Public service bodies’ rebate

Who it is for and why it exists

Many charities and non-profits make mostly exempt supplies, which means they cannot recover GST/HST paid on purchases through input tax credits. The PSB rebate gives back a share of that tax. The CRA lists three groups: charities, qualifying non-profit organizations and selected public service bodies. The last includes municipalities, schools, universities, public colleges and hospital authorities. Each group has its own rebate factor.

A qualifying non-profit must be organized and operated solely for non-profit purposes, must not distribute income for the personal benefit of members, and must receive at least 40% of its total revenue in the fiscal year from government funding. A registered charity also counts if it can issue official donation receipts.

How much comes back in Ontario

The rebate is a percentage of the tax paid, and the percentage depends on the type of claimant and the activity. For a charity or a qualifying non-profit on its non-selected activities, the CRA factors for an Ontario resident are 50% of the GST or federal part of the HST and 82% of the provincial part. Municipalities use 100% and 78%, and school authorities 68% and 93%. Hospital authorities, universities and public colleges have their own factors. Check the current table for your organization type, because the percentages differ from one group to the next.

An illustrative example

Assume an Ontario registered charity pays 1,000 dollars plus 13% HST for supplies used in its programs. This is an illustration only, and it assumes the purchase is eligible and the charity is claiming under the charity factors above. The tax is 130 dollars: 50 dollars federal and 80 dollars provincial. The rebate would be 50% of 50 dollars, or 25 dollars, plus 82% of 80 dollars, or 65.60 dollars, for 90.60 dollars in total. The charity bears the remaining tax as a cost.

Applying and deadlines

The application is Form GST66, with a provincial schedule where one applies. Registrants can file the rebate with their GST/HST return, and non-registrants can use the CRA’s online rebate forms or a paper application. A qualifying non-profit also files Form GST523-1 on government funding for each fiscal year it claims.

A registrant generally has four years from the due date of the GST/HST return for the claim period in which the expense was incurred. A non-registrant has four years from the end of that claim period. There are two ways to calculate the rebate, the regular method and the simplified method, and organizations that perform more than one type of activity have special rules.

What to discuss with your accountant

Bring the organization’s status documents, a funding breakdown, purchase records showing tax paid, and any past rebate filings. Ask which claimant type applies, whether the simplified method is allowed, and whether older periods can still be claimed.