of the residential property is restricted to seniors, youths, students, individuals with a disability, or individuals with limited finances who qualify under a means or income test;
• property and services you bought to sell or give to an officer, an employee, or another person related to that individual, if the value of the benefit would be taxable under the Income Tax Act;
• property and services considered to be acquired by the operator of a joint venture in cases where any of the co-venturers would not be entitled to claim a rebate if they were acquired by the co-venturer; and
• certain returnable beverage containers in cases where you would have been denied an ITC if you were otherwise in a position to claim an ITC instead of a rebate.

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How to apply for the rebate

When you file a rebate application for the first time, you have to complete Form GST66, Application for GST/HST Public Service Bodies' Rebate and GST Self-Government Refund. After we process your first rebate application, we will send you the personalized version of the form (Form GST284) for your next rebate application. Our guide RC4034, GST/HST Public Service Bodies' Rebate includes Form GST66, as well as completion instructions.

You have up to four years to apply for the rebate. Do not include your original invoices or receipts with your rebate application, but keep them for six years from the end of the year to which they relate for audit purposes. Also, you have to send us Form GST523, Non-Profit Organizations - Government Funding, each year. We will send you a personalized version of this form each year. You no longer have to file annual reports and financial statements.

Organizations not registered for GST/HST

You can send us one rebate application for the first six months of your fiscal year, and another for the last six months of your fiscal year.

You have to file the rebate application for your organization as a whole. However, if your organization has branches or divisions, you can also apply to have them file separate rebate applications. To do so, each branch or division must be separately identifiable by its location or the nature of its activities, and separate books and records must be maintained for the branch or division. The head office has to complete and send us Form GST10, Application or Revocation of the Authorization to File Separate GST/HST Returns and Rebate Applications for Branches or Divisions.

Organizations registered for GST/HST

You can apply for the rebate when you file your GST/HST return. If you file the two forms together, you remit only the difference between the net tax owing and the amount of your rebate. You have to include your rebate amount on line 111 of your return.

If you choose to have your branches or divisions file their own GST/HST returns, they also have to file their own rebate applications.

Simplified method for calculating the rebate

We have developed a simplified method for calculating the public service bodies' rebate. When you use this method, you do not have to keep track of the GST/HST you pay or owe to your suppliers for each invoice. However, you do have to separate your GST-taxable purchases from your HST-taxable purchases. You do not have to file any forms with us to start using this method, but you have to meet certain criteria.

You can use the simplified method to calculate your rebate if you meet the following conditions:

• Your taxable purchases (taxable at the rate of 6% or 14% on or after July 1, 2006, and at 7% or 15% before July 2006), and those of your associates, either in Canada or imported into Canada were $2 million or less in the last fiscal year and you reasonably expect that your taxable purchases in the current fiscal year will be $2 million or less.

• In addition, for GST/HST registrants, you and your associates must have annual taxable supplies of $500,000 or less in your last fiscal year (not including supplies of financial services, sales of capital real property, and goodwill) if you are in your first fiscal quarter. If you are not in your first fiscal quarter, annual taxable supplies should be $500,000 or less in your last fiscal quarter of the current year.

For more information on the simplified method and instructions on how to calculate the public service bodies' rebate, see our guide RC4034, GST/HST Public Service Bodies' Rebate.

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