AOH :: GST.TXT
The Goods and Services Tax, and how schools put it to use ~OUploaded by: ~PThe Griffin
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5500: GOODS AND SERVICES TAX
Number 5500
Approval Date Dec/90
Last Amendment Oct/93
Authority VP FOPS
GST on Purchases
The federal Goods and Services Tax (GST) is a consumption tax levied on
most of the non-salary and benefit expenditures of the University. Unlike
the B.C. Social Services Tax (PST), the 7% GST is effectively reduced to
2.31% for most academic and administrative expenditures by the University
being able to claim a 67% rebate. In the case of a commercial trans-
action by the University such as the sale of pens and paper to a
student, all of the 7% paid by the Bookstore on inputs for the
commercial transaction are recoverable, thereby reducing the
University's net cost to 0%.
The MOST CRITICAL requirement when processing purchase invoices is to
identify the GST being paid to suppliers and to code it properly on the
invoice payment voucher, cheque requisition or expense account so that
the University can claim its 67% rebate or 100% input tax credit. If
GST is paid but we fail to identify and code it properly, the full 7%
cost will be charged to the department adversely affecting that budget
and wrongfully overspending University resources by 4.69%.
As described on invoice payment vouchers, cheque requisitions and travel
expense reports, most transactions can be easily coded to trigger these
rebate and input tax credit cost recoveries. The forms themselves
contain basic instruction and all calculations and filings to credit
departments with recoveries are either automated or prepared by
Accounting Services.
The monthly FAS report of departmental expenditures shows the invoiced
amount and the GAS adjustment so that for each properly coded transaction
departments are charged only with the cost net of GST recovery. Note
that most departments will initially be credited with the 67% rebate on
all purchases. If they have commercial activity and have not coded
purchases to a separate FAS account, either quarterly or annually,
Accounting Services will work with the department to review purchases
and claim the additional 3.21%, thereby reducing the department's net
cost for those commercial transactions to 0%. Conversely, departments
with primarily commercial activity such as the Bookstore and Computer
Shop will be credited with a 100% input tax credit initially, but an
adjustment will be required periodically through the year to reduce the
recovery in respect of exempt sales to other University departments and
anomalies such as Distance Education.
Purchases Not Subject to GST
The Purchasing Department will generally indicate the GST status on
purchase orders. When in doubt as to whether GST should apply on an
invoice, contact either Purchasing or Accounting Services. This complex
legislation has many anomalies but the following items may be generally
purchased by the University without paying GST:
- salaries, wages and most employee benefit payments;
- interest, insurance premiums and most other financial services;
- groceries;
- purchases from "small suppliers", being individuals and companies
with less than $30,000 of taxable sales in the previous 12
months. This will include many recipients of honorariums and
outside contractors with very small and usually part-time
business activities. Where an honorarium or other fee is to
exceed $1,000, or where it is reasonable to expect that the
supplier's taxable revenues could exceed $30,000, the Business
Firm Retainer Form should be obtained by the account holder to
have the supplier confirm that they are exempt from charging GST
under Section 148;
- self-employment T4A income of independent contractors if, during
the previous 12 months, their taxable revenues have not exceeded
$30,000. If there is doubt, account holders should have the
contractor complete the Business Firm Retainer form to confirm
they are not registered;
- purchases by one University department from another;
- purchases from a joint venture such as TRIUMF or the federal
Centres of Excellence;
- most purchases of services from other registered charities,
including all Canadian university inter-library loans, consulting
fees, etc.
- goods provided by a registered charity including all universities
in Canada, at nominal cost being where no markup has been added
by the seller for profit or overhead;
- Provincial sales and hotel room taxes;
- voluntary tips and gratuities;
- penalties and fines;
- B.C. Ferry and Coquihalla Highway, etc. provincial tolls;
- airfares from Canada to destinations outside continental U.S.A.
and Canada.
Other Common GST Points on Purchases
Federal laws do not require GST to be explicitly shown on invoices but
when an invoice exceeds $30, there is a requirement that the invoice
indicate whether GST is included in the selling price and if there is
more than one item on the invoice, which items are subject to GST.
Subject to the above exceptions, we should assume that GST is included
in all purchases on invoices below $30. The invoice payment voucher and
cheque requisition forms provide for coding these situations so that the
account holder need not do the calculation (7/107th of the amount before
provincial sales tax).
For invoices over $30 where there is not a clear indication or where you
suspect GST should have been charged but is has not, contact the supplier
since GST may well be included in the price without proper identification
and if we do not identify it as such, we will forego our 4.69% rebate or
full 7% input tax credit.
Most add-on services on invoices such as freight, postage, handling,
telephone charges, etc. will include GST and we should code for a
recovery.
Note that some contractors with taxable sales below $30,000 may be
registered because by doing so they are able to obtain an input tax
credit themselves for GST paid on purchased supplies. In these cases,
they are obligated to charge GST to the University on invoices with the
minimum required GST information so that we are entitled to claim our
rebates or input tax credits.
Most imported goods will have the GST paid by our broker as they cross
the border. Accordingly the rebate or input tax credit recovery will be
triggered off the broker invoice rather than the foreign suppliers
invoice. Account holders should flag any foreign supplier invoice
charging the GST.
Some foreign suppliers such as magazines and other publishers are
registered to collect the GST so that a cross-reference is required to
broker billings by departments as you avoid any double payments of GST.
Imported services will obviously not be captured at the border and
accordingly the University is required to self-assess and effectively pay
the 7% on such supplies and separately claim back a rebate. If an
imported service relates to a commercial transaction, there is no need
to self-assess since we are eligible for the 100% input tax credit
recovery. Also, if the foreign supplier will have less than $30,000 of
taxable sales in Canada, they will be considered a "small supplier" and
there is no need for us to self-assess. This could happen with a guest
lecturer who has less than $30,000 of speaking or royalty, etc. revenues
in Canada. Again, the Business Firm Retainer form should be used to
clarify the tax status of the supplier if we have any doubts. Both the
invoice payment voucher and cheque requisition can accommodate such self-
assessment by merely putting a Y in one box similar to the procedure
used for self-assessing provincial sales taxes.
Purchasing Services will provide assistance to account holders on customs
clearance matters, including GST and excise duties.
If no GST has been charged on imported goods it is technically required
that the documents be returned to Canada Customs for their re-assessment.
Do not self-assess. Since the maximum net GST to the University is
2.31%, it is impractical to return any documents to Canada Customs for
reassessment unless the goods exceed $2,000 resulting in at least $50 of
net GST.
If Canadian invoices for goods or services contain apparent GST errors,
the account holder should contact the supplier for clarification or
correction.
It is REQUIRED THAT THE SUPPLIER REGISTRATION NUMBER (E.G. R123456789)
APPEAR ON EACH INVOICE (even including cash register receipts) exceeding
$30 if GST is charged and we are to claim either a rebate or input tax
credit. Without it, Revenue Canada may deny our recovery claim.
University Transactions with Affiliates
The Faculty Club, Dunsmuir Lodge, Students' Society, WCUMBS, National
Coaching Institute, Alumni Association, Education Training Centre, for
example, are separately registered GST entities. Accordingly, GST must
be paid when taxable goods and services pass between them. Accordingly,
proper invoices rather than the inter-department charge voucher (ICV)
should be used for all such taxable transactions since the purchasing
entity will only be able to claim its rebate or input tax credit if the
proper documentation supports the transactions.
University Revenues Requiring Our Charging of GST
Because the University is both a registered charity and an educational
institution, it is able to provide most of its services to students,
research sponsors and other campus users exempt of GST. The Appendix
below lists the taxable/exempt status of the most common University
revenues.
Note that this list ONLY applies to University revenues since not all
campus affiliates such as the Students' Society or Faculty Club are
registered charities. OVERRIDING the list below are the following
exceptions which may change certain taxable goods and services into
exempt.
- Sales of used goods including used textbooks and those supplies
and equipment acquired originally by the University for exempt
academic or administrative purposes.
- Sales of donated goods.
- Sales at "nominal value" being direct cost without profit or
administration cost recovery markup.
- Sales of goods or services where 90% performed by volunteers.
- Sales directly to the B.C. Government provided the invoice or
written contract contains a paragraph certifying that "This is to
certify that the property and/or services ordered/purchased
hereby re for the use of and are being purchased by the Province
of B.C. with Crown funds and are therefore not subject to the
Goods and Services Tax."
- Sales between University departments, but this does not include
transactions between the University and such affiliates as the
Students' Society, Faculty Club, WCUMBS, Dunsmuir Lodge, etc.
- Exports of goods or services including any contract research, but
note that in these cases we obtain full 100% input tax credit
rather than 67% rebates on GST paid on related purchases of input
goods and services.
Accounting Services provides an invoicing facility for currently over 25
departments. This service is available on request and ensures depart-
ments that the invoice documentation will comply with GST requirements
as well as reduce their time in processing invoices and monitoring their
collection efforts since Accounting Services will provide them with
monthly lists of outstanding accounts.
APPENDIX
TO GOODS AND SERVICES TAX POLICY
External Revenues and Recoveries
(Applies to the University which is also a registered charity but may not
apply in all respects to the Faculty Club, Students' Society,
W.C.U.M.B.S., Dunsmuir Lodge, Alumni Association, Education Training
Centre, etc.)
Note: This list applies only to revenues of the University. Many of the
exempt items listed will be taxable when purchased by the University.
* complex issue. See department involved.
GST TAX
OVERRIDING RULES STATUS EXCEPTIONS (Comments)
Used goods including textbooks, Exempt Except used equipment purchased
supplies and equipment to derive taxable sales
Donated goods Exempt
Sales at nominal value, being Exempt
direct cost without profit or
administration cost recovery
mark-up
Exports of goods or Zero-rated (no tax collected, but
services 100% input tax credit rather
than 67% rebate available)
Sales of goods or Exempt (complex area - refer to Develop-
services where 90% ment or Accounting)*
performed by volunteers
Inter-department Exempt (but chargebacks to be increased
revenues/recoveries for 2.31% of non-salary net cost
by University-proper of GST paid by originating
department)
Sales to B.C. government Exempt Except individual conference
fees, meals, small book orders,
etc., where no formal contract
is present, follow normal course.
SPECIFIC ITEMS SUBJECT TO ABOVE OVERRIDES
Administration fees and Exempt
charges
Admission to professional Taxable
performance, speech, forum
or athletic event
Admission to amateur Exempt (Become taxable if more than 10%
performance, speech, forum of performers/competitors are re-
or athletic event munerated FOR THE EVENT over and
above travel costs or if even a
single paid performer/competitor
is highlighted in advertising) *
Advertising Exempt
Athletics/recreation charge Exempt
per term to students taking
on-campus courses
- day passes Taxable
- sports camps Taxable Unless primarily for children
under 14 years of age, such as
the Adventure Camp
- recreational classes and Taxable Unless primarily for children
courses (e.g. aquatics, under 14 years of age or as
aerobics, and those part of a credit program*
through clubs such as
fencing, badminton, sailing, etc.)
Application fees Exempt
for admission
Audio copying Taxable Unless copied onto tape
already owned by purchaser
Auditor fees for courses Exempt
Beer, wine and liquor Taxable
Broken/damaged equipment - Exempt
replacement or repairs
Calendar mailing charges Exempt (Nominal consideration rule)
Car washes Exempt
Catering services
- external Taxable
- to departments Tax (see override rule regarding
included inter-department revenues)
Charters (e.g. MSS John Taxable
Strickland)
Coin sorting service Exempt
Commissions on vending Exempt
machine revenues
Computer
- sales of hardware and Taxable
packaged software in
Computer Shop
- time share revenues Exempt
- custom programming Exempt
- warranties Taxable (Since considered incidental
to a taxable sale)
Concerts (see Admissions)
Concession sales of Taxable (Possible exemption if 90%
operated and administered by
unpaid volunteers) *
Conferences Taxable Except exempt course fee
components, if any, and admin-
istration charge (Refer to
Conference Services)*
Consignment sales Taxable (Unless consignee is a
"small supplier" like a
student, and UVic makes
it clear it is an agent
for such sale).
Consulting, per diem charges Exempt
for faculty and staff
Contract research Exempt Unless several tangible goods,
such as prototypes, are
produced and value of prototype
is a significant component cost
of the contract
Co-op work term and Exempt
challenge fees
Counselling fees Exempt
Course note materials Taxable Unless sold by departments for
no more than 2 cents per page or
if sold to students in
Distance Education
Courses - credit Exempt
- non-credit Exempt Except for courses that are not
part of a program which consists
of two or more courses; or
courses in sports, games or
hobbies designed to be taken
primarily for recreational
purposes
- music Exempt (Even if for enjoyment and
recreation)
- challenge fees Exempt
- surcharge for fee
units exceeding Exempt
credit units
Damage/Vandalism repair Exempt
recoveries
Delivery charges Exempt
Deposits - general Exempt (Until title to good passes or
performance of service occurs)
- forfeiture Taxable
- forfeiture of Exempt (Because original intent was to
registration deposit pay an exempt course fee)
Distance Education courses Exempt (Including textbooks if
and course materials part of compulsory tuition
package)
Document evaluation fees Exempt
for registration
Donations in cash or in kind Exempt
Dubbing in AVTV Exempt
Editing in AVTV Taxable (Assumes both room and
equipment required)
Evaluation fees for admission Exempt
Examination fees Exempt
FAX services Exempt
Film and video rentals Taxable
Fines Exempt
Food and beverage Taxable Except student meal plans
providing at least 10 meals per
week for at least one month.
Red card passes will be taxable*
Framing Taxable Unless materials supplied
by purchaser and UVic
provides only labour
Gifts Exempt
Graduation certificates Exempt
Graduation fees to UVic Exempt
Grants from government, Exempt
business or non-profit bodies
Grocery items Exempt (Applies to bulk sales by Food
Services and to certain indivi-
dual items in the Bookstore)
Health plan premiums charged Exempt
for UVSS health plan and to
visa students
Health services fees, Exempt But user fees not reimbursable by
including physiotherapy, provincial plans may be taxable*
psychiatry, etc.
Interest and dividends on Exempt
investments
Interest on student loans Exempt
Inter-Library loans Exempt
Janitorial fees Exempt
Lab services Exempt
Laminating Taxable
Language 11 equivalency test Exempt
Late registration fees Exempt
Laundromats Exempt
Library borrowing charges Exempt
Licence fees (e.g., software) Exempt
Locker rentals Exempt
Lost book charges Exempt
Lost card and re-activation Exempt
fees
Manuals - sales such as Peer Taxable
Counselling, Dispute Resolution, etc.
Memberships - where main Taxable
purpose is dining, recreational
or sporting facility
(e.g., Faculty Club)
- Charity or other non- Exempt (Receiving a periodic newsletter
profit organization where and annual report is permitted
members do not receive without making membership
discounts or other taxable)
financial advantages
Overhead transparencies Taxable Unless copying onto
by AVTV transparencies already
owned by purchaser
Packages of services Mixed (We should unbundle taxable
and exempt components such
as an exempt course for $150
within a $400 package including
two days of taxable meals
and accommodation) *
Parking Taxable Except parking by students in
residence over one month
Penalties Exempt
Performances (See Admissions)
Photocopies Exempt Except multi-copy "publishing"
by Printing & Duplicating *
Photography services - negatives Exempt
- prints Taxable
Postage recoveries Tax (Postage will include
Included GST so no further adjustment
need be made)
Prerequisite courses - fees Exempt
Printing and Duplicating Exempt Unless it is publishing multi-
copies of the same document,
such as course notes, booklets,
etc., for resale *
Programs - Advertisements Exempt
- Sales Taxable (Programs will probably be sold
at price to include GST)
Publication sales, e.g., Taxable
Western Geographical Series,
Malahat Review, Literary Society,
Public History Group,
Learned Journals, etc.
Recitals (See Admissions)
Regalia rentals Taxable
Reinstatement fees Exempt
Rentals - equipment, Taxable
tools or supplies
- crutches, canes, Exempt
wheelchairs, etc.
- vehicles Taxable
- residence Exempt Except taxable if for $20
or more per night and for a stay
of less than one month
- classrooms, labs, Taxable Associated technician, usher,
Chapel, Stadium, etc., labour costs are exempt if
recital hall, audi- invoice and contract unbundle
torium, gymnasium, components
offices, television
studio and other space
rentals for less than
one month duration
Repairs and maintenance Exempt Except tax is chargeable on
service - AVTV and Buildings materials supplied if they
& Grounds exceed 10% of total billing and
include any mark-up
Research (see Contract research)
Returned cheque/NSF charges Exempt
Royalties and licence fees Exempt
Safety equipment sales Exempt Unless sold for more than direct
cost which excludes any mark-up
for administration or profit
Salary recoveries Exempt
Sales of new, purchased, Taxable (Direct cost cannot include any
manufactured or produced mark-up for profit or
tangible goods sold at a administration)
price in excess of
"direct cost"
Search fees (Library) Exempt
Secretarial services Exempt
Security services Exempt
Seminars Taxable (See Conferences) *
Service charges - fee accounts Exempt
- box office re Exempt
Royal, McPherson
and Belfry, etc.
- School of Music Exempt (Regardless of amateur or
professional performance)
Sponsorships (e.g. sponsor Exempt
funded dinners, prizes, etc.)
Student orientation Taxable Except housing if room rental
below $20 per night
Students' Society, Graduate Exempt (Provided fees are compulsory
Students' Society and Law element of taking a credit
Students' Society compulsory of taking a credit course
activity and building fund fees program)
Subscriptions Taxable Except sales outside Canada or
if 90% of copies distributed
free
Supplies Taxable Unless used or donated, or sold
at or below direct cost which
excludes any mark-up for adminis-
tration or profit
Taxable benefits on UVic Exempt A few isolated examples
payroll benefit plans affecting a small number of
employees are taxable
Telephone recoveries from Tax (The long distance telephone
staff and others Included bill will include GST so no
further adjustment need be made)
Telephone handset rentals Taxable
Telephone line rentals Exempt
Testing fees Exempt
Textbooks (new) Taxable Used textbooks are exempt as are
texts where cost is included in
Distance Education course package
Tips - voluntary Exempt
- compulsory gratuity or Taxable
service charge
Towel rentals Taxable
Travel guarantees Exempt
Transcripts Exempt
Tutoring Exempt
Vend cards for photocopying Exempt
and Laser printing
Vending machine sales of Taxable
food or beverage
Video copying Taxable Unless copied onto purchaser's
own tape
Visa student differential fees Exempt
Workshop registrations Taxable Unless part of an exempt credit
or non-credit course
NOTE: This schedule is subject to change.
[Submitted by: Margaret Spark (srscn05@uvvm.uvic.ca)
Thu, 20 Jan 94 14:17:02 PST]
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