Town of Olds officials are hoping they won't be hit with a whopping Goods and Services Tax (GST) bill like the $600,000 tab the Town of Peace River is fighting.
The issue came up during Olds council's Sept. 23 meeting.
The Town of Peace River received a $600,000 GST bill from Canada Revenue Agency (CRA) after an audit.
The argument revolves around $8 million in donations given by other municipalities for a new multipurpose facility in Peace River.
The CRA indicated the town owes the money as a result of a clause in an inter-municipal agreement between the town and its neighbouring communities.
Reports say the federal government is arguing that transfers of services between municipalities are taxable even though in previous years they were deemed exempt.
Clause 146(e) of the Excise Tax Act says “a supply of a right to enter, to have access to or to use property of the government, municipality or other body” is taxable.
"Do we charge GST? Are we going to get slammed like the northern community did, with the $600,000 bill?" Coun. Mary Anne Overwater asked.
"Our hopes are that we won't," finance director Sheena Linderman said. "We do agree with the municipality that was charged that they shouldn't have been, and with the auditor's information that they shouldn't have been. But we are looking at the wording within our agreement to make sure that we are covered."
In an emailed statement to the Albertan, Linderman said town officials will make "any adjustments necessary" as a result of that review.
Mayor Mike Muzychka said town officials are taking "sort of a wait and see attitude" as they review their inter-municipal agreements to see how they're worded.
Chief administrative officer Michael Merritt said representatives of Rural Municipalities of Alberta and the Alberta Urban Municipalities Association are looking into the matter.
"Obviously when the two can work together and see that there is a problem with the ruling I think it will be solved, hopefully to our satisfaction," Merritt said.
"Absolutely," Muzychka replied.
