15 July 1998 GST/HST Interpretation HQR0001229 - Tax Status of Services Provided by a Registered Resident to Non-residents Wishing to Emigrate to Canada

                                                                        GST/HST Rulings and Interpretations
Place Vanier, Tower C, 9th Floor
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Vanier, Ontario K1A 0L5

I refer to XXXXX facsimile message of June 22, 1998, and his E-mail message of July 14, 1998, concerning the tax status of services provided by the above-referenced registered resident XXXXX to non-residents wishing to emigrate to Canada.

As requested, I have reviewed XXXXX proposed response to XXXXX[.] I note that XXXXX enters into contracts with residents of XXXXX[.] Under the terms of the contract, XXXXX agrees to:

•   obtain and assist with the completion of all papers required by the Government of Canada, will arrange for and facilitate all required tests and interviews, will attempt to expedite the application to emigrate and do all other things which XXXXX in its sole discretion, considers appropriate to have the application approved; and

•   while the client is in Canada, and upon the request of the client, XXXXX will introduce the client to the community in which the client proposes to settle, make the client aware of various employment and business opportunities, introduce the client to a realtor and other professional advisors, and give advice to the client regarding access to transportation and accommodation while in Canada.

Other services which are provided as part of the agreement, but which are not specifically spelled out in the contract, include:

•   assist in locating an employer sponsor for the client;

•   lobby the provincial government, through the local legislative member, on behalf of a group rather than on behalf of one specific client;

•   prepare paperwork and gather information on potential immigrants as part of the necessary research required to pre-qualify the person, which is necessary to advise them of their chances for approval; and

•   filing the documents after the qualification stage is complete, which may or may not involve a representative of XXXXX travelling to XXXXX to advise the client. (NOTE: In each case, all applications and forms must be signed by the applicant and filed in XXXXX[.]

For the above services, the client agrees that it will pay XXXXX as compensation a total of XXXXX plus the applicable GST. In addition, the client agrees that it will be solely responsible for all out of pocket costs relating to the services, such as transportation, accommodation, food and other miscellaneous costs while in Canada and that XXXXX will not be entitled to be reimbursed by the client for any out of pocket expenses incurred unless they are first approved in writing by the client.

I agree with XXXXX decision that XXXXX is making a single supply of a service to the non-residents and that the supply qualifies for zero-rating under the provisions of Schedule VI, Part V, section 9 to the Excise Tax Act (Act).

I would also like to make the following comments regarding the letter:

•   According to the information in the GST Mainframe, the legal name of XXXXX is XXXXX is a trade name. Therefore, I believe the letter should be addressed to the legal entity.

•   Office copy information (page 8) - The statement is made that "Services provided in XXXXX are outside the scope of GST/HST". This statement is not entirely correct. A service that is performed wholly outside Canada is deemed to be made outside Canada (paragraph 142(2)(g) of the Act) and is, therefore, not subject to the taxes under Division II of the Act. The supply is not outside the scope of the GST/HST because it could be subject to the taxes under Division IV of the Act.

However, in the situation at hand, it is clear that XXXXX is performing part of the services in Canada. Therefore, the supply would be deemed to be made in Canada under the provisions of paragraph 142(1)(g) of the Act.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-6743.

Garry L. Ryhorchuk
Senior Rulings Officer
Border Issues Unit
General Operations and Border Issues Division
GST/HST Rulings and Interpretations Directorate

NCS Subject Code:                 11640-3