Section 135 - Sponsorship of Public Sector Bodies

See Also

Children's Clean Air Network Society v. The Queen, 2013 TCC 352 (Informal Procedure)

The appellant ("CCAN") was a not-for-profit organization which, in connection with the promotion of environmental responsibility, would produce and distribute tailgate magnetic stickers, posters, signs, etc., to discourage idle engine operation. These materials were print with the logos of the sponsors, who were charged amounts representing a mark-up over CCAN's related costs.

C Miller J found that s. 135 deemed CCAN not to make a supply to each sponsor as "the sponsor's sole use was to publicize its business" (para. 10).

Administrative Policy

Excise and GST/HST News - No. 93 16 October 2014

Example 2

A municipality is constructing a recreational facility. ABC Co. contributes $1 million and in exchange the facility will be named "ABC Co. Centre" for the next five years. The $1 million is consideration for a supply of naming rights by the municipality, which is a supply of intangible personal property that does not fall under section 135. Therefore, the $1 million is subject to GST/HST.

25 January 2013 Ruling Case No. 140259

After ruling that the promotional service made by a non-profit organization to its principal corporate sponsor was deemed not to be a supply under s. 135, CRA turned to sponsorship money paid to the Association by other corporate sponsors whose logos were placed on its website and who might submit requests for advertising in its newsletter. CRA stated:

The term "sponsor" is not defined in the ETA and so the CRA accepts the general meaning of the term, which usually indicates either a person who supports or accepts responsibility for another, or more commonly in the commercial sense, one who agrees to provide financial support with respect to another's activities or events while, or by, acquiring advertising or certain promotional rights.

The CRA may find a distinction between a "sponsorship" and a purchase of advertising. A payment made in exchange for the listing of a business's name or logo on a web page may be consideration for a supply of advertising rather than a "sponsorship" where it is a commercial transaction at fair market value. In another case, such a payment may be viewed as a sponsorship, where the sponsor supports the event or activity of an organization while, or by, acquiring some promotional rights. Therefore, where the [other corporate sponsors] are merely purchasing advertising on the [Association's] website section 135 will not apply and [the Association] will be required to charge GST/HST.

Information for Non-Profit Organizations under "Collecting the GST" - "Sponsorships"