Administrative Guidelines for Municipalities

From: Canada Revenue Agency

GST/HST Technical Information Bulletin B-046
February 22, 1991

This publication is not a legal document. It contains general information and is provided for convenience and guidance in applying the Excise Tax Act and Regulations. If interpretation problems occur, please refer to the legislation or contact the nearest Revenue Canada Excise office.


This bulletin outlines the expanded definition of "municipality" for purposes of the Goods and Services Tax and the application of the GST to intra-municipal transfers. Recent negotiations between the Federation of Canadian Municipalities, the Department of Finance and Revenue Canada, Customs and Excise, have resulted in a broadening of the definition of "municipality" and changes in the status of some supplies between municipalities.


Policy Guidelines

"Municipality" is defined in section 123 of the Excise Tax Act to mean:

(a) an incorporated city, town, village, metropolitan authority, township, district, county or rural municipality or other incorporated municipal body however designated, and

(b) such other local authority as the Minister may determine to be a municipality for the purposes of this Part".

The following local authorities may apply to be determined to be "municipalities" under paragraph (b):

  • Unincorporated municipal government units (e.g. unincorporated hamlets, villages, towns);
  • Special purpose provincially established authorities (e.g. conservation authorities, irrigation districts); and
  • Para-municipal corporations, boards and commissions created and owned or controlled by a municipality (e.g. municipal low-income housing corporations, library boards, police and fire commissions).

"Regional government" refers to a regional, county, metropolitan or other entity which operates at a level of authority between the provincial and municipal levels, and which shares jurisdiction with one or more municipalities.

"Para-municipal" refers to an organization which is created and owned or controlled by a municipality, and which has been included in the definition of municipality under paragraph (b) above.

Reapplication Required

Many unincorporated municipal government units and provincially established authorities were deemed to be municipalities under the former Excise Tax Act for purposes of the previous federal sales tax. These organizations will generally qualify for status as a "municipality" for purposes of GST. However, such bodies will have to reapply to Revenue Canada, Customs and Excise to be determined to be a municipality for purposes of the GST.


Unincorporated Municipal Government Units

Criteria: The organization must be empowered under provincial or territorial legislation to exercise general powers of local self-government.

Evidence: Organizations should provide a copy of relevant provincial legislation or regulations under which their municipal status has been granted, and copies of supporting documentation including local by-laws resolutions or written notification from the provincial authority responsible for municipal affairs.

Special Purpose Provincially or Territorially Established Authorities

Criteria: The organization must meet all of the following three criteria:

(1)The organization must be empowered by a province or territory to perform one or more municipal functions within a specified geographic area. These functions may include, but are not limited to:

  • irrigation or water improvement;
  • water or sewerage distribution, administration or other control function;
  • erosion control;
  • parks management;
  • conservation;
  • pollution control;
  • local planning, improvement or development;
  • fire or police protection;
  • library services;

(2)The organization must be a body, entity or organization as opposed to a single person.

(3)The organization must have local jurisdiction rather than provincial or national jurisdiction (e.g. responsibility for performing functions within a localized territory, rather than in the province as a whole.)

Evidence: Organizations should provide a copy of relevant provincial legislation or regulations under which their authority has been granted, and some official indication of this authority as provided by the provincial authority responsible for municipal affairs, local by-laws or resolutions.

Para-municipal Corporations, Boards and Commissions

Criteria: A para-municipal organization must meet the following criteria:

(i) it must be a body, board, commission, corporation, or other organization created by a province or a municipality; and

(ii) it must be owned or controlled by a municipality.

A municipality will be considered to own an organization if:

  • it owns 90 per cent or more of the shares or capital of the organization; or
  • it holds title to the assets of the organization or controls their disposition, such that in the event of wind-up or liquidation, these assets are vested in the municipality.

A municipality will be considered to control an organization if:

  • it appoints more than 50 per cent of the members of the governing body of the organization (e.g. directors, governors, commissioners); and
  • the organization must submit to the municipality its operating and, where applicable, capital budget for review and approval.

Evidence: The organization should provide documentation showing that a province or municipality created the organization. This could include the resolution of the City Council or other managing body of the municipality, indicating its intentions.

The organization should provide documentation showing that either the control or the ownership requirements have been met. Documentation may include: copies of municipal by-laws, the corporate charter, subordinate legislation empowering the organization, or financial statements.

Determination Process

Local Excise offices can assist organizations in reviewing their status.

Determinations will be processed in Ottawa. Organizations seeking municipal status should mail their request, together with supporting documentation, to:

Public Service Bodies & Governments Division
Excise & GST/HST Rulings Directorate
11th floor, Tower A
Place de Ville
320 Queen Street
Ottawa ON
K1A 0L5

If insufficient documentation has been provided, organizations will be contacted and asked to provide additional material to support their request. Organizations will be advised as soon as a determination has been made.


Schedule V of the Excise Tax Act lists a number of current exemptions for the supply of certain property and services by one municipality to another.

In addition to the exemptions currently provided, the Department of Finance has advised that GST will not apply to a supply between:

  • a municipality and one of its para-municipals
  • para-municipals of the same municipality
  • a regional government or one of its para-municipals, and a municipality operating within the jurisdiction of that regional government or one of that municipality's para-municipals.

Please note that the following will still be subject to the GST unless one of the exemptions in Schedule V applies:

  • supplies between neighbouring municipalities even if they are within the same regional government;
  • supplies between para-municipals of neighbouring municipalities, even if they are within the same regional government;
  • supplies between the para-municipal of one municipality and a neighbouring municipality.

If you have any questions concerning the above, please contact your local Excise office.

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