Sofware acquired by NPO for use in two provinces
Example 47
For a single fee of $10,000, a supplier in Ontario supplies software by way of licence to a non-profit organization that is resident in Ontario for use exclusively in its exempt activities by its employees located at its head office in Ontario and at one of its offices in Nova Scotia. The software is supplied electronically over the Internet and there are no restrictions with respect to where the software may be used. The business address of the non-profit organization in Canada that is obtained by the supplier in the ordinary course of its business that is most closely connected with the supply is in Ontario. The supply of the software is therefore made in Ontario and the supplier collects HST at a rate of 13% in respect of the supply. The extent to which the software is acquired by the non-profit organization for use in Ontario is 60% and the extent to which the software is acquired by the non-profit organization for use in Nova Scotia is 40%.
As a resident of a participating province that is a recipient of a taxable supply of intangible personal property made in a province, the non-profit organization is required to self-assess tax under Division IV.1 in respect of the property based on the extent to which the property is acquired for use in any participating province (Nova Scotia) for which the provincial rate is higher than the provincial rate of the province in which the supply was made (Ontario). The amount of tax payable by the non-profit or ganization is equal to $80 (2% (10% Nova Scotia provincial rate – 8% Ontario provincial rate) × $10,000 (the value of the consideration for the supply) × 40% (the extent to which the non-profit organization acquired the property for use in Nova Scotia)).
