Application of the GST/HST to Charities - April 2010

Transcript

Slide 1:

Welcome to the CRA's Application of the GST/HST to Charities Webcast. This webcast is a recording of a webinar that occurred on April 2010. This session is no longer live, so if you have questions, please call our business inquiries at 1-800-959-5525 and an agent will be able to help you. Thank you very much and we hope you enjoy this webcast.

Today's presentation is expected to last one hour and is a general overview of how the Goods and Services Tax, that's the GST, and the Harmonized Sales Tax, the HST, applies to charities. The presentation will start with a general introduction to the GST/HST; we will then review the status of supplies. Next, we will look at registration for GST/HST, the methods of recovering the GST/HST and the remittance rules. After that, we'll look at transitional rules that apply to determine if GST or HST will apply to transactions that straddle the implementation date of HST in Ontario and British Columbia of July 1, 2010. We'll take a break to answer some of your questions. We have included a list of publications at the end of the presentation as well as contact numbers that you can use if you have questions after today's presentation that we're not able to answer, or if you need any further information on the topics.

Slide 2:

It is very important to note that today's presentation only applies to charities. If you have an RR account number, you are a registered charity for income tax purposes and would either be a charity or a public institution for GST/HST purposes. Now we're on slide number three.

Slide 3:

If you have an RR Account Number and you are also a school authority, a public college, a university, a hospital authority, or a determined municipality you are a public institution for GST/HST purposes and the charity rules will not apply to you. This presentation only applies to charities that are not public institutions.

Slide 4:

Some of you may be familiar with the GST/HST rules that apply to businesses. Charities have rules that differ greatly from these rules. For example, most supplies made by charities are exempt while most supplies made by businesses are taxable. Many charities are not required to register for the GST while most businesses are required to do so. Charities are limited in the Input Tax Credits, or ITCs as they're commonly known, that they may claim while most businesses may recover the GST/HST paid or payable on their business purchases by claiming ITCs. Where ITCs are not available, charities can recover a portion of the GST/HST paid or payable on their purchases, subject to certain exceptions, by claiming a public service body or PSB Rebate, while businesses cannot claim this rebate.

We will discuss these charity rules later in the presentation. If you would like more information on these rules, you can refer to info sheet GI67 entitled, “Basic GST/HST Guidelines for Charities.”

Slide 5:

As you may be aware, HST is being introduced in Ontario and British Columbia.

Slide 6:

On slide number 6 we'll see that on July 1, 2010, the Ontario retail sales tax will be replaced by HST and most supplies made in Ontario will be subject to the HST at a rate of 13%, of which 5% will represent the Federal part of HST and 8% the Provincial part. Also on July 1, 2010, the British Columbia Provincial sales tax will be replaced by the HST and most taxable supplies made in British Columbia will be subject to the HST at the rate of 12%, of which 5% will represent the Federal part and 7% the Provincial part. It will be very important to remember that the HST is composed of a Federal part and a Provincial part for such things as how to calculate the PSB rebate, which we'll discuss later in the presentation. It is proposed that effective July 1, 2010, the HST in Nova Scotia will be increased to a rate of 15% and the Province will introduce some new point-of-sale rebates. This presentation does not address those issues.

Slide 7:

You may want to know what will change -- what will be different with the HST. For charities, very little will change. If your charity is registered for GST/HST and makes taxable supplies in Ontario, it will have to collect 13% HST or 12% HST if the supplies take place in British Columbia. Even if your charity is not physically located in these two Provinces, you may have to collect this tax. Where your charity has paid HST, you may be entitled to a PSB rebate on the provincial part of HST. The rebate rates are 82% for charities resident in Ontario and 57% for charities resident in British Columbia.

Slide 8:

With some exceptions, the HST will apply to the same property and services as the GST. Supplies of property and services that are zero-rated or exempt under the GST will keep the same tax status under the HST. Persons that are registered for GST purposes will automatically be registered for HST purposes and will not have to obtain a new GST/HST number. They will collect the HST on their taxable supplies, other than the zero-rated supplies, and will use the same reporting periods to account for the tax. The elections and applications previously made and/or approved will remain in effect.

For example, if your charity has been approved to file separate GST returns for branches or divisions, you will not have to file another application. From a CRA perspective, we are updating our publications and forms to include Ontario and British Columbia HST information.

Slide 9:

I just referred to taxable supplies. Let's look at that term and other terms I will use during this presentation.

Slide 10:

When we refer to supplies, we generally mean property and services provided or sold. This includes a transfer, barter, exchange, license, lease, gift or disposition. Taxable supplies are goods and services that are supplied in the course of a commercial activity and are subject to 5% GST, 13% or 12% HST or 0% which are zero-rated supplies.

Examples of zero-rated supplies are basic foods, some medical devices and most exports. Exempt supplies are goods and services that are not subject to the GST/HST.

GST/HST registrants cannot claim ITCs to recover GST/HST paid or owing on expenses relating to making such supplies. The tax status of supplies is very important and will determine if a charity should register for the GST/HST, if it must collect this tax and how it recovers any taxes paid on its expenses.

Later in this presentation, we'll discuss all of these topics. For now, let's look at some supplies commonly made by charities.

Slide 11:

As you can see, most supplies made by charities are exempt. For example, the supply of a counseling service, another example is catering a function. Sales of used clothing at a charity's used clothing store are also exempt. In addition, the sale of new goods are exempt if they are sold at or below their direct cost. Direct cost includes the purchase price but no other expenses, such as overhead. For example, if a charity purchases new mittens and sells them at or below their direct cost, the mittens would be exempt under the direct cost rule.

Slide 12:

However, some supplies made by charities are taxable. Included would be restaurant meals, new goods sold at a profit in the charity's gift shop or a gym membership.

Slide 13:

Some supplies made by charities will be exempt if they meet certain conditions or taxable if they meet other conditions. Let's look at some of these supplies.

The first supply we'll look at is recreational programs. If a charity provides a recreational day camp where the children arrive daily at noon and leave at 4:00 p.m., the supply is exempt. On the other hand, a weeklong overnight camp provided by charity is taxable, such as where children arrive on a Monday and remain at the camp until the following Sunday.

Recreational programs provided primarily for underprivileged individuals or persons with disabilities are also exempt regardless of the length of the program or the age of the participants. This could include an art day camp for underprivileged individuals or a weeklong camp for terminally ill children.

Slide 14:

We'll look at memberships. Memberships in a charity may be exempt when the members do not receive a direct benefit from the membership. However, some memberships are taxable. For example, memberships that provides free admission to a museum, where the admissions have a significant value in relation to the cost of the membership.

Slide 15:

Some charities may charge a token admission to their museum or event. As long as the most expensive admission is a dollar or less, then all the admissions will be exempt.

Slide 16:

There is another provision that may exempt memberships provided by charities. Ticket sales to a performance or an athletic or competitive event are exempt if 90% or more of the performers, athletes, or competitors are not paid for their participation.

Government and municipal grants and reasonable amounts as gifts, prizes, or compensation for travel or other incidental expenses are not considered payment for participation in the event. For example, admissions to a charity's amateur theater festival would be exempt under this rule. This exemption does not apply to events where professional competitors compete for cash prizes such as admissions to a professional golf tournament.

Slide 17:

Most gambling revenues of a charity are exempt. However, special rules apply to provincial lottery tickets. These remain taxable regardless of who sells them and there are special rules regarding who must account for the GST/HST on the sale of provincial lottery tickets.

Slide 18:

Slide number 18 addresses the status of fund-raising activities. Many charities undertake fund-raising. The exemption for fund-raising activities applies to short-term fund-raising only. Such as flowers sold for a two-week period or chocolate bars sold for a month. If the charity undertakes fund-raising activities on a regular or continuous basis, it may be taxable. For example, this exemption would not apply to goods sold in a charity's gift shop that is open on a year-round basis. In addition, if the fund-raising is undertaken by a third party that is not a charity and the money raised is then donated to a charity, the fund-raising by the third party would not be exempt under this provision.

Slide 19:

Often charities will have fund-raising events where a portion of the admission qualifies for a donation receipt under the Income Tax Act. Where this is the case, the full amount of the admission is exempt. In the example shown on the slide, the admission is exempt and the full $100 will not be subject to the GST/HST.

Slide 20:

Some charities supply real property. Real property generally means land and buildings such as houses or office buildings. Let's now look at if supplies of real property by a charity are taxable or exempt.

Slide 21

Most supplies of real property made by charities are exempt. For example, providing both short and long-term parking spaces is exempt when provided by a charity.

Slide 22:

However, there are some supplies of real property that are taxable. This would include vacant land sold to individuals or new residential housing. As previously mentioned, most sales, leases or other supplies of real property by charities are exempt from GST/HST. However, as a charity, you can choose to file an election that allows you to treat certain exempt sales and leases of real property as taxable.

Note, however, that the election cannot be used to make all supplies of real property taxable. For example, the sale of a used house is generally exempt and an election will not make the sale of that used house taxable.

Another impact of making this election is the recovery of GST/HST will change. As we'll see later in this presentation under the discussion of ITCs, where an election is filed, your charity may be eligible to claim ITCs in respect of the elected property.

Slide 23:

One of the questions that we've received is,

“With the introduction of HST, will the tax status of some supplies change?”

No.  The tax status of the supplies will remain the same as they were under the GST.  So, if the supply made by your charity was exempt when -- for GST, it will also be exempt for HST purposes.

We have a question from Norm.

He printed our webinar slides and wants to know if he can contact us if he has any questions after today's presentation. 

If you have any questions after today that are a general nature, please contact our business inquiries at 1-800-959-5525 or for more complex inquiries, please call GST rulings at 1-800-959-8287. These numbers are listed on slide 66 near the end of our webinar.

Also, while our webinar is live today, it will be recorded and will be available for viewing as a webcast on the CRA website. Transcripts of this webinar will also be available. Also, if some of the questions -- we were not able to answer today, we may use them to add to our GST/HST Notice 253 which is entitled HST for Ontario and British Columbia.  Questions and answers for Public Service Bodies and this publication is currently available on our website.

I've got a question from Susan.

“We rent program and office spaces within our center to other nonprofits -- excuse me, to other not-for-profits. We have never charged tax on our space. When the HST comes into effect, will we need to charge HST on our space?”

This is kind of like the first question that I was talking about. Supplies of property and services by charities that are currently exempt will continue to be exempt for HST. I would like to also mention that the terms charity and non-profit organization have very specific meanings for GST/HST purposes and are not interchangeable.

So, there will be rules for charities and then there are separate rules for non-profit organization. Also, a charity may be able to file an election when you are making supplies of real property to make the exempt supplies of the leased real property taxable.

If you would like more information on this election, please call GST/HST rulings at 1-800-959-8287.

I think we have time for one more question.

“We are currently fundraising for a major project and it appears we have to do this for some time yet. How does the HST affect this at this time? And we're not planning on fundraising -- to do a fundraising that charges an admission.”

Determining if fund-raising is a taxable or exempt supply is done on a case-by-case basis. Unfortunately, without more details, I'm not able to say, for certain, if your fund-raising would be a taxable or exempt supply, but some of the factors that will impact the tax status of your fund-raising are what, if any, is being sold. Is it goods or is it services?

Another question is will the fundraising result in the charity issuing donation receipts for income tax purposes? Also, how long does the fund-raising last? A few weeks? A couple of months? For a whole year, or longer? If you wish to discuss your tax status of your charity's fundraising, I recommend that you call GST/HST rulings at 1-800-959-8287.  Once again, this number is listed on slide number 66.

Those are some great questions.

Slide 24:

Now that we've looked at the tax status of supplies made by charities, let's look at the GST/HST registration requirements of a charity.

Slide 25:

As I previously stated, determining the tax status of your charity supplies is very important. One of the consequences is that if you are only making exempt supplies, you cannot register for GST/HST purposes. If you make both taxable and exempt supplies, you will be required to register if you are not a small supplier.

Let's review the small supplier rules for a charity.

Slide 26:

This slide describes when a charity is a small supplier. Charities have two small supplier tests, the $250,000 test, which is based on gross revenue, and the $50,000 test, which is based on taxable supplies. When determining if a charity is required to register under each small supplier test, you must look at the charity as a whole. Determining if the charity should register is -- cannot be done on a branch by branch basis.

Please note that these small supplier rules are different than the small supplier rules for businesses.

Slide 27:

We'll start with the $250,000 gross revenue test. Your charity's gross revenue will include its business income, donations, grants, gifts, property income and investment income. But you must deduct from this amount any amount considered a capital loss for income tax purposes. Gross revenue for the $250,000 gross revenue test can be determined by referring to your charity information return that you file annually with the Canada Revenue Agency.

Slide 28: 

If your gross revenue is always $250,000 or less, your charity is a small supplier and does not have to register for the GST/HST. However, if your charity's gross revenue is over $250,000, you may still be a small supplier under the $50,000 taxable supplies test. Let's look at that test.

Slide 29:

We have the $50,000 taxable supplies test. Unlike the $250,000 test that includes essentially all of a charity's revenues, the $50,000 taxable supplies test only includes revenues from taxable supplies. It does not include other types of revenue, such as revenues from exempt supplies. Therefore, determining if your charity is making taxable supplies is important and will be used to determine if this test has been met.

Slide 30:

The $50,000 small supplier test for charities is calculated based on two different periods of time. Four consecutive calendar quarters or a single calendar quarter. If your charity's taxable revenues are under $50,000 during these periods of time, you are a small supplier and you are not required to register. Therefore, if your gross revenue is $250,000 or less or your taxable supplies are $50,000 or less, you are a small supplier and not required to register for GST/HST purposes.

Slide 31:

The GST/HST registration applies to the legal entity as a whole so that all branches and divisions of a GST/HST registrant are required to collect GST/HST on their taxable supplies. However, if a charity has a branch or division with $50,000 or less in taxable supplies, that branch or division can be designated as a small supplier division. This is an application that would be used by a charity that would prefer not to have a particular branch or division collect GST/HST. For example, perhaps the branch's taxable supplies are minimal and it would be too much paperwork to keep track of the taxable supplies and the GST/HST collected on them.

To qualify for the designation as a small supplier division, separate accounting records must be kept for the branch or division and either its location or its activities must be separately identifiable.

To request that a particular branch or division be treated as a small supplier division, an authorized representative of the charity's head office must complete form GST31 entitled, Application by a Public Service Body to Have Branches or Divisions Designated as Eligible Small Supplier Divisions. The completed form is sent to the tax service office that serves the charity's head office.

Slide 32:

Once the application is approved by the Canada Revenue Agency, the small supplier division does not collect the GST/HST on its taxable supplies, nor can it claim ITCs. Essentially, that branch or division will be treated as a non-registrant even though the charity itself may be registered for the GST/HST. Although the charity may have many divisions, it is not required to file the application for all its divisions. Just for those that want to be treated as a small supplier division. It is important to note that the $250,000 gross revenue test does not apply to determine if this application can be made. That test remains at the charity as a whole.

Slide 33:

We'll look at now the most common way that charities recover the GST/HST paid on expenses. That is, the public service body or PSB rebate.

Slide 34:

Although the GST/HST paid on most purchases will qualify for the PSB rebate, there are some expenses that will not qualify, such as purchases where the GST/HST is recovered in any other way. For example, through a point of sale rebate or an input tax credit.

Slide 35:

The PSB rebate is available to all charities, both GST registrants and non-registrants. Generally speaking, a charity is entitled to claim a PSB rebate of 50% of the GST and the federal part of HST paid or payable on eligible purchases. However, the PSB rebate calculation is a bit more involved when the charity is resident in a participating province and has paid HST. The charity will have to calculate the GST and the federal part of HST paid. That amount will be eligible for the PSB rebate at a rate of 50%. In addition, the charity will have to determine the provincial part of HST paid on purchases and expenses. This amount is also eligible for a PSB rebate at the applicable provincial rate. Currently, charities resident in the participating provinces of Nova Scotia, New Brunswick, Newfoundland and Labrador are entitled to claim a PSB rebate of the provincial part of HST at a rate of 50%.

It is proposed that the PSB rebate on the provincial part of HST will be available for charities resident in Ontario at a rate of 82% and while charities resident in British Columbia will be eligible at a rate of 57%.

Slide 36:

The first time a charity claims a PSB rebate, it must complete form GST66 entitled, Application for the GST/HST Public Service Body's Rebate and GST Self Government Refund.”

After the CRA  processes that rebate application, the charity will be sent form GST284 which is a personalized version of the form GST66. You have up to four years to file your PSB rebate claim.

Slide 37:

We will now review the various options to recover the GST/HST and when a charity must collect and remit the GST/HST.

Slide 38:

The most important factor in determining how a charity recovers the GST/HST paid on purchases and expenses and whether or not it has to collect and remit GST/HST is the charity's GST/HST registration status. Generally speaking, if a charity is a GST/HST registrant, it must collect GST/HST on its taxable supplies and determine its net tax using the net tax calculation for charities.

Certain charities can opt out of the net tax calculation for charities if they meet certain conditions and file the appropriate election form. We'll discuss the net tax calculation for charities later.

Slide 39:

Let's look at when a charity is not registered.

Slide 40:

A charity that is not a GST/HST registrant does not collect GST/HST. Only persons that are registered for the GST/HST collect this tax. However, there is an exception to this rule. A charity may be required to collect and remit GST/HST on taxable sales -- supplies of real property even if it is not registered for the GST/HST purposes. For example, you would have to collect GST/HST on supplies to an individual of a cemetery plot or a place of burial, entombment or deposit of human remains or ashes.

When a charity is not registered for the GST, it recovers this tax by claiming a PSB rebate.

Slide 41:

Let's look at how you claim a PSB rebate. To claim the PSB rebate, a charity will have to calculate the total GST and the federal part of HST paid on its purchases and expenses. It can claim a PSB rebate of 50% of this amount. In addition, if the charity is resident in a participating province, it can also claim a PSB rebate of the provincial part of HST at the applicable rate. As I previously mentioned, charities resident in Nova Scotia, New Brunswick, Newfoundland and Labrador qualify for a 50% rebate of the provincial part of HST.

It is proposed that a PSB rebate on the provincial part of HST will be available for charities resident in Ontario at a rate of 82% while charities resident in British Columbia will be eligible at a rate of 57%. PSB rebates are claimed by using form GST66 or 284.

As a non-registrant, a charity can file a PSB rebate claim twice in a fiscal year. One rebate application covering the first six months of the fiscal year and another for their last six months of the fiscal year.

Slide 42:

Next, we'll look at charities that are registered and using the net tax calculation for charities.

Slide 43:

Once registered for the GST/HST, a charity is required to collect GST/HST on its taxable supplies. This is another example of why it is important to correctly determine what supplies you make are taxable. Most of the GST/HST paid on your expenses will be recovered by claiming a PSB rebate. A charity that is a GST/HST registrant has to use a net tax calculation for charities to determine its net tax.

This method applies exclusively to charities and is mandatory.

Slide 44:

Let's look at how the net tax calculation for charities works. Net tax is generally the difference between any GST/HST collected or collectible by a person, less any ITCs that the person is entitled to recover.

GST/HST registrants that are not charities usually report 100% of the GST/HST they collect and full ITCs are generally available. Under the net tax calculation for charities, charities report only 60% of the tax they collect. The 40% difference is to be kept by the charity. Please note that while -- excuse me. Please note that a charity will continue to remit 100% of its tax collected for certain sales. For example, sales of real property, capital property, and 100% of tax collected in error.

Under this method, ITCs may not be claimed except for purchases of, or improvements to real property, capital property used primarily that is 50% or more, in commercial activities. Where no ITC is available, the charity may claim a PSB rebate for that tax paid or payable.

For a detailed discussion on the net tax calculation for charities, please refer to info. sheet GI66 entitled, How a Charity Calculates a Net Tax to be Reported on its GST/HST Return.

Slide 45:

Some charities that are registered for the GST/HST may elect to not use a net tax calculation for charities. Let's now review how those charities remit and recover the GST/HST.

Slide 46:

In very specific circumstances, a charity can opt out of using the mandatory net tax calculation for charities. In order to make this election, the charity must either make zero-rated supplies, for example, basic groceries or certain medical equipment in the ordinary course of a business; make supplies outside of Canada in the ordinary course of a business; or 90% or more of its supplies are taxable supplies. Once the election is made, it is binding on the charity and all of its branches. Charities must notify the CRA of the election not to use the net tax calculation for charities by mailing or faxing a completed form GST488 entitled, Election or Revocation of an Election not to Use a Net Tax Calculation for Charities to a Tax Services Office.

Slide 47:

Let's look how a charity calculates its net tax once it has made this election.

When a charity has made the election, it calculates the net tax under the general rules used by most GST/HST registrants. Under these rules the charity must remit all of the GST/HST it collects and it may claim ITCs but only to the extent that the purchases are used in taxable activities.

This will require the charity to determine the extent that it is using a purchase in making either taxable or exempt supplies. When no ITCs are available, the charity may claim the PSB rebate for the GST/HST paid or payable. Charities that are registrants file their PSB rebate applications with the same frequency as they file their GST/HST returns. That is, monthly, quarterly or annually.

You can file your rebate application when you file your GST returns. If you do this, include the rebate amount on line 111 of your GST/HST return.  And simply remit the difference between the amount of your net tax owing and the amount of your rebate.

Slide 48:

On slide 48 we have a chart. This chart recaps when a charity is required to collect and remit GST/HST and the options available to recover the tax. As you can see, the PSB rebate is available to all charities both registrants and non-registrants. Also of note is that charities not registered for the GST/HST should not collect GST/HST on their taxable supplies unless the charity makes certain supplies of real property.

Slide 49:

The PSB rebate applications and GST/HST returns are filed for your charity as a whole. However, if your charity has branches or divisions, it can apply to have its branches or divisions file separate rebate applications and returns. Let's look at how this application is made.

Slide 50:

This application is available to all charities regardless of their GST/HST registration status. To be eligible to file separate returns and rebates, each branch or division must be separately identifiable by either its location or by the nature of the activities engaged by it, and maintain separate books, records and accounting systems.

When a charity has branches or divisions scattered across the country, it may be time consuming to have all the information submitted to the head office. This application simplifies the charity's reporting by enabling specific branches or divisions to file rebates or returns independently rather than having the head office do so. The application is made using form GST10 entitled, Application or Revocation of the Authorization to File Separate GST/HST Returns and Rebate Application for Branches or Divisions.

This form is to be completed by an authorized representative of the charity's head office and must be sent to the tax office that serves the charity's head office.

Slide 51:

Once an application is approved by the CRA, the branch or division identified on the application form must file separate PSB rebates, separate printed book rebates, and separate GST/HST returns, if it is a registrant. Take, for example, a charity that is not a GST registrant and has a December 31st year end. A division that has been approved to file separate rebates must file its PSB rebates using the same filing frequency and year end as the head office. The branch must file two PSB rebates applications a year. The first covering the first two six months of the fiscal year and the other covering the last six months of the fiscal year. Although a charity may have many divisions, it is not required to file the application for all divisions, only for those who want to file separately.

Slide 52:

We're going to take a few moments now to answer some of your questions.

Donna had a question which is,

I don't know if we are registered for the GST and how can I find out if we are?  We have an RT account, does that mean that we're registered?

Well Donna, having an RT account does not mean that you are registered for GST/HST purposes. If you're only filing PSB rebates, you will be issued an non-registered RT account. To find out -- and it will look exactly the same as if you were registered, unfortunately, so to find out if your charity is registered for GST/HST purposes, please call the CRA business inquiries line at 1-800-959-5525. If you have your charity's GST/HST number, you can also use the GST/HST registry on the CRA's website to determine if that number is registered.

Linda's question is,

We currently get provincial sales tax back on some of the items we purchased because we're a registered charity.  How will HST affect this?  We're in Ontario.

Well, charities resident in Ontario may claim the PSB rebate of 50% of the GST and the federal part of HST. With the introduction of HST in Ontario, charities resident in Ontario will be entitled to the PSB rebate of 82% of the provincial part of HST. Remember that you don't have to be registered for GST purposes to claim the PSB rebate.

From Sherry,

We are a registered charity that operates a thrift store in B.C. We are not registered for GST, as registered charities operating thrift stores are not required to register. However, we currently charge and remit PST on certain items sold in the thrift store. We receive the 50% PSB rebate on GST we have paid. Under HST, I assume that we will not be required to charge HST and will continue to receive the 50% GST rebate.

While supplies of used or donated goods are exempt when they're provided by charities, so this will not change with the introduction of HST in British Columbia. If you also sell new goods, these could be subject to the HST. We suggest that you call GST rulings at 1-800-959-8287 to discuss your specific situation. You will continue to claim PSB rebates, so 50% of the GST or federal part of HST, in addition, charities resident in British Columbia will be entitled to a PSB rebate of 57% of the provincial part of HST.

Slide 53:

We'll now go over a few other issues that may be of interest to charities. The first one being on slide 54.

Slide 54:

Although the PSB rebate may be the most common rebate claim, other rebates may be available to charities. These other rebates have varying eligible criteria and some may need pre-approval from the CRA before you can qualify. Most have rebate rates that are higher than the charity PSB rebate rates. If you think you may be eligible for an additional rebate and you wish to have more information, please contact us at the GST/HST rulings phone number that I'll list at the end.

We had a question from Linda on one of the rebates listed on this slide.

Her question was that if you operate a public lending library, other rebates are available and she wanted to know if we had a definition.

We do have a publication that is specific to this particular rebate. It's the GST/HST memoranda series 13.4 entitled Rebate for Printed Books, Audio Recordings of Printed Books and Printed Versions of Religious Scriptures. It's available on the CRA website.

Paragraph five of that document does provide a definition or interpretation of what the CRA considers a public lending library. It is interpreted to mean a place where a collection of documents and other items such as films and recordings are kept and maintained and that is open to the public for its use. It includes libraries from which these documents and other items can be borrowed as well as libraries accessible to the public for research purposes only.

Slide 55:

As a charity, you may receive grants and contributions, subsidies or other payments. These are given for many different reasons ranging from simple contributions made to a charity to major government funding projects. Usually these payments are made in the public interest or for charitable purposes. We do not regard them as payment for supply. Therefore, the payments will not be subject to the GST/HST. The tax treatment of grants and subsidies is to be determined on a case-by-case basis.

For more information, please see technical information bulletin B67 entitled, Goods and Services Tax Treatment of Grants and Subsidies. Receiving grants and subsidies will generally not affect your entitlement to rebates or ITCs.

Slide 56:

As I discussed at the beginning of this presentation, HST is being introduced in Ontario and British Columbia on July 1, 2010. There are some transactions that may occur before the July 1 implementation date that you should give attention to as they may be subject to HST and not GST. This part of the presentation is a general overview of when this may occur. Additional information on transitional rules will be discussed on slide 64.

Slide 57:

On slide 57 it shows the different dates that are important for the HST transitional rules. The first one, October 14, is the date that the governments of Ontario and British Columbia announce the general transitional rules for property and services.

May 1, 2010 is the date that the HST will apply on the consideration for certain property and services provided on or after July 1, 2010. And July 1 is the implementation date of HST in Ontario and British Columbia.

Slide 58: 

This list summarizes the types of supplies made in Ontario and British Columbia that may be subject to the transitional rules if the transaction takes place before July 1, 2010. The rules are very specific and vary from one subject to the next. If you wish further information on any of these special rules, please refer to the information on slide 64. Also, the CRA is providing seminars and webinars on these topics. Please see the CRA website, www.cra.gc.ca to sign up for these information sessions.

Slide 59:

Let's look at one example of the special HST transitional rules.

Some charities that are registered for GST/HST purposes may be providing taxable admissions to a place of amusement such as theaters or museums. You may be selling tickets in the spring of 2010 for events that will take place after July 1. When more than 10% of the event takes place on or after July 1, 2010, GST applies to the consideration that becomes due, or is paid without having become due, before May , 2010. When the consideration becomes due, or is paid without having to come due, after May 1, 2010, GST applies to the consideration that relates to the portion of the event that takes place before July, 2010 but HST applies to the consideration that relates to the portion of the event that takes place on or after July 1, 2010. We'll explain.

First let's look at an example of the HST transitional rule for admissions.

Slide 60:

A charity makes taxable supplies of admissions to a concert. The admissions are sold on May 15, 2010 but the concert takes place on July 15, 2010. A charity registered for GST/HST purposes would be required to collect HST on these taxable admissions as the event takes place after July 1, 2010. This is because the consideration for the admissions became due on or after May 1, 2010.

Slide 61:

If your charity makes supplies that are subject to the transitional rules, the way you account for the HST will be a bit different. You will account for the 5% federal part of HST on the return that covers the date in which the consideration for the supply becomes due, but the 8% or 7% provincial part of HST will only be accounted for on the GST/HST return that covers July 1. As most charities that are registered for the GST/HST file one GST/HST return per year, if that return includes both the date the sale takes place and July 1, nothing will be different. However, if using the previous slide's example, your charity has a May 31 year end, then the charity will record the 5% part of the HST on the return for the period covering May 31 as the sale took place on May 15. The 8% or 7% provincial part of HST will be accounted for on the return that includes July 1, 2010.

Slide 62: 

When the consideration becomes due or is paid without having become due after October 14, 2009 and before May,  2010, the supplier charged the purchaser GST, and accounts for the GST on the GST/HST return for the reporting period that includes the date the tax became due or paid, as usual. However, certain purchasers that are non-consumers such as charities, they may have to self assess the 8% or 7% provincial part of the HST on certain purchases. When the consideration becomes due, or is paid without having to become due, during this time.  For certain property and services supplied on or after July 1, 2010.

Slide 63: 

Charities that make certain purchases and meet any of the requirements listed on this slide would generally be required to self assess the provincial part of HST. Let's look at an example of when this would be required. On April 15, 2010, a charity pre-pays an amount for the purchase of a delivery van. The charity receives ownership and takes delivery of the van in August, 2010. The van will be used in the charity's exempt activities. Since both transfer and ownership and delivery of the van occur in August 2010, the sale of the van is subject to HST. As the pre-payment is made before May, 2010 the seller will charge the federal part of HST, but not the provincial part of the HST. Since the charity uses the van only for exempt activities, the charity is required to self assess the provincial part of the HST and it would do so on its GST return that includes July 1, 2010, if that return is due before November, 2010. Otherwise, the charity must account for the provincial part of HST in the prescribed form before November of 2010.

A PSB rebate would be available to the charity on the amount that is self assessed and it is also proposed that a person will not have to self assess if the amount of tax that is payable in a calendar month is less than $25.

Slide 64:

The provinces of Ontario and British Columbia have information on their websites regarding the implementation of HST in their province. The CRA has published several information sheets and technical information bulletins on this subject also. We also offer a number of informative seminars both in-person and online to help ensure that you receive information you need for the transition to the federal administration of HST in Ontario and British Columbia. CRA HST seminars and webinars are free of charge. Please visit the CRA website often as new locations are added weekly.

Slide 65:

Further information on most of today's topics can be found in the GST/HST Public Service Body's Rebate Guide and the GST/HST Information for Charities Guide. Both are available on our website and are in the process of being updated with information relating to the introduction of HST in Ontario and British Columbia.

The CRA recently published Notice 253 entitled HST for Ontario and British Columbia, Questions and Answers for Public Service Bodies and this document should be consulted if you have any questions regarding this topic.

Slide 66: 

Forms are available on our website or by phoning the CRA. Officers at the business inquiries, general inquiries number can also assist charities with a variety of issues relating to their GST/HST accounts such as address and fax numbers to send elections and application forms, help determining if you qualify for various rebates and how to complete the rebate form, information regarding should you register and registering you for the GST, and requests for change of address, contact numbers, etcetera. Officers at the GST/HST rulings number provide clients with ruling and interpretation services, both written and verbal, about the application of GST/HST and related statues and regulations. Please note that Revenu Québec administers GST/HST in Québec.

If the physical location of your charity is in Québec, please contact them at the number listed on the slide.

Slide 67:

There may be some more -- other publications that you would find interesting after today.

Slide 68:

We have some recently published a couple of info sheets on topics specific to charities. These documents are no more than six pages in length, written in plain language, and have been designed to provide clear and brief explanation on specific GST/HST issues.

Slide 69:

We have some documents if you want more information regarding grants and subsidies. And as I mentioned, we do have other rebates and one of them is the export rebate, and there's a publication on that.

Slide 70:

I have included a list of the different forms that we referred to throughout the presentation and their full name.

Do we have time for a few more questions?  All right.  That's great.  I'm sure the participants will enjoy that.

Sharon in Hamilton asks,

If we have a fiscal year end that is not December, can we do a PSB rebate for nine months ending June 30, 2010 and a second return for the three months ending September, 2010?

If you are not registered for GST, you can file an application for the first six months of your fiscal year and another application for the last six months of your fiscal year. You cannot file a rebate for a period of nine months and then a period of three months. If you are a GST registrant, then you file your rebate application form according to your reporting periods and reporting periods for registrants are either monthly -- you file for covering a month, covering your three months, or covering a whole year. So, the options that you're looking for, Sharon, unfortunately, are not available.

Susan had a question,

One of the service groups in town hosts an annual fair and business associations and community programs can rent booth space to promote their programs -- booth space, excuse me, to promote their programs. In the past, they have never charged us GST or PST on the booth rental, ever. This year, they are charging HST. Is this the case now that HST applies to the booth rental cost?

There have been no changes to supplies of booth rental cost, so their tax status has not changed with the introduction of HST. Now, to determine if they're correctly charging you HST now, that's a question of fact. So, the things that will determine that tax status is whose name is making the supply of the booth rental, because there are some rules for charities and then there are rules for persons who are not charities. Now, some of the other factors that could impact the tax status of the supply include a situation where the organization making that supply could have been recently informed that the supply of the booth rental is, in fact, a taxable supply. Or, perhaps, the organization was a small supplier in the past, and wasn't required to collect GST and now has registered and therefore, is now required to collect GST. Also, if the supply is a supplier of real property, perhaps they've made an election to make that supply of real property now taxable. So, there's a lot of unknowns and there's a lot of factors that could influence. So, without knowing all the details, it's difficult to let you know.

And we'll -- let's see here.

Currently, we lease a whole building and use part of the building for one of our programs and then lease the rest of the building to other organizations. Do we need to be charging them the HST?

Now, the answer is a charity that rents out office space is making an exempt supply.  It can, however, make an election to make these supplies taxable. If you would like more information, please call GST rulings at 1-800-959-8287.

So, we got some really good questions today from our audience. I thank you very much for that. This does wrap up our presentation. I would like to take this opportunity to thank you all for participating today. I hope you found it worthwhile and learned something new.

Some questions we did not have time to address will be answered and posted on the webinar website under the appropriate webcast in the coming weeks.

Thank you and we hope you enjoyed this webcast. If you would like more information on our future live webcasts, visit our charities and giving website and select webinars, information sessions and other news.

Also, if you haven't already signed up for the electronic mailing list, we invite you to register on the charities and giving website by selecting webinars, information sessions and other news and electronic mailing list. Once registered, you will receive one or two emails a month with new information and updates affecting registered charities. The electronic mailing list is also one of the communication channels we use to let you know when the next charities information webinars will take place.

If you would like more information on GST/HST, please contact our business inquiries at 1-800-959-5525.