Casual legal: Claiming the PSB rebate
DISCLAIMER: This article is meant to provide information only and is not intended to provide legal advice. You should seek the advice of legal counsel to address your specific set of circumstances. Although every effort has been made to provide current and accurate information, changes to the law may cause the information in this article to be outdated.
By Hannah Schmakeit
Reynolds Mirth Richards Farmer LLP
Alberta Municipalities Casual Legal Service Provider
Under the Excise Tax Act (RSC 1985, c E-15, the “Act’), municipalities (and other eligible parties) can receive the public service bodies’ (“PSB”) rebate. The PSB rebate allows eligible parties to get a refund of the GST or the federal part of any HST paid or payable on certain eligible purchases. The proportion of the GST or the federal part of any HST paid or payable that gets refunded depends on the claimant’s activity type, the claimant’s categorization by the Canadian Revenue Agency (“CRA”), and which province the claimant is operating in.
The following are eligible parties to get the PSB rebate:
registered charities,
qualifying non-profit organizations, and
selected public service bodies.
However, there are qualifications and restrictions for each group of eligible parties. For example, qualifying non-profit organizations must have at least 40% of their total revenue from government funding in order to qualify. Currently, the selected public service bodies include school authorities, universities, public colleges, hospital authorities, municipalities, facility operators, and external suppliers. If an entity does not fit nicely within any of those categories, they can apply for a municipal determination for GST/HST purposes, and, if granted, then the entity can benefit from the PSB rebate.
However, every party needs to ascertain whether the PSB rebate is sufficiently beneficial to justify applying for a municipal determination. The GST or the federal part of any HST paid can only be refunded for certain eligible purchases. The following could be eligible for the PSB rebate: (i) general operating expenses (e.g., rent, utilities, administration expenses, etc.) for which you cannot claim input tax credits; (ii) most allowances and reimbursements paid to employees who were involved in the exempt activities; (iii) property and services used, consumed, or supplied in exempt activities; and (iv) capital property used in exempt activities. The exempt activities referenced are generally GST/HST exempted activities. However, the CRA has been exceptionally clear about what is not claimable for the PSB rebate. While this list is very long and published by the CRA in RC4034(E) Rev. 25, some of the most notable purchases and expenses that are ineligible for the PSB rebate are tobacco products and alcoholic beverages, club memberships like golf clubs memberships, and property acquired to provide long-term residential accommodation unless greater than 10% of the accommodation is restricted to certain groups of people.
In order to claim the PSB rebate, all claimants must complete a Form GST66. Municipalities with questions about the PSB rebate should reach out to their professional advisors.
To access Alberta Municipalities Casual Legal Helpline, Alberta Municipalities members can call toll-free to 1.800.661.7673 or email casuallegal [at] abmunis.ca (casuallegal[at]abmunis[dot]ca) and reach the municipal legal experts at Reynolds Mirth Richards and Farmer LLP. For more information on the Casual Legal Service, please contact riskcontrol [at] abmunis.ca (riskcontrol[at]abmunis[dot]ca), or call 310.MUNI (6864) to speak to Alberta Municipalities Risk Management staff. Any Regular or Associate member of Alberta Municipalities can access the Casual Legal Service.
