Budget Clarifies GST/HST Rules on Supplies of Paid Parking by Public Service Bodies and Charities

March 21, 2013

The Budget clarifies the GST/HST rules that
apply to public service bodies (“PSBs”) that provide paid parking
services. For the purposes of the GST/HST,
a PSB is a municipality, university, public college, school authority, hospital
authority, charity, non-profit organization or government. Supplies by PSBs are exempt generally from
GST/HST, unless a specific exception to the general exemption applies.

Currently, supplies of paid parking are GST/HST
taxable, including when provided by a PSB.
This is an exception to the general GST/HST exemption for PSBs. The Budget clarifies how certain specific
exempting provisions apply to paid parking when supplied by a PSB.

Supplies of Parking by PSBs

Supplies of a property or service
made by a PSB are exempt from GST/HST if all or substantially all (i.e., 90% or
more) of the supplies of the property or service are made for free. The Budget
clarifies that this exempting provision does not apply to supplies of paid
parking made by way of lease, licence or similar arrangement in the course of a
business carried on by a PSB. Occasional supplies of paid parking by a PSB,
such as those made as part of a special fund-raising event, would continue to
qualify for the GST/HST exemption. This
measure will be effective the date the GST legislation was enacted.

Supplies of Paid Parking by Charities

Supplies of parking made by charities (other than
municipalities, universities, public colleges, schools or hospitals) are exempt
from GST/HST. The Budget clarifies that this exemption does not apply to supplies
of paid parking that are made by way of lease, licence or similar arrangement
in the course of a business carried on by a charity set up or used by a
municipality, university, public college, school or hospital to operate a parking facility. This
measure will apply to paid parking supplies made after Budget Day.

Charities and PSBs who provide paid parking
services may wish to review their policies and practices with respect to the
collection of GST/HST on this activity.
Miller Thomson’s GST/HST lawyers would be pleased to assist and advise
on this issue.

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