GST

I­

II.

III.

IV.

V.

VI.

VII.

THE TAX EXEMPT CATEGORY

The Tax Exempt Category••••••••.••••••••.••••...••••••••••••••• l

Introollction ••••••••••••••••••••••••••••••••••••••••••••• 1

Real Property 2

Health Care Services (SChedule V Part II} •••••••••••••••••••••• 3

A. Institutional Health Care Services••••••••••••••••••••••• 3

B. Medical Equipment Leases••••••••••••••••••••••••••••••••• 4

c. Ambulance Services••••••••••••.••.••••••••.•••••••••••••• 5

D. Physicians and Dentists Services••••••••••••••••••••••••• SE. Nursing, Dental Hygienist' and Psycho-Analitic Services•• SF. Other Health Care Practitioners Services••••••••••••••••• 6

G. Prescri1:>ed Service ·........•••.•...•......... 6

H. Food Services Supplied to Health Care Facilities••••••••• 6I. Other Provincially Insured Services•••••••••••••••••••••• 7J. Implications For The Medical Industry•••••••••••••••••••• 7Educational Supplies (Schedule V Part III} •••••••••••••••••••••8

A. Supplies of Educational Services••••••••• ~ ••••••••••••••• 8B. Supplies of Associated Services••••••••••••••••••••••••• lO

Child Care and Personal Care Services••••••••••••••••••••••••• ll1. Child Care ..•.....•..•........•............•....••...•11

2. Personal Care Servi(;les ' 12

Legal Aid .••••••••••••••••••••••••••.•••••••••••••••• 12

Public Sector Bodies•••••••••••••••••••••••••••••••••••...••• 12

A. IntrOOUction••••••.••••••••••••••••••.••••••••••.••••.•. 12

B. Definitions 13

c. General Rule .•.......•................................... 15

E. Volunteer Exemption••••••••••.••.•••••.••••••••••••••••• l7

1. Charities•••••••.•.••••••••••••••.•• -•••••.••••.. •• 17

2. All Public Sector Bodies•••••••••••••••••••••••••• 17

F. Membership Fees•••••••••••••••••••••••• ~ •••••••••••••••• 18

1. Dining, Recreation or Sporting Facilities••••••••• 182. ProfessionalOrganizations •••••••••••••••••••••••• 18

3. Other Memberships •••••••••••••.••••••••••••••••••• 18

G. Donations, Grants and Sponsorships•••••••••••••••••••••• 19H. Gambling Events, Bingos, Raffles, Etc••••••••••••••••••• 20

ii

I. Trade Unions 20

J. Other Exempt Supplies••••••••••••••••••••••••••••••••••• 2l

K. Goverrunent •••••••••••••••••••••••••••••••••••••••••••• 21

L. Rebcltes ••••••••••••••••••••••••••.• •••••••••••••••• • 22

VIII. Financial Serviaes ..•••••••.••••.•••••••••••••••••••••.•.•••.. 24

A. Financial Services•.•••..•.•••.•.•.••••••.••••••••..••.• 25

1. Financial Instrument•••••••••••••••••••••••••••••• 25

2. Definition of Financial Service••••••••••••••••••• 26

3. Specific Exclusions from "Financial Services" ••••• 27

B. Mixed Supplies.•..••••••••••••.•••••.•••••••.••••.•••••• 28

C. Zero-Rated Financial Services (Schedule VI Part IX) ••••• 29

1. E~rt Services••••••••••••••••••••• ~ ••••••••••••• 29

2. Precious Metals ........•••.........•....•.....•..• 29

D. Input Tax Credits•••.••.•.••.•••••••••••..••.••••••••.•• 29

1. "Exclusive Use 302. Pri~y Use Test••••••••••••••••••••••••• ~.~ •••••• 30

3. Change of Use Rules ••••••••••••••••••••••••••••••• 30

F. Group Relief ••••••••••••••.•••••••••••.•••••.••.•••••.•• 31

G. Miscellaneous Provisions•••••••••••••••••••••••••••••••• 3l

1. Supplies in the Course of Settlement of

Insurance Claims••••••.•••••••••.••••....•.......• 31·

2. Distributions by Trusts••••••••••••••••••••••• ~ ••• 3l

3. Smcill Businesses and Personal Invesbnent

Holding Campanies••••••••••••••••••••••••••.•••••• 32

)

IX. Schedules .•.•............•.....•......••....••....... 33

I IN'rIOXaIQ!I

For p..1rposes of the Goods and Services Tax ("G.S.T.") the sale of goods and the

provision of services are referred to as a "supply".

To determine which goods and services are subject to the G.S.T. you must

determine whether they are a:

a) taxable supply;

b) zero rated supply; or

c) tax exempt supply.

The term "Taxable Supply" is defined in the Act and includes any supply, other

than a tax exempt supply, made in the course of a carmercial activity.

Technically this includes zero-rated supplies. G.S.T. is levied on the

acquisi tion of a taxable supply. The vendor of taxable supplies is entitled to

receive inp..1t tax credits in respect of any tax paid on p..1rchases relating to

the making of the taxable supplies.

Zero rated supplies include basic groceries, agricultural and fish prooucts,

prescription drugs, medical devices and the export of supplies. No G.S.T. is

levied on the acquisition of a zero rated supply. The vendor of zero rated

supplies is entitled to receive inp..1t tax credits in resPeCt of any tax paid on

p..1rchases relating to the making of the zero rated supplies.

"Tax exempt supplies" are defined in Section 123 (1) of the Act and Schedule V

thereto. Tax exempt supplies include:

long term residential rents (longer than 1 month);

sales of used housing;

most health and dental services including hospital and nursing home

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services;

day care services;

legal aid services;

most supplies by charities;.

certain supplies by non-profit organizations, goverrunent and otl'Er

selected fUblic sector organizations; and

most domestic financial services.

No G. S.T. is levied on tl'E acquisi tion of a tax exempt supply. Unlike zero

rated supplies the vendor of ·tax exempt supplies is not entitled to infUt tax

credi ts in respect of tax paid on p.1rchases relating to tl'E making of tax

exempt supplies.

For tl'E most part tl'E liability for collecting G.S.T. is not related to tl'E

type of business you are in but the tyPes of goods and services which are dealt

wi tho As such many businesses will find that tl'Ey sell all three categories of

supplies. There is no need to differentiate between G.S.T. paid on infUts for

taxable and zero related supplies. However tl'E rosiness must keep separate

their G.S.T. paid on infUts for tax exempt supplies. This may require detailed

accounting procedures to identify and track every expenditure. Alternatively,

tl'E business may be eligible to use one of several "simplified" accounting

procedures being proposed by tl'E goverrunent for this fUrpose.

II. REAL PRPERrY

The supply of real property, wl'Etl'Er by way of sale or lease, will generally

attract G.S.T. unless the supply is specifically exempted. The following is a

summary of exempt supplies of real property. Tl'Ese are also referred to in tl'E

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) real property portion of this seminar.

A} Used residential Property;

B} Long term residential rents;

C} Condominium fees;

D} Farm land.

III. HEAI:rH mm SEWICES (SCBEOOLE V PARr II),

A. INSTITUl'IOOAL HFALTH ~RE SERVICES

Section 2 of Part II of Schedule V states that institutional health care

services provided in a health care facility are exempt. "Health care facili ty"

refers to an acute, rehabilitative, or chronic care hospital, clinic or similar

facility and also includes an institution for the mentally disordered, a

nursing home or an insti tution providing similar services for children. All

such facilities are included in the definition whether they are operated by a

government, non-profit organization, charity or by a private, profit oriented

business. The supply of prescription drugs and medical devices outside of

institutions of zero-rated and will be dealt with under another topic.

"Institutional health care services" includes basic health care services

provided by health care facilities to residents or patients, in particular:

Laboratory, radiological or other diagnostic services;

Drugs and other such preparations when administered in the facility in

oonjunction with an institutional health care service;

The use of operating roans, case rOans or anesthetic facilities,

) including necessary equipnent or supplies;

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Medical or surgical equipnent or supplies used by tre facility in

providing such services, or supplied to a patient or resident, other than

by way of sale;

The use of radio trerapy, physiotrerapy, occupational trerapy facilities;.

Accamodation (including upgrading accommodation);

Meals provided wi th the accommodation; and

Services rendered by personnel who receive remuneration therefore fran

tre facility.

All otrer services provided by these insti tutions 00 not fall under the

definition of a institutional health care service, and are not exempt, for

example:

Parking;

Meals served in a cafeteria to visitors;

Hair cuts for which a separate fee is charged;

Addi tionally, the exemption ooes not oover oosmetic surgery or oosmetic dental

service that have no medical or re-oonstructive p..lrpose. One YKluld assume that

Revenue Canada will expect GST to be collected on any cosmetic surgical or

dental service which· is not oovered by a Provincial health plan.

B. MBDlCAL EcpIPloEm !EASES

Section 3 of the Schedule exempts leases of medical equipnent by a health care

facility to a oonsumer on the written order of a medical <bctor or dentist.

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C. AMBUIANCE SERIJICES

Ambulance services, including air ambulance services, are exempt where they are

provided by a person carrying on such a business.

D. PHYSICIANS AND DENl'ISTS SERIJICES

The legislation generally treates the provision of similar services the same

regardless of whether they are performed in a doctors office or in a

hospi tal. Medical or dental services provided by licensed physicians or

dentists are exempt, except where the services are performed for cosnetic

p.lrposes and not for medical or reconstructive p.lrposes. The Deparbnent of

Finance has stated in the explanatory notes to Bill C-62 that an orthO<bntic

service performed both for cosmetic and dental p.lrposes would be exempt.

E. Nill5ING, IEN'mL HYGIENIST' AND PSYQiO-ANALITIC SERIJICES,

Nursing services rendered by a registered nurse, registered nursing assistants

or a licensed practical nurse will be exempt if provided to an individual in a

health care facility or in the individual's home. Also exempt are private duty

nur,sing services provided to an individual and nursing services supplied to

p.lblic sector bodies. Therefore, services provided to ascOOol, nursing home,

or caranunity clinic, for example, are not subject to the GST. In order to

bring the treabnent of dental hygienist's services in line with the exempt

status of dental services, hygienist's services are not subject to GST.

The supply of psycho-analitic services are exempt to GST where the supplier has

met specific qualifications encanreated in section 12 of the Schedule.

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F. OI'HER HEALTH mRE PRAcrITIGtER> SERIJICES

The Government has reoognized that many specialized health care services are

now provided outside of oospi tals by professionals woo are not ooctors or

dentists. Therefore, the following services provided by practitioners are also

exempt:

Optometric services;

Chiropractic services;

Physio-therapy services;

ChyroPOdic services;

Podiatric services;

Osteopathic services;

ALrliological services;

Speech therapy services;

OCcupational therapy services; and

Psycoological services.

''Practi tioners" is defined as toose persons licensed or otherwise certified in

the province to practice a particular profession.

G. PRESCRIBED SER\.TICE

Health care services made on the order of a "medical practitioner" or

"practitioner" as defined, will be exempt. Examples of such a prescribed

service inclLrle diagnostic and laboratory testing.

H. FOOD SERIJICES SUPPLIED TO HEAIJrH 0illE FACILITIES

Such services are exempt where provided under a oontract to provide meals on a

regular basis to the patients or residents of the facility. As stated

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) previously, food and beverages sold in a cafeteria or canteen to visitors to a

health care facility are taxable.

I. OI'HER pROvINCIALLY INSURED SERVICES

There are few services which ~uld be covered by provincial health plans which

would not be caught by one of tha othar provisions of tha relevant Schadule.

However, as a catch all, GST does not attract to the supply of a service where

tha charge for such service is paid or reimbursed by a provincial health plan.

J. IMI?LICATIOOSFOR THE MEDICAL INDUSTRY

Altoough medical practitioners and health care facilities are not required to

collect GST on the supply of health services, thay also are not entitled to

imput tax credits for tha GSTthey have paid on thair purchases. As a result,

thay will experience an increase in overhead costs. Hospitals will therefore

have to ei thar reduce expenses or receive increased grants fran governments to

remain within their budgets. Most medical practitioners will have to take

similar steps. Those woo generally direct bill tha public can be expected to

attempt to pass along their higher overhaad costs to the public.

In recent years, many medical practitioners have set up management companies

which own the assets of tha private practice. For incane tax reasons, the

management companies rent tha equipnent and office space and pay the salar ies

of employees each month. These charges are then billed to the practice,

usually with a 15% mark up. Because tha management fee will be subject to GST,

am practiHoners c'b not have an entitlement to inp.1t tax credits, the

foregoing arrangement has tha effect of increasing tha overall amount of GST

) payable as canpared to a practice witoout a management canpany. The management

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company must charge t~ practice GST on t~ 15% mark up, as well as on items

built into the management fee, which otherwise would not attract G3T such as

salaries, insurance and business taxes. Happily, professionals providing

taxable services, such as legal services, will not suffer such consequences as

th::>se firms would be enti tled to claim G3T paid to management companies as an

input tax credit.

IV. E:lXDTICIW:. SElVICES eSC BEl JD B V PARr III)

A. SUPPLIES OF EDUCATIONAL SERIJICES

T~ supply of educational services are generally exempt, fUrsuant to t~

legislation, including basic instruction provided by a school authori ty

recognized by t~ province. T~ term "school authority" is defined in section

123 (1) to include any organization or part of an organization operating a

primary or secoooary school that provides instruction meeting provincial

standards. This encanpases many types of institutions including sane private

schools.

Also exempt fran G.S.T. are t~ supply of t~ follC7iling educa·tional services

respecting post serondary education and professional training:

1. Instructing or administer ing examinations in respect of courses leading

to or, for t~ fUrpose of maintaining or upgrading a profession or trade

accreditation or designation recognized by a provincial regulatory body,

where t~ supply is made by a professional or trade association,

goverrunent, vocational school, universi ty, or fUblic college or by a

provincial regulatory body instructing o~ administering examinations in

respect of courses for which credit may be obtained towards a diplana or

degree when the supply is made by a school authority, fUblic college or

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university.

2. Instructing or administering performed by a school authority, vocational

school, p.lblic college or university in respect of, courses leading to

certificates, diplanas, licenses or similar Cbcuments or classes or

ratings in respect of licenses, that are prescribed by federal or

provincial regulations which attest to too CX)Jilp€tence of an individual to

practice or perform a trade or vocation.

3. Tutoring in a course that follows a curriculum designated by a school

authority or as a prescribed equivalent of such a course.

4. Instruction or too administration of an examinations in secorrl language

courses in either French or English where supplied by school authority,

p.lblic college or university or an organization that is establisood and

operated primarily to provide instruction in languages.

In light of the foregoing, it is possible that individuals will be required to

pay G.S.T. on courses required to obtain professional accreditation where the

courses are given by a professional association which is not regulated by the

province. Also, courses supplied by private universities will be exempt while

courses provided by private colleges may be subject to G.S.T.

It will generally not be necessary for institutions to evaluate a student's

reason for taking a course. Rather, the institution need only determine

whether it is an exempt course. That is, if the institution is a reoognized

degree granting university or a college funded by a government or municipality

which provides programs of instruction in vocational, technical or general

education and too course can be used to obtain a diplana or other certification

or a part of program consisting of two or more nonrestricted courses, G.S.T.

need not be collected on toose courses, regardless of too stooent' s intentions.

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The exemption does not extend to courses offered on a recreational basis unless

supplied by a primary school to its students. However, certain noncredi t

courses supplied by a university or public college are exempt where the course

is part of program that consists of two or more courses and is subject to the.

approval of the appropriate counsel, board, or committee of the institution.

B. SUPPLIES OF ASSOCIA'IED SERVICES

Part III of Schedule V refers to the provision of a number ancillary goods and

services supplied by educational institutions, which are considered to be an

essential part of the principle supply of the ewcational services and are

therefore exempt. Extra curricular activities organized under the authority of

a pr imary or secOl'rlary school which entail the supply of food and beverages and

admissions to events will not be taxable. Sales by the institution of such

i terns as apparel or sctx>ol photographs will be taxable.

Cafeterias which supply food am beverages primarily to stooents of an

elementary or secondary school will not be required to collect G.S.T. provided

the consumables are not provided for a private party, reception, meeting, or

similar private event. This exemption ches not extend to supplies through

vending machines nor "to certain prescribed foods or beverages.

Universi ty meal plans may also be exempt provided the plans meet wi th cer tain

minimum requirements.

The exemption can also extend to contractors woo supply food and beverages or

catering services to one of the foregoing bodies where the supply w::>uld be

exempt if it had been self-provided by the educational institution.

A supply of personal property made by way of lease by a school al1thority to an

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) elementary or secondary school stooent is exempt. This would apply to such

things as rental of musical instruments and sports equipnent.

The supply of· transportation to and fran an elementary or secondary sc0001

which is operated by a school authori ty is exempt. This exemption does not

extend to private contractors hired by the auth::>rity.

v. ClIILD~ AND PER)QW.~ SEWICES

1. Child Care

Most child care services (th::>se generally referred to as daycare. or

babysitting) will be exempt from G.S.T. These services must be primarily

provided to children aged 14 and under and normally for per iods of less than 24

hours. If the period of care exceeds 24 hours on only an occasional basis, the

exempt status will be maintained. Many individual pr.oviders of child care will

not exceed the snal1 supplier threshho1d of $30,000.00 in sales per year and

will therefore have the option not to register nor credit the tax. Certain

types of overnight services ~uld be exempt when provided by p.1blic service

bodies.

As with other exempt suppliers, child care providers will not be enti tled to

inp.1t tax credits on their p.1rchases. However, nonprofit child care providers

will be entitled to a rebate equivalent to 50 percent of the G.S.T. paid on

p.Irchases.

Child care provided by employers in the work place will also be exempt fran

G.S.T.· and as such, businesses will not be entitled to inp.1t tax credits on

their related p.1rchases.

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2. Personal Care Services

The legislation also exempts a supply made by a person of a service providing

care and supervision to a resident of an institution established and operated

for that purpose and of providing a place of residence for children or disabled

or underprivileged individuals.

VI. IEGMa AID

Part V of Schedule V to the Act provides that the supply of legal services

provided under a legal aid plan administered by or under the authori ty of a

government of a province made by the person responsible for administering the

plan is exempt from G.S.T. Private practitioners woo provide services to a

provincial legal aid plan will be required to charge the G.S.T. to the plan for

legal services. The Legal Aid Camnission will then be entitled to apply for

100 perCEnt rebate of the G.S.T. paid to private lawyers. Where the Camnission

has supplied the services and bills the client for a portion thereof, that

supply is exempt.

VII. PWLIC SECrQt BOOms

A. IN'£lOln'IQt

The Goods and Services Tax is a tax on consumption. As such, it is levied on

all taxable supplies received by individuals, businesses, and other

organizations regardless of whether these were received in the pursuance of a

profi t making venture.

The term "Public Sector Bodies" covers most organizations that are operated on

a not for profit basis. The general rules regarding the G.S.T. apply to these

bodies. The Tax will be payable on taxable supplies received by these

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) bodies. Also, Public Service Bodies will be required to collect and remit

Goods and Services Tax on all taxable supplies disposed of by them.

A large portion of too activities of charities and sane of too activities of

the other organizations are declared to be exempt supplies under Part VI of

Schedule V to too Act. Because toose activities are exempt, toose

organizations will not be eligible for the inplt tax credit regarding these

exempt supplies. To reduce too hardship this will cause, too Act provides for

the rebate of a portion of the G.S.T. paid by sane Public Sector Bodies.

All Public Sector Bodies will have to determine which of tooir activities

oonstitute taxable supplies and which are exempt supplies. Also, tooy must

determine which of tooir purchases will be eligible for input tax credits and

which will be eligible for rebates. Charities and Non-Profit organizations can

elect to use "s inplif ied Accounting" rules in calculating too refunds and

rebates (s. 259(7».

Public Sector Bodies need not register under too Act in order. to receive tooir

rebate of G.S.T. However, most persons engaged in a carmercial activity in

Canada must be registered under too Act. Also, to obtain input tax credits,

the person must be registered.

B. IEFINITI<I1S

Section 123 of too Act contains too b.11k of too def initions relating to too

Goods and Services Tax. Sane of those definitions which relate to Public

Sector Bodies are:

1. "Public Sector Body" - means a goverrunent" or a plblic service body;

2. "Government" - means Her Majesty in Right of Canada or a Province;

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3. ''Public Service Body" - means a non-profit organization, a charity, a

municipali ty, a school autlnri ty, a oospi tal autoori ty, or a p.1blic

college or university;

4. "Nm-Profit Organizatioo" - means a person (otb:r than an individual, an

estate, a trust or a charity) that was organized and is operated solely

for a p.1rpose other than profit, no part of the incane of which is

payable to, or otb:rwise 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

p.1rpose and function of which is tb: pranotion of amateur athletics in

Canada;

5. "Charity" - means a registered charity or registered Canadian athletic

association wi thin tb: meaning of the Income Tax Act;

6. "f.iJnicipality" - means:

a) an incorporated city, town, village, metropolitan autoority,

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 tb: purposes of this part.

7. "ScbJol Autmrity" - means an organization or that part of an

organization that operates in a province an elementary or secorrlary

school in which it provides instruction that meets the standards of

educational instruction established by tb: g01lerrunent of tb: province;

8. "Hospital Autmrity" - means an organization or that part of an

organization that operates a p.1blic hospital that is CErtified as such by

the Department of National Health and Welfare;

9. "A Public College" - means an organization or that part of an

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organization that operates a post-secondary college or post-secorrlary

institute:

a} that is funded by a government or municipali ty; and

b} the primary p.1rpooe of which is to provide programs of instruction

in one or more fields of vocational, technical or general education;

10. "Universi ty" - 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 insti tution.

c. C£NERAL DB

Generally, all supplies by charities are exempt supplies unless thay are

specifically excluded fran the broad exemption contained in s. 2 of Part VI of

Schedule V to tha Act. Those items which are excluded fran this exemption may

be made exempt supplies by virtue of other provisions of the Act and its

schedules. Alternatively, supplies of all othar Public Sector Bodies are

taxable supplies unless specifically exempted.D••••••••••••••CHAE[TIES

The following supplies provided by charities are specifically declared to be

excluded fran tha broad exemption contained in s. 2 of Part VI of Schedule V of

the Act and are thus taxable supplies. Notwithstanding this, there are other

provisions of tha Act and schedules which also apply to thase supplies. Where

applicable these other provisions are indicated.

1. Zero rated supplies described in Schedule VI of tha Act except supplies

for nominal or no consideration;

2. Deemed supplies e.g. goods for which a charity has received an inp.1t tax

credit being conferred upon its employees as a benefit;

- 16 -

3. Personal prcperty acquired for use in a conunercial activity;

4. capital property primarily used in a canmercial activity;

5. New goods acquired or proouced for resale plrposes (ot~r than catered

meals or donated goods);.

6. Soort term rentals of personal property supplied with t~ rental of real

property;

7. Catering services for private functions or events (catered meals sold to

such organizations as hospitals, nursing hanes, meals on wheels, etc. are

exempt) ;

8. Admissions to places of amusement such as museums, recreational

complexes, t~atres, bingo halls and casinos;

9. Professional services of performing artists w~n supplied under contract

with another organization which is staging a professional performance and

charging admission t~refor. (In this way t~ organization pltting on

the performance may reoover all ofits inplt tax credits.)

10. Instruction in recreational or athletic activities;

11. Sales of lottery, raffle and break-open tickets (a special exemption is

provided for t~se under section 5.1 of Part VI of Schedule V) ;

12. Instructional services supplied by educational institutions (specific

exemptions for educational services are contained in part III of Schedule

V) ;

13. Admissions to universi ty or oollege seminars, conferences or similar

events.

- 17 -

E. va:.ammR EXlH?TICl't

1. CHARITIES

Supplies which are not exempt under t~ general rule may be exempt by vi rtue of.

their volunteer canponent. Where a charity supplies property or services in

t~ oourse of a rosiness or an activity that is not part of an ongoing

business, those supplies are exempt if all or sUbstantially all (at least 90%)

of t~ day to day adminis trative functions and ot~r functions per formed in

carrying on t~ business or activity are performed by volunteers. Paragraph 3

of part VI of Schedule V refers to "exclusively" by volunteers. Section 123 of

the Act defines "exclusively" to mean all or substantially all.

Where a charity operates a business that does not have t~ necessary volunteer

canponent over all but does have one or more programs which do have the

necessary volunteer oomponent, toose specific programs can be classified as

exempt supplies.

T~ volunteer oomponent exemption does not apply in t~ case of:

zero rated supplies;

deemed supplies;

supplies of personal property and services in a commercial activity;

supplies of capital property in a commercial activity;

gambling activi ties (a special exemption is provided under sections 5.1

and 5.2 of Part VI of Sc~duleV for certain gambling events); or

sale of real property.

2. ALL PUBLIC SEcrOR BODIES

Fund raising activities by all Public Sector Bodies involving t~ sale of goods

- 18 -

will be an exempt supply provided that:

the goods sold are not alcoholic beverages or tobacco products;

th= Public Sector Body does not carryon th= blsiness of selling th=se

goods;

all th= sales persons are volunteers;

the price of each item sold <bes not exceed $5.00; and

th= goods are not sold at an event wh=re similar goods are sold by

persons woo carryon the business of selling those goods (e.g. the sale

of food by a church organization at a COI11IlU.1l1ity exhibition or fair).

F. WJtI3ImSBIP PEES

1. DINING, RECREATICN OR SPORrING FACILITIES

Memberships in clubs, the main p.1rpose of which is to provide the members with

access to or use of dining, recreation or sporting facilities are a taxable

supply.

2. PROFESSICNAL ORG1\NIZATICNS

Memberships in professional organizations where:

a) th= organization is recognized by statute; and

b) membership is necessary to maintain a professional designation;

are an exempt supply.

3. 0rHER MEreERSHIPS

Memberships in oth=r Public Sector Bodies are exempt supplies provided that th=

memberships 00 not confer any SPecial benefit on the individual other than

th:>se iooirect benefits which are intended to accrue to all members

- 19 -

collectively (e.g. the right to vote at or participate in meetings; the right

to receive periodic newsletters, reports or other publications which have

insignificant value; the right to receive services received by the organization

that are in the nature of investigating, conciliating or settling complaints or

disputes involving members; the right to acquire or receive prOPerty or

services at their fair market value; the right to receive a discount on

property or services acquired or received where the discount is insignificant

in relation to the membership fee.

Where membership fees in a Public Sector Body are an exempt supply, that

organization will not be eligible to receive input tax credits regarding G.S.T.

paid upon inputs which relate to toose members. Where all or most of the

members are themselves eligible for input tax credits, the organization may

wish to elect to treat the memberships as a taxable supply•. The members would

then pay G.S.T. on their membership fees and receive an input tax credit

therefor. The organization would collect and remit the G.S.T. but would also

receive input tax credits regarding its inPJ,ts incurred in providing services

to its members.

G. IXR\TICNS, GRANrs AND SP(R;OOsBIPS

The definition of "property" in the Act sPecifically exclooes money.

Therefore, Cbnations and grants of roney are not treated as supplies for

purposes of GST. As such donations and grants Cb not attract GST when received

by an organization. Nor do they affect the organization's ability to receive

input tax credits.

Often, public sector rocHes receive funding or sponsorships fran other

organizations in conducting activities or events. The sponsor usually receives

- 20 -

in return ei ther services fran the fllblic sector body or the right to use a

oopyright, trademark, trade name or other intellectual property of the p.1blic

sector body e.g. its logo. This sponsorship is deemed not to be a supply

exoept where it may reasonably be regarded that the funding is primar ily for

advertising via radio, television, newspaper, magazine or other fllblication

fllblished periodically (s.135).

H. ~G EVENl'S, BINeD;, RAFFLES, E'l'C.

Admission to gambling events such as bingos, casinos, etc. are exempt where:

1. the administrative and all other functions related to the activity are

carried out exclusively (90% or more) by volunteers; and

2. in the case of bingos and casinos they are not ooooucted in a place used

primarily for the fllrpose of conducting gambling activities e.g. a

conunercial bingo hall or casino.

Generally, the supply of the right to participate in games of chance is a

taxable supply. However, gambling proceeds fran bingos, raffles or the sale of

break open tickets or similar rights are exempt supplies when ooooucted by a

char.ity or other. non-profit organization exoept a provincial lottery

corporation. Also, paramutual betting on running, trotting or pacing horses is

exempt.

Section 189 of the Act deems the payment of membership dues to a trade union or

an association of fllblic servants to be payment for an exempt supply. As such

this will affect the ability of trade unions and these associations to obtain

inp.1t tax credits.

) J.

- 21 -

01'IIER EXIH"l' SUPPLIES

sales of goods and services for nominal consideration~

amateur performances and events~

recreational sarvices~

relief of poverty, suffering or distress~

h::>memaker' s services~

library borrowing privileges~

standard government and municiPal service-s~

municipal transit;

certain real property supplies.

K. <D1.ERD£Nl'

Under tha Constitution Act, tha federal government cannot tax a provincial

government and vice versa. Because of this provincial governments can not be

forced to pay GST on thair p.lrchases of taxable supplies. Provincial croon

corporations, municipalities, cities, etc. will be subject to GST. Also, the

Act requires that tha provinces oollect and remit GST on certain supplies made

by them.

Tha federal government, its departments, agencies and croon corporations will

pay GST on all taxable supplies acquired by tham.

GST will be payable upon too fo1la-1ing i terns:

1. charges for testing or inspecting property to ensure it meets standards;

2. charges to consumers for tha right to hunt or fish~

3. charges for the right to take or raoove minerals, forestry products,

water or fishing products, but only if too right is supplied to a

- 22 -

consumer, or a person not registered for GST p.1rposes but woo is in too

business of making supplies of minerals, forestry products, water or

fisoory products to consumers;

4. charges for a license, permi t, quota or similar right in respect of too

importation of alcoholic beverages;

5. charges for too right to enter, have access to, or use federal,

provincial or municipal property;

L.

Registered charities, registered Canadian amateur athletic associations, non­

profit organizations that provide nursing hane, intermediate care services or

residential care services and certain government subsidized, non-profit

organizations (generally, those that receive 40% .or more of their annual

revenues fran federal, provincial and/or municipal governments) are eligible

for a GST rebate.

Hospital autoorities, not for profit school autoorities, not for profit

universities, plblic colleges and municipalities are eligible for a rebate.

Governments and profit motivated schools and universities do not qualify for

the rebate.

Eligibility for rebates depends on wootoor too organization fits into one of

these categories on the last day of its claim period, or the last day of its

fiscal year. Toough an organization may fit into one of toose three categories

it may also be considered to be a financial institution either because of the

services provided by it or certain deeming provisions in too Act. As a

financial institution it w::>uld not then be eligible for any rebates. Also, too

legislation allows too government to prescribe by regulation certain properties

50%

)

- 23 -

or services for which no rebate of GST will be allCMed.

The following are the rebates which will be payable:

Eligible Claimants Percentage Rebate

Selected Public Service Bodies:

Municipalities 57%

Universities 67%

Schools 68%

Hospitals 83%

Registered Charities 50%

Qualifying Non-Profit Organizations

These rates are included in the regulations to the Act. Section 259 (14) of

tl'e Act provides thate tl'ese percentages may not. be repealed, amended or

varied.

The rebate percentages for selected plblic service bodies were determined by

the Department of Finance to approximate the federal sales tax burden borne by

tl'ese institutions. It is tl'e intention that tl'ese organizations pay no more

goods and services tax than tl'ey did federal sales tax. In determining the

percentages, tl'e goverrunent has looked at both federal sales tax paid directly

by these organizations and federal sales tax which ~uld have been already

included in tl'e price of goods plrchased.

Charities am qualifying non-profit organizations may elect to use a simplified

metOOd of accounting in determining which plrchases are eligible for rebate and

which are eligible for inplt tax credits. For inventories and plrchases of

capital goods and real property over $10,000.00 tl'e normal rules will apply.

If the plrchase is primarily for use in a taxable supply, an inplt tax credit

- 24 -

is available. If it is for use primarily in an exempt supply, it is eligible

for a rebate. For other costs, rather than determining actual percentages of

use in taxable supplies and exempt supplies, percentages will be prescribed by

regulation for use in determining the aIIOunt of input tax credit and rebate.

The follCMing is an example of rebate and inplt tax credi tcalculations if the

prescribed percentage is 20%.

Purchase of equipnent for commercialactivity $15,000.00

GST paid 1,050.00

Other taxable plrchasesGST paid 280.00

Taxable sales 5,000.00GST collected 350.00

4,000.00

Input Tax Credits

GST paid on equipnent 1,'050.00GST on other purchases regarding

taxable sales(20% of $5,000.00 X 7%) 70.00

Rebate50% of remaining GST paid on othertaxable purchases(50% of (280.00 - 70.00) 105.00

1,225.00Less GST collected on sales 350.00

Net Refund $875.00

Applications for rebates are made:

1. for registrants, on the same basis as they report sales and collection of

GST, monthly, quarterly or annually; and

2. for non-registrants, quarterly based on their fiscal period.

VIII FINANCIAL SERTICBS

In order to bring the G.S.T. in line with value added taxes of other countries,

- 25 -

the provisions respecting financial services oontained in the proposed

legislation generally provide that financial services supplied danestically

will be exempt fran G.S.T. As a result, financial institutions and others

supplying financial services will not charge the tax on such supplies and will

not -be permi tted an inp.lt tax credi t on p.lrchases of go<X1s and services. In

keeping with the treatment of exports, financial services supplied to non­

residents are zero-rated. Key to this area of the G.S.T. regime is the

defini tion of financial services which includes a broad range of services

supplied by all types of enterprises, not just financial institutions.

A. FINANCIAL SElVICES

1. FINANCIAL INSTR.Ul-ENI'

Of importance to the scope of the financial services category is the term

"financial instrument", which is defined to include the following:

a) a debt secur i ty;

b) an equity security;

c) an insurance policy;

d) an interest in a partnership or trust or any right in respect of such an

interest;

e) a precious metal;

f) an option or oontract for the future supply of a conunodi ty traded on a

recognized exchange;

g) a prescribed instrument;

h) a guarantee, an acceptance, or an indemnity in respect of a), b), d), e),

or g) above; and

- 26 -

i) an option or contract for too future supply of money or any of too i terns

above.

Too term "financial instrument" can be furtoor refined by reference to too

defini tions of sane of the relevant terms set out above. A "debt security" is

defined as a right to be paid money and includes a deposit of money.

Specifically excluded fran this definition is a lease, licence or similar

arrangement relating to property otoor than a financial instrument. An "equity

security" is defined as a share of the capital stock of a corporation or any

interest in or right to such a share.

Too term" insurance policy" is defined to include life, property, and casualty

insurance policies issued by persons licensed or authorized under the laws of

Canada or a foreign jurisdiction to carryon an insurance rosiness. Too

defini tion includes re-insurance policies, annuity contracts and segregated

fund contracts. An exception to too license insurance requirement are

insuranre contracts which are in the nature of accident, sickness, dental

insurance.

Bill C62 defines "r:>recious metal" as a bar, ingot, coin or wafer of gold,

platinum or silver refined to a r:urity level of at least 99.5 percent in the

case of gold and platinum and 99.9 perrent for silver.

2. Definitim of Financial Service

For G.S.T. p.1rposes the term "financial service" includes the following:

a) The exchange, payment, or transfer of money~

b) The operation or maintenance of a savings, chequing or deposit account,

cheque processing fees, penalty fees and a non-sufficient funds charges~

- 27 -

c) The lending or borrCMing of a financial instrument, the supply of a

guarantee or acreptance of a financial instrument;

d) The payment or receipt of interest and dividends in respect of a

financial instrument in the activities surrounding the maintenance of an.

insurance policy and· the payment of claims;

e) The making of a depositor the lending of money;

f) The underwriting of a financial instrument such as an insurance policy or

of a debtor equity security;

cg) Services related to credit card operations, including discounts charged

to merchants and card member fees;

h) Agreeing to provide, or arranging for, the services or activities

described above (i.e., agents, brokers and dealers);

i) Services of insurance adjusters;

j) Certain supplies where "group relief" has been elected plrsuant to

subsection 150 (1) • In the final point is a portion of the services

provided by income tax discounters as determined in section 158.

3. Specific Exclusions from "Financial Services"

Several servires which otoorwise might fall within too foregoing definition are

specifically excluded from the definition of financial service. The principle

exclusions are the fo11CMing:

a) Payment or receipt of money as consideration for a good or service other

than a financial service;

b) The provision of financial or any otoor advice (except advire regarding

insuranre claims), management and administrative services to investment

funds or plans and any professional services (otoor than those of agents,

traders, dealers and brokers in financial instruments);

- 28 -

c) The receipt or payment of money in resPeCt of a settlement of a claim

other than under an insurance policy.

Addi tionally, many services corrunonly provided by financial institutions would

not be considered financial services and are therefore fully taxable. Sane

examples are:

a) Payroll and data processing services;

b) Sale of cheques, property leases, safety deposit rentals, sales of used

office equipnent.

B. MIXED SUPPLIES

The legislation contains a general provision in section 138 whereby a supply

that is incidental to another supply is treated as part of that other supply.

This rule applies where the primary and incidental supplies are provided

together for a single consideration. The rule will not apply where a

separately identifiable charge is made for the incidental supply. This

provision is intended to simplify the tax treatment of mixed supplies. Section

139 contains a furtter SPeCial provision for financial services. Where more

than 50 percent of the consideration for a mixed supply represents

consideration for the financial services portion of that supply, the supply of

all of the services and property together is treated as a supply of financial

services. This section will apply to all inclusive bank service charges which

might include the provision of personalized cteques (a nonfinancial service).

The bank will not be required to identify a charge for the cheques separately

am collect G.S.T. on that charge. The entire supply will be a:msidered

exempt.

- 29 -

C. ZER:>-RATEJ) FINANCIAL SERVIms (SCHBlI[R VI PARI' IX)

1. Export Services

Generally, t~ supply of financial services are zero-rated when rented to.

nonresidents of Canada. The specific listing of zero-rated financial services

is listed in Part IX of Schedule VI to t~ legislation. The zero-rating of

exported financial services applies only to supplies made by financial

institutions. A nwnber of specific provisions oontained in the Schedule

attempt to exclude fran zero-rating those exPorted services which ~uld find

t~ir way back into t~ Canadian econany and end up competing with the oomestic

supply of financial services. The Schedules also provide special zero-rating

for insurance policies which cover risks located outside Canada regardless of

the residence of the insured.

2. Precious Metals

The sale of precious metals meeting miniIllJl1\ };Urity levels, whether sold

danestically or by export, by a refiner or by a person on whose behalf the

precious metals were refined, are zero-rated. All subsequent transactions

relating to precious metals will be considered exempt financial services.

D. INPor '!'AX cmmrl'S

The legislation provides for special rules with respect to in};Ut tax credits

which may be claimed where a person is a "financial. institution" either because

it is a "listed financial insti tuion" or because its financial services

revenues exceed a de minimus threshhold (section 149 (1». Listed financial

institutions include toose organizations usually referred to as financial

institutions by the industry. Others are brought into the financial

- 30 -

institution definition where the financial revenues for the previous fiscal

year meet a de minimus test of:

a) 10 pero;nt of tl'e previous year's total revenue; or

b) $10,000,000.00 (prorated for fiscal years less than 365 days).

If the person is an individual, only interest and dividends that would be

considered income fram a business for income tax purposes will be included in

tl'e irrlividual's financial revenues for the purposes of this test.

For the moot part, the general rules relating to input tax credits apply to

financial institutions and these general rules are dealt with in another

paper. This paper will deal only with the rules for financial institutions

which differ from the general rules for input tax credits.

1. "Exclusive Use"

For financial institutions an input is deemed to be used exclusively in an

activity only if it is 100 percent used in that activity as oampared to the 90

pero;nt threshhold for persons otoor than financial institutions. This allows

financial institutions to claim a partial input tax credit even where the use

of too input in corranercial activities (not financial services) is less than 10

perCent.

2. Primary Use Test

This test does not apply to financial institutions.

3. Change of Use Rules

An exception to too general rule for financial institutions applies in too case

of capitial personal property with a coot less than $50,000.00. Such property

is not subject to too primary use test nor to too general change of use rule

and instead are treated as no~capital purchases and a credit is allowed based

- 31 -

upon tre anticipated portion which is expected to be attrib..1table to cormnercial

activities at the time of their acquisition.

Section 150 (1) of tre legislation provides for an exemption for certain

supplies between members of tre closely related group of which a listed

financial institution is a member. Under this rule corporations may elect to

treat the portion of the supply fran a related canpany which is not subj ect to

G.S.T. such as salaries, financing charges and profit margin, as exempt. . If

the financial institution was required to pay the G.S.T. it ~uld be a

significant burden as input tax credits cannot be used in reSPect of financial

services. The legislation contains a number of condi tions which must be met

before group relief is available.

G. MIS<EUANIDS PI01ISIcm

1. Supplies in tre Course of Settlement of Insurance Claims

Where an insurer accepts property as part of a settlement of an insurance

claim, the transfer of the property fran the owner to the insurer is deemed to

be for no consideration. A subsequent resale by tre insurer will be deemed to

be in the course of carmercial activity and taxable in the normal matter. If

tre insurer can soow that the previous owner did not claim an input tax credit

or rebate in respect of the property, the insurer is entitled to an inp.1t tax

credi t equal to 7 percent of tre resale pr ice. .

2. Distrib..1tions by Trusts

Distributions of nonconunercial property by trust will generally not be

oonsidered to be carmercial activity and therefore not subject to G.S.•T.

- 32 -

Trusts will be liable for G.S.T. payment and oollection in the normal manner

where the trust a::quires a business and carries on same.

3. SJDall Businesses and Personal Investment Bolding Canpanies

Many small oosinesses have significant investment incane and as a result of the

de minimus test are oonsidered to be financial institutions. As a result they

are required to follow the oanplex rules related to inp1t tax credits for

financial institutions. This creates a significapt oanplianoe and

administrative l::urden on such oanpanie~. Further, these cx:mpanies are not

eligible for the group relief election available for listed financial

institutions.

- 33 -

SCHEDULE(Section 18)

SCHEDULE V(Subsection 123(1»

EXEMF.r SUPPLIES

PARTI

REALPROPERTY

1. In this Part, "improvement", in respect of realproperty of a person. means any property or servicesupplied to. or goods imported by, the person for thepurpose of improving the real pioperty, to the extentthat the consideration paid or payable by the personfor the property orservice or the value of the goods is,or would be if the person were a taxpayer mder theIncome Tax Act. included in determining the cost or.in the case of real property that is capital propeny ofthe person. the adjusted cost base to the person of theproperty for the purposes of that Act.

2.Asupply bywayofsaleofaresidentialcomplexor an interest therein made by a ¢rsoIi who is not thebuilder of the complex or. where the complex is amultiple unit residential complex, an addition thereto.unless-

(a) the person claimed an input tax credit inrespect of the acquisition of or an improvementto the complex; and

(b) after the person claimed the creditandbeforeownership of the complex or interest is trans­ferred to the recipient of the supply. the personwas DOt deemed to have made another supply byway of sale of the complex 1Dlder subsection206(4) or 207(1) of the Act or. by reason ofsection 210 of the Act, lDlder subsection 200(2)of the Act.

3. Asupply by wayofsaleofaresidentialcomplexor an interest therein made by the builder of the com­plex or. where the complex is a multiple unit residen­tial complex, the builder of an addition thereto. if

(a) the builder is an individual,

(b) atany time after the consttuetion or subsIan­tial renovation of the complex or addition issubslantiallycompleted, the complex is usedpri­marily as a place of residence of the individual,an individual re1arecl to the individualora formerspouse of the individual, and

(c) the complex is DOt used primarily for anyOIlIer pmpose after the construction or subslan­tial renovation is substantially completed andbefore that time.

unless the individual claimed an input tax credit inrespect of the acquisition ofor an improvement to thecompleX and, after the individual claimed the creditand before ownership of the complex or interest istransfened to therecipientof the supply. the individualwas DOt deemed under subsection 207(1) ofthe Act tohave made another supply by way of sale of thecomplex.

4. Asupply by way ofsale ofa single unitresiden­tial complex or a residential condominimn unit or aninr.erest in the complex or unit made by the builder ofthe complex or unit if. before ownership of the com­plex. unit or interest is transfetred to the recipient ofthe supply. the builder was deemed under subsection191(1) or (2) of the Act to have made at any timeanother supply of the complex unless. after that time.

(a) the builder claimed an input tax credit inrespect of the acquisition of or an improvementto the complex or unit; and

(b) after the builderclaimed the creditandbeforeownership of the complex or interest is trans­ferred to the recipient of the supply. the builderwas not deemed under subsection 206(4) or207(1) of the Act or. by reason ofsection 210 ofthe Act, under subsection 200(2) of the Act tohave made another supply by way of sale of thecomplex or unit.

5. A supply by way of sale of a multiple unitresidential complex or an interest therein

(a) made by a person who is the builder of thecomplex if. befOre ownership of the complex orinterest is transferred to the recipient of the sup­ply, the builder was deemed under subsection191(3) ofthe Act to have made another supply ofthe complex. or(b) made by a person who is not the builder ofthe complex but is the builder of an addition tothe complex.

unless(c) the person claimed an input tax credit inrespect of the acquisition of or an improvement_to the complex, oth« than in respect of the c0n­

struction or substantial renovation of the c0m­plex or addition, and

- 34 -

(d) after the person claimed the creditand beforeownership of the complex or interest is trans­ferred to the recipient of the supply, the personwas not deemed under subsection 206(4) or207(1) of the Act or, by reason ofsection 210 ofthe Act, under subsection 200(2) of the Act tohave made another supply by way of sale of thecomplex,

but not including that part of the supply that mayreasonably be regarded as the supply ofan addition tothe complex, or an interest in an addition, of which

(e) the person is the builder, and

(f) the person was not deemed under subsection191(4) of the Act to have made another supply.

6. Asupply

(a) of a residential complex or a residential unitin a residential complex by way of lease, licenceor similar arrangement for the purpose of itsoccupancy as a place of residence or lodging bythe same individual, where it is occupied by theindividual for a period of at least one month; or

(b) of a residential unit by way of lease, licenceor similar arrangement for the purpose of itsoccupancy as a place of residence or lodging bythe same individual, where the consideration forthe supply does not exceed $20 for each day ofoccupancy or $140 for each week of occupancy.

6.1 A supply of real property that is

(a) land; or

(b) a building, or a part of a building, where thebuildingorsuch part, as the case may be, consistssolely of residential units,

by way of lease, licence or similar arrangement to aparticularperson for a period during which the supplyby the particular person, or by any otherperson, of theplopetty or ofall or substantially all of the parts of theland or the residential units in the property, as the casemay be, is exempt under section 6 or 7 or this section.

7. A supply of land by way of lease, licence orsimilar arrangement made to the owner or lessee of amobile home, or any other residential unit, affixed orto be affixed to the land where the term of the arrange­ment is a period of not less than one month, but notiDc1udingany landcontiguous to the landon which theunit is, or is to be, affixed that is not reasonablynecessary for the use and enjoyment of the unit as aplace ofresidence for individuals.

8. A supply of a parking space, where the supplyis incidenl81 to the use of land, a residential complexoraIeSideotialunitina residential complex, thesupplyofwhich is included in any of sections 2 to 7.

»' 9. Asupply ofreal property by way of sale madeby an individual or a trust, all the beneficiaries ofwhich are individuals, other than

(a) asupply of real property that is, immediatelybefore the time ownership or possession of theploperty is transferred to the recipient of thesupply under the agreement for the supply, capi­tal pioperty used primarily in a business of theindividual or trust;

(b) a supply of real property made(i) in the course ofa business of the individ­ual or trust, or(ii) where the individual has fIled an electionwith the Minister in the prescribed form andmanner and containing the prescribed infor­mation, in the course of an adventure orconcern in the nature of trade of the individ­ual or trust that is not a business;

(c) asupply deemed under section 206 or 207 ofthe Act to-have been made; or

(d) a supply of a re~dential complex.

10. A supply of fannland by way of sale made byan individual to another individual who is related to orwho is a former spouse of the individual where

(a) the farmland was used at any time by theindividual in a commercial activity that is thebusiness of fanning;(b) the fannland was not used, immediately be­fore the time ownership of the property is trans­ferred under the supply, by the individual in acommercial activity other than the business offanning; and

(c) the other individual is acquiring the farmlandfor the personal use and enjoyment of that otherindividual or any individual related thereto.

11.Asupply by an individual offarmland deemedunder subsection 190(2) or 207(1) of the Act to havebeen made where

(a) the farmland was used at any time by theindividual in a commercial activity that is thebusiness of farming;(b) the fannland was not used, immediately be­fore the time the supply is deemed to have been

- 35 -

made, by the individual in a commercial activityother than the business of farming; and(c) the farmland is,immediately after the time thesupply is deemed to have been made, for thepersonal use and enjoyment of the individual oran individual related thereto.

12. A supply of fannl8nd by way of sale made toa particular individual, an -individual related to theparticular individual or a former spouse of the partic­ular individual by a person that is a corporation, part­nership or trust where

(a) immediately before the time ownership ofthepropeny is ttaJ1sferred under the supply,

(i) all or substantially all of the property ofthe person is used in a commercial activitythat is the business of farming,(il) the particular individual is a member ofthe partnership, a beneficiary of the trust ora shareholder of or related to the corpora­tion, as the case may be, and(iii) the particular individual, the spouse ofthe particular individual or a child (withinthe meaning O,f paragrap~ 70(10)(a) of theIncome TaxAct) of the particular individualis actively engaged in the business of theperson; and

(b) immedia1ely after the time ownership of theproperty is transferred under the supply, thefarmland is for the personal use and enjoymentof the individual to whom the supply was madeor an individual related thereto.

13.A supply made bya condominium corporationto the owner or lessee of a residential condominiumunit in the condominium complex managed by thecdndominium cmporation of property or a servicerelating to the occupancy or use of the uniL

14. For the purposes of sections 4 and 5, section191 of the Act shall be deemed to have been in forceat all times before 1991.

PARTll

HEALTH CARE SERVICES

1. In this Part,"health care facility" means

(a) a facility, or a part thereof, opemted for thepurpose ofproviding medical or hospital care,including acute, rehabilitative or chronic care.

(b) a hospital or institution primarily for themenrally disoIdered, or(c) a facility, or a part thereof, operared for thepurpose ofproviding nursing home intermediatecareserviceorresidential careservice, within themeaning of the Canoda Health Act, or compara­ble services for children;

"institutional health care service" means any of thefollowing when provided in a health care facility:

(a) laboratory, radiological or other diagnosticservices,(b) drogs, biologicals or related preparationswhen administered in the facility in conjunctionwith the supply of a service included in any ofparagraphs (a) and (c) to (g),(c) the use of operating rooms, case rooms oranaesthetic facilities, including necessary equip­ment or supplies,(d) medical or surgical equipment or supplies

(i) used by the operator of the facility inproviding a service included in any of para­graphs (a) to (c) and (e) to {g}, or(il) supplied to a patient or resident of thefacility otherwise than by way of sale,

(e) the use of radiotherapy, physiotherapy oroccupational therapy facilities,(f) accommodation,(g) meals (other than meals served in a resta1D'­ant, cafeteria or similar eating establishment),and(h) services rendered by persons who receiveremlD1eration therefor from the operator of thefacility;

"insmed person" has the same meaning as in theCanada HealthAcl;

"medical practitioner" means aperson who is entitledunder the laws ofa province to practise the profes­sion of medicine or dentistry;

"practitioner", in respect of a supply of optometric,chiropractic, physiotherapy, chiropodic, podiatric,osteopathic, audiological, speech-therapy, occupa­tional therapy, or psychological services, means aperson who

(a) is licensed or otherwise certified to practisethe profession of optometry, chiropractic, pbys­iotheozapy, chiropody, podiatry, osteopathy, audi­ology, speech-therapy, occupational therapy,orpsychology in the province in which the sezviceis supplied, or

- 36 -

(b) where the person isnotrequired tobe licensedor otherwise certified to practise the professionofthe person in tbe province in which the serviceis supplied. has the qualifications equivalent tothose necessary to be so licensed or otherwisecertified in another province. and(c) in respect of the supply of psychologicalservices, is registered in the Canadian Registerof Health Service Providers in Psychology,

and practises the profession of optometry, chiroprac­tic, physiotherapy, chiropody, podiatry, osteopalhy,audiology, speech-therapy, occupational therapy, orpsychology, as the case may be.

2. A supply of an institutional health care servicemade by the operatOr of a health care facility to apatient or resident of the facility, but not including aservice related to the provision of a surgical or dentalservice that is perfonned for cosmetic purposes andnot for medical or reconstructive purposes.

3. A supply made by the operator ofa health carefacility by way of lease of medical equipment orsupplies to a consumer on the written order ofa med­ical practitioner.

4. A supply of an ambulance service made by aperson who carries on the business of supplying am­bu1aDce services.

S. A supply made by a medical practitioner of aconsultative, diagnostic, treatment orother health careservice rendered to an individual (other than a surgicalor dental service that is perfonned for cosmetic pur­poses and not for medical orreconstructive purposes).

6. A supply of a nursing service rendered by aregistered nurse, a registered nursing assistant or alicensed practical nurse, where

(a) the service is rendered to an individual in ahealth care facility or in the individual's place ofresidence;(b) the service is a private-duty nursing service;or

(c) the supply is made to a public sector body.

7. Asupply ofany of the following services whenrendered to an individual, where the supply is made bya pmctitioner of the service:

(a) optometric services;(b) chiropractic services;(c) physiotherapy services;(d) chiropodic services;

(e) podiatric services;(I) osteopathic services;(g) audiological services;(b) speech-therapy services;(i) occupational therapy services; and(j) psychological services.

8. Asupply ofa dental hygienist service.

9. Asupply ofany plopet"tf or service but only if,and to the extent that, the consideration for the supplyis payable or reimbursed by the government of aprovince wtder a plan established under an Act of thelegislature of the province to provide for health careservices for all insured persons of the province.

10.Asupply ofa prescribed diagnostic, treatmentorotherhealth care service when made on the order ofa medical practitioner or practitioner.

11. Asupply offood and beverages, including theservices of a caterer, made to an operator of a healthcare facility wtder a contract to provide on a regularbasis meals for the patients or residents of the facility.

12. A supply ofapsychoanalytic service made bya person who. .

(a) has received the same training in the provi­sion of P.S}'choanalytic services from the sametraining institute as medical practitioners whoprovide psychoanalytic services; and(b) is a member in good standing of the profes­sional society in respect of the provision of psy­choanalytic services in Canada that

(i) sets and maintains the same standards ofpractice and conduct in respect of all mem­bers of the society, and(ii) consists ofat least 300 members in Can­ada of which at least 2/3 are medical practi­tioners.

PART ill

EDUCATIONAL SERVICES1. In this Part,

"elementary or secondary school student" means anindividual who is enrolled in a school that is oper­ated by a school authority in a province and in

(a) courses that are at the elementary level ofeducation, or(b) courses for which credit may be obtainedtoward a diploma or certificate issued or ap-

- 37 -

proved by the government of the province ercourses equivalent 10 such comses;

"provincial regulatory body" means a body that isconstituted or empowered by an Act ofthe legisla­ture of a province to regulate the practice of aprofession or trade in the province by seUing SIaD­dards ofknowledge ana proficiency forpractition­ers of the profession or trade and by registering orlicensing persons topractise the professionor tradein that province;

"vocational school" means an organization that is es­tablished and operated primarily to provide stu­dents with

(a) correspondence courses, or

(b) instruction in courses

that develop or enhance swdentS' occupationalskills and includes an educational institution that iscertified by the Minister ofEmploymentand Immi­gration for the purposes of subsection 118.5(1) ofthe Income Tax Act.

2. A supply made by a school authority in aprovince of a service of instructing individuals in acourse that is provided primarily' for elementary ersecondary school students.

3. Asupply offood, bevemgesorservices, includ­ing admissions, made by a school authority primarilyto elementary or secondary school swdents during thecourse of extra-curricu1ar activities organized lDlcWthe authority andresponsibilityofthe school authority.

4.Asupply madebya schoolauthorityofa serviceperfonned by an elementary or secondary school stu­dent or by an instructor ofan elementary or secondaryschool swdent in the ordinarycourseofthe insttuctimof the SWdenL

5. Asupply made by a schoolauthority to elemen­tary or secondary school swdentsofa service oftrans­porting the students to orfrom a school thatisoperatedby a school authority.

6. A supply ofa service ofinstructing individualsin, or administering examinations in respect of,courses leading to, or for the purpose of maintainingor upgrading, a professional or trade accrediwion erdesignation recognized by a provincial regularorybody, where the supply is made by a professional ortrade association, government, vocational school, uni­versity or public college or by the provincial regula­tory body, except where the supplier has filed with the

Minisrer an election under this section in prescribedform containing prescribed informatim.

7. A supply made by a school authority, publiccollege oruniv~of a service of insIructing indi­vidualsin,oradministeringexaminations inMSPClCtof.courses for which credit may be obtained toward adiploma Or degree.

8. Asupplymadebya schoolauthority, vocationalschool, public college or university of a service ofinstructing individuals in, or administering examina­tions in respect of, courses leading to certificates.diplomas. licences or similar documents, or classes orratings in respect of licences, that are prescnDed byf~ er provincial regulation and that attest to thecompetence of individuals to practise or perfonn atrade or vocatim.

9. A supply of a service of wtoring an individualin a course that either follows a curriculum that isdesignated by a school authority or is a prescn'bedequivalent of such a course.

10. Asupply ofa service ofinstructing an indivi~

ual where the instruction is a prerequisite to a coursethat either follows a curriculum that is designated bya school authority or is a prescribed equivalent ofsucha course.

11.Asupply ofa serviceofinstructing individualsin, .or administering examinations in respect of, lan­guage courses that form part ofa program of second­language insttuction in either English or French.where the supply is made by a school authority, publiccollege or lDliversity or an organization ,that is estab­lisbedand operated primarily to provide instruction inlanguages. '

12. A supply of food or bevemges (other thanprescribed food or beverages or food or bevemgessupplied througha vendingmachine) where the supplyismade in an elementaryorsecondary school cafeteriaprimarily to swdents of the school, except where thesupply is for a private party, reception, meeting orsimilar private eveDL

13. A supply of a meal at a lDliversity or publiccollege to a stUdent where the meal is provided undera plan under which the student purchases from thesupplier for a single considemtion a supply ofnot lessthan 10 meals weekly fer a period ofnot less than onemonth.

14. A supply of food and beverages. includingcatering services, made to a person that is a school

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audlority. university. orpubliccollege underacomractto provide food or beverages

(a) to students under a plan refm:red to in section13; or

(b) in an elementary or secondary school cafete­ria primarily to students of the school.

except to the extent that~e food. beverages and ser·vices are provided for a reception. conference orotherspecial occasion or evenL

15. Asupplyofpersonal property made byway ofleaseby aschool authority to an elementary orsecond·ary school studenL

16. A supply made by a public college oruniver·sity ofa serviceofinstructing individuals in. oradmin·istering examinations in respect of. courses that arepart ofa program that consists of two or more courses(adler than cowses in sports. games. hobbies or othern:aeational pursuits that are designed to be rakenprimarily for recreational purposes) and that is subjectto the review of. and is approved by. a cOlmcil. boardor committee of the university or college establishedto review and approve the course offerings of theuniversity or college.

PART IV

CHILD AND PERSONAL CARE SERVICES .

1. A supply of child care services. the primarypurpose ofwhich is to provide care and supervision tochildren 14 years of age or under for periods normallyless than 24 hours per day.

2. A supply made by a person of a service ofproviding care and supervision to a resident of aninstitution established and operated by the person forthe purpose ofproviding such service andofprovidingaplace ofresidence for children or disabled or under·privileged individuals.

PART V

LEGAL AID SERVICES

1. A supply of legal services provided under alegal aid plan administered by or under the authorityof a government of a province made by the personresponsible for administering the plan.

PARr VI

PUBUC SECI'OR BODIES

1. In this Part.';diIectcost" ofafilm. slide show or similarpresenta·

lion orofa supply of tangible personal property ora service means the total of all amounts eacq ofwhich is the value ofconsideration paid orpayableby 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 prop.erty of the supplier) that was purchased by thesupplier. to the extent that the article or material isto be incorporated into or is to fOIm a constituentor component part of the property or is to be

. consumed or expended directly in staging the pre­;' sentatiOD. supplying the service or in the process

ofmanufacturing. producing. processing or pack·aging the property. and includes

(c) in the case ofasupply ofproperty ora servicethat was previously purchased by the supplier,the value ofcOnsideration paid or payable by thesupplier for the property or service. and(d) in the case of a film. slide show or similarpresentation. the total of all amounts each ofwhich is'the value of consideration paid or pay·able by the supplier of admissions in respect ofthe presentation for the rental of. or right to use,any film. slide or similarproperty orprojector orsimilar equipment used for the presentation,

and, for the purposes of this definition, the consid­eration paid or payable by a supplier for propertyoraservice shall be deemed to include the amount,ifany. by which the tax payable by the supplier inrespect of the property or service exceeds the totalofall amounts each of which is an input tax creditof the supplier or a rebate under Pan IX of the Actthat the supplier has claimed or is entitled to claimin respect of the property or service;

"homemaker service" means a household or personalservice. such as cleaning, laundering, meal prep·aration and child care, that is provided to an indi­vidual who. due to age, infinnity or disability,requires assistance;

"municipal transit service" means a public passengertransportation service (other than a charter serviceoraservice that is panofa tour) thatis supplied bya aaDsit authority all or substantially all of whose

- 39 -

supplies are ofpublic passenger transpOttation ser­vices providedwithin aparticularmunicipalityandits environs;

"transitauthority" means

(a) a division, departmentoragency ofagovern­ment, municipality or school authority, the pri­mary purpose of which is to supply publicpassenger transportation services. or

(b) a non-profit organization that

(i) receives funding from agovernment, mu­nicipality or school authority to support thesupply of public passenger transpOrtationservices, or

(ii) is established and operated for the pur­poseofprovidingpublic passengerttanspor­tation services to disabled individuals.

2. A supply made by a charity of any personalproperty or a service, but not including a supply of

(a) property ora service included in Schedule VIand not included in section 6 or 10;

(b) property or a service the supply of which isdeemed lDuter Part IX of the Act to have beenmade by the charity; .

(c) property (other than capital property of thecharity or property that was acquired. manufac­tured orproduced by the charity for the purposeof making a supply of the property) where, im­mediately before the time taX would be payableinrespectofthesupply ifitwerea taxable supply,the plopeny was used (otherwise than in makingthe supply) in commercial activities of the char­ity;

(d) capital property of the charity where, imme­diately before the time taX would be payable inrespect of the supply if it were a taXable supply,the property was used (otherwise than in makingthe supply) primarily in commercial activities ofthe charity;

(e) tangiblepropertythatwasacquired,manufac­tured or produced by the charity for the purposeof making a supply of the property and wasneitherdonated to thecharitynorusedby anotherperson before its acquisition by the cbarity•. cr.any service supplied by the charity in respect ofsuch property. other than such plopedy orsuch aservice supplied by the charity under a comractfor catering;

(f) plopedy made by way of lease. licence orsimilarammgementin conjunctionwitha supply

. ofreal property included in paragraph 2S(f);

(g) property or a service made by the charityunder a contract for catering for an event oroccasion sponsored or arranged by another per­son who conttaets with the charity for catering;(h) an admission in respect of a place ofamuse­ment or a membership where the membership

(i) entitles the member to supplies ofadmis­sions in respect ofa place ofamusement thatwouldbe taXable supplies if they weremadeseparately from the supply of the member­ship, or to discolDlts on the value ofconsid­eration 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. discountsor right described in subparagraph (i) or (ii) isinsignificant in relation to the consideration forthe membership;(i) services of performing artists in a perform­ance where the supply is made to a person whomakes taxable supplies of admissions in respectof the performance;(j)a service involving, or amembership or otherrightentitling aperson to, supervision or instruc­tion in any recreational or athletic activity;(k) a right to play or participate in a game ofchance;(l) a service of instructing individuals in. or ad- .ministering examinations in respect of, anycourse where the supply is made by a vocationalschool, as defined in section 1 of Part m, or aschool authority, public college or university; or(m) an admission in respect ofa seminar. confer­ence or similar event supplied by a university orpublic college.

3. Asupply made by a charity of any property orservice where

(a) the supply is made in the course ofa businessof making supplies of such property or such aservice or of similarproptZty or services carriedon by the charity, and the day-to-day administra­tive functions and other functions performed incmying OIl the business are performed exclu­sively by volunteers,

- 40 -

(b) thesupply is made in the course ofan activityengaged in by the charity otherwise than in thecourse of, or as part of, a business refemd to inparagraph (a), and the day-to-day admjnisrraavefunctions and other functions performed in car­rying on the activity. including the provision ofany property orserviCe in the course of the activ­ity, are performed exclusively by volunteers, or(c) the property or service is, and is representedto prospective recipients to be. supplied as partofa program established by the charity that con­sists of a series of classes or other activities andthe non-administtative fuDctions performed inproviding the activities are performed exclu­sively by volunteerS.

butuot including a supply of(d) property or a service included in paragraph2(a), (b), (c), (d).or (k),

(e) an admission in respect of a place ofamuse­ment at which bets are placed or a game ofcbance is conducted. or(t) teal property made by way ofsale.

4. A supply of tangible personal ploperty (otherthan alcoholic beverages or tobacco products) madeby way ofsale by a public sector body where

(a) the body does not cany on the business ofselling such piOperty;(b) all the salespersons are volunteers;(c) the consideration for each item sold does notexceed $5; and

(d) the property is not sold at an event at whichsupplies ofproperty ofthe kind or class suppliedare made by persons.who carry on the businessofselling such property.

5. A supply made by a public sector body of anadmission inrespect ofa place ofamusementat whichthe principal"activity is the placing of bets or theplaying of games of chance. where

(a) the administrative functions and other func­tionsperformedin operating the game and takingthe betsareperformedexclusively byvolunteers;and

(b) in the case ofa bingo or casino, the game isnotconducted inpremisesorataplace, includingany temporary structure, that is used primarilyfor the purposes of conducting gambling activi­ties.

5.1 A supply made by a charity fr non-protitorgantzaaoQ (otbertban aprescribedperson) ofarightto play or participare in a game of cbanc:e (other than

"a.prescribed game ofchaDce). .

5.2 A supply of a service !bat is deemed undersection 187 of the Act to have been supplied

(a) by a charity or non-profit organization (otherthan apresa'1"bed person); cr(b) where the service is in respect of a bet madethrough the agency ofapari-mutuel system on a .running. trotting or pacing horse-race.

6. Asupply made by apUblic service body of(a) a service, where the supply is made in thecourse of a business of making supplies of theservice. or(b) rangible personal property.

where the value of the consideration for the supplypaid or payable by the recipient is equal to the usualcbarge by the body for such supplies to such recipientsaDd does not, or could not reasonably be expected to,exceed the direct cost of the supply.

7. A supply of any service. other than a supplyiDcluded in section 6. made by a public service bodyin the course ofan event Or activity, where the total ofall amounts. each of which is the consideration for asupplyofsuchaservicemade by the body in the courseof that event or activity. could not reasonably be ex­pected to exceed the aggregate of all amounts each ofwhich is the direct cost of a supply of such a servicemade by the body in the course ofthateventoractivity.

8. A supply made by a public sector body of anadmission in respect of a film, Slide show or similarpresentation where the total of all amOlDlts, each ofwhich is the consideration for an admission in respectof the ~tation. could not reasonably be expectedto exceed the direct cost of the ~tation.

9. A supply made at any time by a public sectorbody of an admission in respect of a place of amuse­ment where the maximum consideration for a supplyat that time by the body of an admission in respect ofthe place does. not exceed one dollar.

10. Asupply made by a public sector body ofanypropertyor service where all or substantially all of thesupplies of the property or service by rhe body aremade for no consideration.

11. A supply of a right to be a specwor at aNpelllr4rtimorm-8Dce. athletic event or ~mpetitive event,

- 41 -

where all orsubstantially all of theperformers,athletesor competitors taking part in the performance oreventdo not receive, directly or indirectly, remuneration fordoing so (other than a reasonable amount as prizes,gifts or compensation for travel or other expensesincidental to the performers', athletes' or competitors'participation in the performance or event, or gIantspaid by a governmentora municipality to theperform­ers, athletes or competitors), and no advertisement orrepresentation in respect of the performance or eventfeatureS participants who are so remunerated, butdoesnot include a supply of a right to be a spectator at acompetitive event in which cash prizes are awardedand in which any competitor is a professional partici­pant in any competitive evenL

12. A supply made by a public sector body of amembership in. or services supplied as part of, a pr0­gram established and operated by the body that con­sists of a series of supervised instructional classes oractivities involving athletics, outdoor recreation,music, dance, arts, crafts or other hobbies or recrea­tional plD'Suits where

(a) it may reasonably be expected, given thenature of the classes or activiti,es or the degree ofrelevant skill or ability required for participationin them, that the program will be provided pri­marily to children 14 years of age or under,except where the program involves overnightsupervision throughout a substantial portion ofthe program: or .,.

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

13. A supply made by a public sector body ofboard and lodging or recreational services at a recrea­tional camp or similar piace under a program or ar­rangement for providing the board and lodging orservices primarily to underprivileged or mentally orphysically disabled individuals.

14. Asupply made bya public sectorbody offood,beverages or short-term accommodation where thesupply is made in the course ofan activity the purposeof which is to relieve poverty, suffering or distress ofindividuals and is not fund-raising.

15. Asupply made bya public sectorbody offoodor beverages to aged, infirm, disabled or underprivi­

.leged individuals under a program established andoperated for thepurpose ofprovidingprepared food tothose individuals in their places of residence and any

supply of food or beverages made to the public sectorbody for the purpose of the program.

16. A supply of a homemaker service that is pr0­vided to an individual in the individual's place ofresidence, where the supply is made by

(a) a government or municipality: or(b) a non-profit organization that receives anamount paid by a government or municipality inrespect of the supply.

17. A supply of a membership in a public sectorbody (other than a membership in a club the mainpurpose of which is to provide dining, recreational orsporting facilities) where each member does not re­ceiv~a benefitbyreason ofthe membership, other than

(8) an indirect benefit that is intended to accrueto all members collectively,(b) the right to receive services supplied by thebody that are in the nature of investigating, con­ciliating or settling complaints or disputes in­volving members,(c) the right to vote ator participate in meetings,(d) the right to receive or acquire property orservices ·supplied to the member for consider­ation that is not part of the consideration for themembership and that is equal to the fair marlcetvalue of the property or services at the time thesupply is made,(e) the right to receive a discount on the value ofthe consideration for a supply to be made by thebody where the total value of all such discountsto which a member is entitled by reason of themembership is insignificant in telation to the.consideration for the membership, or(f) the right to receive periodic newsletters, re­ports or publications

(i) the value of which is insignificant inrelation to the consideration for themember­ship, or(ii) thatprovide information on theactivitiesof the body or its financial statUS, other thannewsletters, reports or publications thevalue of which is significant in relation tothe consideration for the membership andfor which a fee is ordinarily charged by thebody to non-members,

except where the body has filed with the Minister anelection under this section inprescribed fonn contain­ing prescribed information.

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18.A supply ofa membership made by an organ­ization membership in wbicb is required to maintain aprofessional status recognized by SWIlte. exceptwhere die supplier has filed wirh the Minister aneJection under this section in prescribedform contain­ingpteSCribed iriformaIion.

19. A supply made by a public sector body of aright that confers borrowing privileges at a publiclending libmry.

2O.1befollowing supplies madebya governmentor municipality or by a board. commission or otherbodyesrablished by a government or municipality:

(a) a supply of a service of registering any prop.erty or tiling any document in a ploperty regis.Ir8tion system.(b) a supply ofa service ofthe tiling orplOCUringofa docwnent in a court. .(c) a supply ofa licence. permit. quota or similarright (other than such a right supplied in respectof the importation ofalcoholic beverages).(d) a supplyofa serviceofprovidinginformalionin respect of. or ofany certificate oro~ docu­ment evidencing. the vital SWistics. residency.citizenship or· right to vote of any person. theIegistration of any person for any service pr0­vided by the government or any other SWDS ofany person.(e) a supply of

(i) a service of providing information inrespect of. or(ii) any certificate or other document evi­dencing.

the tide to. any right or estate in. or any encum­brance in respect of. property.(f) a supply ofa service ofproviding informationunder the Access to InformoJion Act.(g) a supplyofa law enforcementserviceora tireprotection service made to a government or amunicipality or to a board. commission or otherbody established by a government ormunicipal­ity.(h) a supply of garbage collection services. butnot including a supply ofa service that is not panof the basic garbage collection service suppliedby the govemmentormunicipality on areguJarlyscheduled basis. and(i) a supply of a right to deposit refuse at a refusedisposal site.

but not including

(j) a supply to a consumer of a right to hunt orfish.(k) a supply ofaright to take €rrelDQVe minerals.foresay 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 ofa businessofmaking supplies of the minerals. foresttyproducts. water or fishery products to con­sumers. or

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

21. Asupply ofa municipal service made by or onbebalf of a government or municipality to owneIS oroccupants of real property situated in a particulargeographic area where the owners or occupants havenooptionbut to receive theservice, orhertbana supplyof a service of testing or inspecting any property forthe purpose ofverifying or certifying that the propertymeers particular S1IDdards of quality or is suitable forcaasumption. use or supply in a particular manner.

22. A supply ofa service made by or on behalfofa government or municipality, or by an organizationdesignated by the Minister to be a municipality for thepmposes of tIfis section. of installing, repairing ormaintainingawaterdistribution. sewerage ordrainagesystem that is for the use ofall occupants and ownersof real property situated in a particular geographicarea. but not including a supply ofa service for whicha sepaxate charge is made to the recipient of repairingor maintaining any part of the system that is for thesole use of the occupants or owners of a particularparcel ofreal property.

23. A supply of unbottled water made by a gov­ernment. municipality or designated organization re­ferred to in section 22.

24. A supply of a municipal transit service or apublic passenger transportation service designated bythe Minister to be a municipal transit service.

25. A supply of real property made by a publicservice body (.other than a financial institution or agovernment), but not including a supply of

(a) a residential complex or an interest thereinmade by way ofsale;

(b) real property where the supply is deemedunder Part IX of the Act to have been made;

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(c) real propeny made by way of sale to anindividuaL other than a supply of real propertyon which is simared a stnlCtUl'e that was used bythebody .

(i) as an office, or

(Ii) in the course ofcommercial activities orof making exempt supplies;

(d) real plopetty where, immediately before thetime tax would be payable in respect of thesupply if it were a taxable supply, the propertywas used (otherwise than in making the supply)primarily in commercial activities of the body;

(e) short-term accommodation made by a non­profit organization, municipality, university,pUblic college or school authority; .

(f) real property (other than short-tenD accom­modation) made by way of lease, licence orsimilar ammgement for aperiod of less than onemonth, where the supply is made in the course ofa business carried on by the body;

(g) real propt.tty in respect of which an electionundersection211 ofthe Actisineffectatthetimetax would become payable under Part IX of theAct in respect of the supply if it were a taxablesupply; or

(h) a parkingspacemade by way oflease.licenceorsimilarammgementin thecourseofa businesscarried on by the body.

26. A supply made by a particular non-profit or­ganization esaabUshed primarily for the benefit of or­ganiml labour whae the supply is made to

(a> aaade union, apoc:jation orbody refeued toin paragraphs 189(a) to (c) of the Act that is amember ofor affiUated with the organization, (Jf

(b) inodler DOD-profit organization establishedprimarily for the benefit of organized labour,

or a supply made by a person refetred to in paragraph(a) or (b) to any such organi 7JJrion.

PARrW

FINANCIAL SERVICES

1. A supply of a financial service that is notiDcluded in Part IX ofSchedule VI.

2. A supply deemed under subsection 150(1) ofthe Act to be aSUpply of afinancial service.

PARrvnI

FERR~ROAD AND BRIDGE TOLLS

1. A supply ofa service of f=rying by wateremftpassengers or plopeIt)' where the principal pmpose ofthe f=rying is to traDspOtt motor vehicles and passen­gers between parts of a road or highway system thatme separated by a sttetch of water.

2. Asupplyofaright to usea road orbridge wherea toll is charged for the righL