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					                          GST Memoranda Series

13.2 Rebates: Legal Aid

Overview                 This section outlines how the administrator of a legal aid plan may apply for a rebate
                         of the Goods and Services Tax (GST) paid or payable on purchases of taxable services
                         and goods.


Disclaimer               The information in this memorandum does not replace the law found in the Excise Tax
                         Act and its Regulations. It is provided for your reference. As it may not completely
                         address your particular operation, you may wish to refer to the Act or appropriate
                         Regulation, or contact a Canada Revenue Agency (CRA) GST/HST Rulings Centre for
                         more information. These centres are listed in GST/HST Memorandum 1.2, Canada
                         Revenue Agency GST/HST Rulings Centres. If you wish to make a technical enquiry
                         on the GST/HST by telephone, please call the toll-free number 1-800-959-8287.

                         If you are located in the Province of Quebec, please contact Revenu Québec by calling
                         the toll-free number 1-800-567-4692 for additional information.


General
Definition               1. Each province and territory has its own legal aid organization whose mandate is to
ss 258(1)                provide legal services to persons who could not otherwise afford the services of a
                         lawyer. A "legal aid plan" is defined as a legal aid plan administered under the
                         authority of the government of a province. The term "province" is interpreted to
                         include a territory.

Legal services           2. Legal services provided by the administrator of a legal aid plan may be provided to
Schedule V, Part V       clients at no charge, at a discounted rate or at the full rate ordinarily charged by private
                         practitioners. The supply of legal aid services under such legal aid plans is exempt
                         from the tax.

Additional information   3. Further information on exempt supplies of legal aid services is available in GST
                         Memorandum 300-4-5, Legal Services and will be available in Chapter 5, Exempt
                         Supplies.

Tax status of legal aid plans
Government plans         4. Some legal aid plans in Canada are part of the provincial or territorial government
                         entity. To obtain a list of government entities for each province, please contact your
                         local Revenue Canada district office.




                                                                                                    ME-13-02-9401-E
Section 13.2 Rebates: Legal Aid (continued)


 Tax treatment            5. Legal aid plans that are administered by part of the provincial government entity
                          receive the GST treatment of a provincial government entity and, therefore, purchases
                          of legal services by the administrator of such a plan would not be subject to the tax.
                          Administrators of these legal aid plans will use a "certificate" which verifies that the
                          supply is being purchased by a provincial government, to receive relief from the tax at
                          the time of purchase. These legal aid plans are not covered by this section.

 Qualifying non-profit    6. Some organizations that administer legal aid plans (that are not part of a provincial
 organizations            government entity) may qualify as non-profit organizations for the purposes of the
                          GST. To be a qualifying non-profit organization, the organization must receive at least
                          40% of its funding from the province or other government sources. These
                          organizations are required to pay the tax on their purchases. This section explains how
                          that tax may be recovered in whole or in part through one or more rebates.

 Additional information   7. For current information on the status of specific legal aid plans or legal aid clinics,
                          please contact your local Revenue Canada district office.

 Rebate for tax paid on legal services
 Taxable services         8. Supplies of legal services by registered private practitioners to the legal aid plan
                          are taxable at 7%. Fees for legal services may include out-of-pocket expenses made by
                          a lawyer in the ordinary course of practice in addition to fees for professional services.
                          Such expenses or "disbursements" are treated as part of the lawyer's fees for legal
                          services for GST purposes unless the expense was made by the lawyer as the client's
                          agent.

 Amount of rebate         9. The administrator of a legal aid plan (which is not part of a provincial government)
 ss 258(2)                is eligible for a rebate of 100% of the tax paid for legal services provided to the legal
                          aid plan.

 Example                  10. For example, assume that a lawyer in private practice provides legal services to the
                          legal aid plan. On the invoice, in addition to the lawyer's fees, the lawyer requests a
                          reimbursement for expenses incurred by the lawyer in his or her own name rather than
                          as agent for a client under the plan. Charges for long-distance telephone service or
                          photocopying services paid by the lawyer and pertaining to the legal aid case are
                          examples of such expenses. The lawyer charges the tax on the total amount invoiced.
                          The administrator of the legal aid plan may claim a 100% rebate of the tax charged by
                          the lawyer on the legal services and the expenses that are deemed to be part of the
                          consideration for the supply of the legal services.

 Limitation               11. Where a rebate of the tax charged for legal services is paid, the administrator of
 ss 258(2)                the plan cannot claim any other rebate in respect of the same supply.

 Application for legal aid plan rebate


 When to file a claim     12. The administrator of a legal aid plan may apply for the rebate of the tax charged on
 ss 258(3)                legal services as frequently as desired. However, the application must be filed within
                          four years after the end of the reporting period in which the tax became payable. The
                          reporting period for non-registrants is a calendar month.

Section 13.2 Rebates: Legal Aid                             Goods and Services Tax - Memoranda Series
page 2 (Nov-06)                                                                           Chapter 13
                                         ME-13-02-9401-E
Section 13.2 Rebates: Legal Aid (continued)


 Prescribed forms         13. To claim the rebate for tax paid on legal services, the General Application For
                          Rebate Of Goods And Services Tax, form GST 189, is the prescribed form.

 Guides                   14. Guides are available which contain step-by-step instructions on how to complete
                          the application form. These guides and forms are available at Revenue Canada district
                          offices.

 Rebate for expenses other than legal services
 Public Service Body      15. Legal aid organizations (that are not part of a government entity) may also be able
 rebate                   to claim a partial rebate of the tax charged on supplies other than legal services. The
 s 259                    rate at which a rebate may be claimed depends on the status of the legal aid
                          organization. For example, a legal aid plan that is a qualifying non-profit organization
                          (as described in paragraph 6 of this Section) will be entitled to claim a rebate equal to
                          50% of the "non-creditable tax charged". Where the organization is registered for the
                          GST, a portion of the tax may be fully recoverable through an input tax credit (ITC).

 Calculating the rebate   16. The "non-creditable tax charged" for a legal aid organization would be equal to the
                          total amount of tax paid or payable on all purchases for the claim period (other than
                          legal services), less the total of all amounts included in determining an input tax credit.

 Tax paid on behalf of    17. Tax paid for purchases made by another person, such as a lawyer, as an agent of
 legal aid plan           the legal aid plan is considered to be tax paid by the legal aid plan and not by the other
                          person. The administrator of the legal aid plan may claim a rebate of the tax paid in
                          respect of these supplies at the rate applicable to the organization.

 Additional information   18. For further information on rebates for charities, qualifying non-profit organizations
                          and other selected public service bodies, refer to GST Memorandum 500-4-8, Non-
                          Profit Organizations, GST Memorandum 500-4-9, Charitable Organizations and GST
                          Memorandum 500-4-3, Universities, School Authorities and Public Colleges. This
                          information will also be available in Chapters 22, 21 and 23.

 Application for Public Service Body rebate

 When to file a claim     19. Only one rebate application may be filed in each claim period, unless the legal aid
 ss 259(6)                organization has applied to the Minister to have its branches or divisions file separate
                          GST returns and/or rebate applications. For a non-registrant, the claim period is the
                          fiscal quarter and for a registrant it is the reporting period.

 Limit on application     20. A legal aid organization that is a non-registrant must file a rebate application
 ss 259(5)                within four years after the last day of the claim period in which the tax was paid. A
                          registrant legal aid organization must file a rebate application within four years after
                          the day its return is required to be filed for that period.

 Prescribed forms         21. The rebate application form General Application For Rebate Of Goods And
                          Services Tax, form GST 189, should be used by the administrator of a non-registrant
                          legal aid plan when applying for a rebate of tax paid on goods and services (other than
                          legal services). The administrator of a registrant legal aid organization would file the
                          GST 66 form, Goods and Services Tax Rebate Application for Registrant Public
                          Service Bodies.

Goods and Services Tax - Memoranda Series                              Section 13.2 Rebates: Legal Aid
Chapter 13                                                                            (Nov-06) page 3
                                        ME-13-02-9401-E
Section 13.2 Rebates: Legal Aid (continued)


 Guides                 22. Guides are available containing step-by-step instructions on how to complete the
                        application. These guides and forms are available at Revenue Canada district offices.

 Filing a rebate application
 One application        23. Both types of rebate application forms must be dated and signed by the
 ss 262(2)              administrator of the legal aid plan and only one application may be made for a rebate
                        with respect to a particular amount of tax.

 Ineligible claims      24. A rebate is not payable to the extent that it can reasonably be regarded that the
 s 263                  claimant:

                        (a) has previously been refunded, rebated or remitted the amount under the Act or any
                            other Act of Parliament;

                        (b) has claimed or is entitled to claim an ITC in respect of the amount; or

                        (c) has obtained or is entitled to obtain a rebate, refund or remission of the amount
                            under any other provision of the Act or under any other Act of Parliament.

 Application address    25. Rebate applications must be mailed to the following address:

                            Summerside Tax Centre
                            Summerside, P.E.I.
                            Canada
                            C1N 6A2

 Books and records
 Books and records      26. Every person carrying on a business or engaged in a commercial activity in
 ss 286(1)              Canada, every person who is required to file a return and every person who makes an
                        application for a rebate or refund is required to maintain adequate books and records.

 More information       27. More information on this subject is contained in Chapter 15, Books and Records.




Section 13.2 Rebates: Legal Aid                           Goods and Services Tax - Memoranda Series
page 4 (Nov-06)                                                                         Chapter 13
                                      ME-13-02-9401-E

				
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