6 December 1999 GST/HST Interpretation HQR0001936 - Voluntary Registration for Non-resident Company

Dear XXXXX

Thank you for your letter of September 1, 1999 requesting confirmation that your client may voluntarily register for the Goods and Services Tax (GST)/Harmonized Sales Tax (HST).

Statement of Facts

The facts as I understand them are that:

A non-resident company ("ForeignCo") is engaged in transactions with a Canadian company or companies ("CanCo") pursuant to which ForeignCo acquires title and physical possession of tangible personal property situated in Canada from CanCo. ForeignCo, in turn, sells the subject property to a purchaser who takes title and physical possession in Canada.

ForeignCo does not have a permanent establishment in Canada for the purposes of the Excise Tax Act nor does it have any agents or employees in Canada who are authorized to contract on its behalf. All contracts entered into between ForeignCo and CanCo are made outside Canada. In addition, ForeignCo does not solicit orders for the sale of goods in Canada nor does it have a bank account in Canada, or any listings in Canadian directories.

Interpretation Requested

That ForeignCo may voluntarily register for the GST/HST pursuant to paragraph 240(3)(a) of the Excise Tax Act (the Act).

Interpretation Given

Based on the information provided we are pleased to provide you with the following interpretation.

If ForeignCo is not required to be registered under any of subsections 240(1), (1.1), (2), and (4) of the Act and it meets any of the conditions outlined in subsection 240(3) it may register voluntarily for the GST/HST under the provisions of that subsection.

As a general guideline, the Revenue Canada and Customs Agency (CCRA) considers that a significant presence in Canada is required for a non-resident person to be considered to be carrying on business in Canada. Policy statement P-051R (Carrying on business in Canada) outlines various factors to be considered when making a determination as to whether a non-resident person is carrying on business in Canada. The factors are based on court decisions and must be applied in each and every case to make such a determination. It should be noted that a non-resident person can be carrying on business in Canada even though the person may not have a permanent establishment in Canada as defined in section 123(1) of the Act. Based on the information provided, while ForeignCo may not be carrying on business in Canada, it is making taxable supplies in Canada. Therefore, it would be eligible to apply for registration pursuant to paragraph 240(3)(a) of the Act.

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the Excise Tax Act, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST/HST Memoranda Series, do not bind the CCRA with respect to a particular situation.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at 952-4294.

Yours truly,

Roy McKain
Senior Rulings Officer
Border Issues Unit
General Operations and Border Issues Division
GST/HST Rulings and Interpretations Directorate
Policy and Legislation Branch

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