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Subject:
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Elements Provided in the Course of Constructing a Road
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This is in response to your letter of May 26, 1994 to which you attached a proposed interpretation for our review.
Facts
1. On May 18, 1992, XXXXX (XXXXX), hereinafter called the Department, and XXXXX, hereinafter called XXXXX, entered into an agreement for the construction of a road, contract no. XXXXX.
On December 20, 1991, The Department and XXXXX hereinafter called XXXXX, entered also into an agreement for the construction of XXXXX in the vicinity of XXXXX contract no. XXXXX[.]
2. The two agreements provide that XXXXX and XXXXX "convenants and agrees with the Department to do, furnish and perform the works, materials, matters and things required to be done, furnished and performed, in the manner hereinafter described, in connection with the following work or works, namely:"
With XXXXX contract XXXXX "For the construction of XXXXX on a section of Highway No. XXXXX from XXXXX to the junction of Highway No. XXXXX for a total distance of XXXXX km."; and
With XXXXX contract XXXXX "For the construction of XXXXX in the vicinity of XXXXX[.]
3. The agreements further provide that tender, general provisions, specifications, special provisions and plans attached to the agreement are considered to be part of the latter.
4. The tender identifies many tasks to be performed by XXXXX and XXXXX in the course of constructing the above mentioned road/stockpiles, as well as amounts to be charged in respect of each of these tasks.
5. Amongst the tasks to be performed by XXXXX and XXXXX in the course of constructing the road/stockpiles, XXXXX and XXXXX are required to haul gravel.
Questions
You asked if the haulage of the gravel may be considered as a separate supply or is part of the supply of constructing the road/stockpiles. In your opinion, the haulage of the gravel is not a separate supply and is part of the supply of constructing the road/stockpiles.
Answer
Pursuant to the agreement of May 18, 1992 with XXXXX and the Department and to the agreement of December 20, 1991 with XXXXX and the Department, XXXXX and XXXXX are making a single supply of constructing a road/stockpiles to the Department. The different tasks specified in the tender are things to be done in the making of the above supplies. Therefore, we agree with you that these various tasks, including the haulage of gravel, are inputs and are not themselves supplies.
We believe that the provisions of the agreements specifically provide that XXXXX and XXXXX were to make a single supply of constructing a road/stockpiles to the Department. The elements identified in the tender are merely things on which XXXXX and XXXXX with the Department agree to specify in terms of the scope and the quality of the work to be done in constructing the road/stockpiles.
I hope our comments will be useful to you. Should you wish to discuss this issue further, please contact Anny Roy at (613) 954-2560.
H.L. Jones
Director
General Tax Policy
Policy and Legislation
XXXXX
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