Published | Category : GST and QST
Public Service Bodies' Rebate
Many public service bodies (PSBs) are entitled to a PSB rebate of the GST and QST paid or payable on certain purchases and expenses. PSBs that have paid HST on purchases and expenses in a participating province may qualify for a PSB rebate of the HST paid.
Since January 1, 2014, municipalities (and organizations designated as a municipality) are entitled to a rebate of 62.8% of the QST paid on property and services acquired to make exempt supplies. The rebate mechanism is similar to that provided for under the GST system.
PSBs eligible for a rebate
A PSB may be eligible for a rebate if, on the last day of the claim period or on the last day of the fiscal year that includes that claim period, it is either
Therefore, a PSB could be entitled to a rebate for some claim periods, but not for others.
Taxes that qualify for a rebate
The rebate claimed by a PSB is generally calculated based on the taxes that were payable, or that were paid without becoming payable, during the claim period. However, the following amounts do not give entitlement to the rebate:
- any input tax credits and input tax refunds claimed by the PSB, or to which the PSB was entitled, for the taxes paid during that period;
- any tax refunds, rebates or remissions that it is reasonable to expect the PSB received or was entitled to receive;
- any amount of GST or QST that was refunded, credited, or adjusted in favour of the PSB and for which it has received a credit note from the supplier or has issued a debit note to the supplier.
The taxes payable during a given claim period cannot generally be claimed in the rebate application for a subsequent claim period. If a PSB has not claimed rebates for several periods, it must file a separate rebate application form for each period for which it is entitled to a rebate.
Rebate application forms
A PSB filing a rebate application for the first time must complete the GST/HST Rebate Application for Public Service Bodies(form FPZ-66-V) for the GST and the Application for a QST Rebate for Public Service Bodies(form VDZ-387-V) for the QST.
After we process the application, we will send the PSB personalized versions of the forms, which the PSB will be required to use for its next application.
Frequency of rebate applications
If the PSB is registered for the GST and the QST, it must apply for a rebate when it files its returns, whether it be on a monthly, quarterly or annual basis.
If the PSB is not registered for the GST and the QST, it must apply for a rebate twice a year: once for the first six months of its fiscal year, and a second time for the last six months.
Filing deadlines for the rebate
A PSB registered for the GST and the QST has four years from the due date of its GST and QST returns for a given claim period to file a rebate application. A PSB that is not registered for the GST and the QST has four years from the last day of the claim period to file a rebate application.
If a PSB has already claimed a rebate for a claim period and subsequently realizes that it could have claimed rebates for other amounts of tax for the same period, it must adjust the previously filed application by including the additional amounts of tax. It cannot include the amounts in the rebate application for a different claim period. Adjustments to applications must generally be made no later than four years after the date the applications were originally filed.
A charity that is not registered for the GST and the QST pays GST and QST on purchases and expenses that qualify for a rebate throughout its fiscal year ending December 31, 2013. Can the charity file a single rebate application that covers the entire fiscal year?
As the charity is not registered for the GST and the QST, it must file two rebate applications per fiscal year: one for the first six months and another for the last six months. The charity must file one rebate application for the period from January 1, 2013, to June 30, 2013, and another for the period from July 1, 2013, to December 31, 2013. It must calculate its rebate based on the taxes paid or payable for each respective period.
A charity that is registered for the GST and the QST files monthly tax returns. It always files rebate applications with its tax returns before the due date of the returns. In August 2013, the charity realized that it had not included an invoice dated April 24, 2013, in its April rebate application. The invoice showed a GST amount of $1,500 and a QST amount of $2,992. Can the charity include these amounts in its rebate application for the period from August 1, 2013, to August 31, 2013?
The taxes became payable during the period from April 1, 2013, to April 30, 2013. Therefore, the charity may only claim the rebate on the application for the period from April 1, 2013, to April 30, 2013. Since the charity had already filed its rebate application for that period, it must adjust that application rather than include the taxes in an application for a subsequent period.
In July 2013, an organization that is not registered for the GST and the QST was designated as a municipality in respect of certain designated activities. The effective date of the designation is July 1, 2009. The fiscal year of the organization designated as a municipality ends on December 31. How can the organization claim a rebate of the taxes paid or payable since July 1, 2009?
Since the organization is not registered for the GST and the QST, it must file two rebate applications per fiscal year: one for the first six months and another for the last six months.
Under the GST system, an organization designated as a municipality may file its rebate application within four years following the last day of its claim period. In this example, the organization must first file, no later than December 31, 2013, a rebate application for the period from July 1, 2009, to December 31, 2009. It must then file separate rebate applications for each of the subsequent six-month periods.
In addition, if the organization designated as a municipality has already claimed a rebate as a charity or a non-profit organization for a period after July 1, 2009, it must, for its designated activities only, adjust the rebate application using the rebate rates of a municipality.
Under the QST system, an organization designated as a municipality is not entitled to any rebates pertaining to its designated activities before January 1, 2014.
A non-profit organization that is registered for the GST and the QST files quarterly tax returns. It determined that it was a qualifying non-profit organization during its fiscal year ending December 31, 2013. The non-profit organization has never filed a rebate application. Can it apply for a rebate on the taxes paid on its purchases and expenses in the last four years?
The taxes paid or payable during a period when a non-profit organization was not entitled to the rebate cannot be carried to a rebate application for a period when the organization is entitled to a rebate. To claim a rebate of the taxes paid or payable during a previous period, the organization must determine whether it was a qualifying non-profit organization on the last day of the particular claim period or the last day of the fiscal year that includes that claim period.
If it determines that it was only a qualifying non-profit organization during its fiscal year ending December 31, 2013, the organization must file a separate rebate application for each quarter of 2013 in which it was entitled to the rebate.
For more information, see the Canada Revenue Agency's GST/HST Public Service Bodies' Rebate guide (RC4034).