30 July 1999 GST/HST Interpretation HQR0001836 - Supply of Tangible Personal Property or Supply of a Transportation Service

Dear XXXXX

Thank you for your letter of June 1, 1999 (with attachments) concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the operations of your client XXXXX a non-resident person and is the owner of the XXXXX XXXXX entered into a charter party (Agreement) with XXXXX in respect of the chartering of the XXXXX Agreement was signed in XXXXX and states that the XXXXX is to be employed XXXXX for XXXXX transportation of pipes and other supplies and the movement of personnel related to XXXXX business, and for other duties within the XXXXX Natural capacities and capabilities.

Under the Agreement XXXXX is to provide the XXXXX with a full and competent complement of Masters, officers and crew appropriate for such XXXXX. XXXXX to pay a fixed amount per day the XXXXX is on hire, for the use of the XXXXX and her equipment and personnel XXXXX provides also all provisions, supplies and on board stores. If XXXXX ends passengers on the XXXXX XXXXX, XXXXX is required to pay a fixed amount per meal and a fixed amount per bunk per man per night.

The Agreement states that the place of delivery of the XXXXX to XXXXX is XXXXX. The place of redelivery by XXXXX to XXXXX the expiration of the XXXXX[.]

Interpretation Requested

Whether the charter of the XXXXX under the Agreement is a supply of tangible personal property or whether it is a supply of a transportation service due to the fact that XXXXX provides a Master and crew to operate the XXXXX.

Interpretation Given

In accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST/HST Memoranda Series, we are providing an interpretation rather than a ruling as the matter is primarily one of fact and requires an opinion on commercial practices of the industry in which your client operates.

Based on the information provided in the Agreement and our understanding of the commercial practices, it is our opinion that XXXXX is making a supply, by way of lease, licence or similar arrangement, of the use or right to use the XXXXX (a tangible personal property) to XXXXX[.] For GST/HST purposes, a supply, by way of lease, licence or similar arrangement, of the use or right to use tangible personal property is deemed to be a supply of tangible personal property.

On April 1, 1997, the harmonized sales tax (HST) replaced the goods and services tax (GST) and the provincial sales tax (PST) in the three participating provinces of Nova Scotia, New Brunswick and Newfoundland with a harmonized tax rate of 15%[.]

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the Excise Tax Act, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST/HST Memoranda Series, do not bind the Department with respect to a particular situation.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-4291.

Yours truly,

B. Mulinda
Border Issues Unit
General Operations and Border Issues Division
GST/HST Rulings and Interpretations Directorate