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Diffusing Canada's goods & services tax.


AT PRESS TIME We just received word that the Canadian government has made a major modification in the administration of the GST: Canada's nonresident rebate program will now apply to such convention-related expenses as audiovisual, convention show services, exhibit design and display, and newsletter services. The expanded rebate program is not retroactive to Jan. 1, 1991, when the GST took effect, but is expected to be implemented momentarily.

The Canadian government's response to concerns of industry and association executives makes Canada the only country with a value-added tax to offer a GST rebate on accommodation and convention expenses, according to Canada's Federal Tourism Minister Tom Hockin.

Read more about it in our July issue. There is a new word for tax in Canada, and if you are a U.S. meeting planner considering Canada as a destination, you may wonder what the word means. The GST--a new 7 percent goods and services tax that took effect in Canada Jan. 1, 1991--is quickly working its way into the vocabulary of many U.S. association executives, bringing with it the attendant confusion that invariably accompanies the introduction of any new tax.

At an ASAE-sponsored issue briefing, held at ASAE Feb. 27, 1991, association executives expressed interest and concern about the impact of the GST on U.S. meetings held in Canada.

While the briefing clarified many aspects of the basic operation of the GST, many issues about the specific application of the tax were raised, including questions about the procedures for obtaining an accommodation rebate for foreign convention organizers and visitors; the application of the GST to membership dues and other purchases paid for by Canadian residents to U.S. associations; and an explanation of the advantages and disadvantages of registering for the GST.

A unique aspect of the GST has been the Canadian government's recognition of the importance of the association community to the Canadian tourism industry and its willingness to listen to constructive criticism. The Canadian Minister of Finance, for example, has already made amendments to the original GST legislation in order to minimize its impact on the convention and meeting industry, including a streamlining of the rebate process for tour operators and convention organizers; a 100 percent rebate of the GST paid on meeting rooms and exhibit space to foreign convention organizers (provided the percentage of Canadian delegates is less than 25 percent); and a reduction of the minimum threshold for rebates from Can$20 (the amount of GST paid on Can$280) to Can$7 (the amount of GST paid on Can$100).

According to Canadian tourism board operators, the door is still open for change. "Revenue Canada's attitude has been very market sensitive," says Maureen Kelly, sales manager for the Montreal Convention & Tourism Bureau, Canada. "They are trying to be as accommodating as possible."

Key desirable changes that association executives continue to lobby for are a "grandfather clause" that would exempt U.S. associations that negotiated contracts for conventions in Canada before implementation of the GST and an exemption for all convention-related services, including food and beverage, security, and audiovisual services.

"No one in Canada views the association market as a one-time proposition," says Wayne St. John, director of Tourism Canada, Toronto, Ontario, whose office stresses that Canadian suppliers want to make it easy for non-Canadian associations to do business with Canada. "We are working with the Department of Finance, and we want to identify things that are logical and reasonable to change."

Evette L. Mezger is a free-lance writer and editor in Washington, D.C.
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Title Annotation:includes related article
Author:Mezger, Evette L.
Publication:Association Management
Date:Jun 1, 1991
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