17 July 1995 Headquarter Letter File 11635-3

When a non-resident sells discs in Canada under a consignment arrangement with a Canadian distributor, the fact that there is a sale from the non-resident to the distributor simultaneous with the sale by the distributor to a Canadian consumer does not necessarily cause the initial contract to be considered to be concluded in Canada.

A non-resident company offers music discs for sale in Canada under a consignment arrangement with a distributor. The discs are both produced in Canada on its behalf by a contract manufacturer and produced in the U.S. and shipped to Canada. The non-resident would not be considered to be carrying on business in Canada provided that the contract for the sale of the compact discs to the distributor by the non-resident was concluded outside Canada.