Tele-Mobile – Tax Court of Canada rejects an attempt to bifurcate U.S.-to-Canada cell phone calls into a non-taxable U.S.-roaming service and a taxable Canadian leg

When Telus charged its Canadian customers for calls made from the U.S. to Canada, its invoices contained a separate charge for a roaming service, relating to the part of the service that was performed in the U.S., on which it did not charge GST, and a second charge for connecting the call from the U.S. to Canada, which it conceded was subject to GST. C Miller acknowledged that in the context of local calls in the U.S., a roaming service had "commercial efficacy as a standalone supply." However, in this context of cross-border long distance calls, insofar as the customers were concerned they were getting a "seamlessly integrated" service of the long distance call. As there was only a single supply, all the charges therefor were subject to GST under ETA s. 142.1(2)(b)(ii) given that a part of the supply (i.e., the receiving of the telecommunication in Canada) was performed in Canada.

Similar issues respecting whether a supply can be bifurcated arise, for example, under ETA 142(1)(g), which deems a supply of a service to be made in Canada if the service "is to be performed in whole or in part in Canada."

Neal Armstrong. Summary of Tele-Mobile Company v. The Queen, 2015 TCC 197 under ETA, s. 123(1) – supply.