We figured that if the Roblin And District Handi-Van could get some $1,500 then we should investigate our eligibility.
We took a look at the rules, sent off a letter and were informed that among other things, we should provide a copy of our operating agreement with the municipality.
It's funny how something simple was a problem.
Technically, we didn't have any operating agreement, contract or any other form of memorandum of understanding. Since 1980, we've been providing service to our region, working with as many as six municipalities. Each year we would apply for funding and take our chances.
Our funding has never been consistant, some years municipality A had some funds and other years municipality B had the funds. Somehow we always managed despite our municipal funding seldom being more than 20% of our revenue stream.
So we sat on this GST re-application process and dealt with the day to day issues of providing a rural service.
The Town of Crossfield's Municipal Council understood our plight, passing a motion for their Chief Administrative Officer AKA Town Manager (it's an Alberta thing) to sign a memorandum of understanding between ourselves and the town. The trouble was that we had to draft the document.
I was in a quandary.
We needed to produce an operating agreement that said we would provide service yet not put the town on the spot for better funding. This would be a document that promised service without suggesting the promise propect of full funding support. This was the kind of agreement that you never wanted to put in writing, especially if it was to be a template for all the municipalities in our service region.
The GST application stayed on the back burner until summer 2007 when I decided to take up the challenge again.
Checking the appropriate taxation guide , we were delighted to find this new example in the text:
"An organization supplies public passenger transportation services to the general public similar to municipal transit services. The organization is not under contract with the municipality to provide the services. The public passenger transportation services may be designated as municipal transit services to make the supplies exempt. The organization may then qualify to be designated as a municipality to claim the municipal rebate."
Someone had updated the guideline document, providing an new example that described EXACTLY how we operated. Suddenly the operating agreement requirement became redundant.
Unfortunately, the guidelines didn't exactly spell out how to meet the requirements of this new example. A brief phone call to the GST directorate yielded the helpful advice of "don't be afraid to include too much documentation with your letter." Our one-page letter was accompanied with annual reports, newspaper clippings and anything else we imagined to be relevant.
Three months later we had our confirmation letter.
For our operation, with six drivers and a $400,000 budget. This simple ruling meant a $14,000 rebate for 2007. As a registered charity, we were already claiming a 50% rebate. This ruling meant an addition $7000 returned to us annually.
Once again here are the docs:
GST/HST - Public Service Bodies - Rebates for Municipalities
GST/HST Information for Municipalities guide (RC4049)
Two last thoughts:
- Don't be afraid to contact CRA for advice (they actually want to help), unfortunately there is no avalanche of applications before the GST Directorate so the staff taking your call may not be aware of what exactly you are looking for.
- The last line of our letter asked for our status to be retroactive to January 2005 -- the year we originally wanted the rebate status for. It was granted and but we never confirmed if retroactivity was available just for the asking or because we specifically asked for it.
Big agency or small agency, this one-time status change is worth the effort. Let us know if it works out for you!
