Calgary v. Canada - Supreme Court decision may suggest that not all the recipients of an exempt supply are necessarily required to satisfy the conditions for exemption

Transit procurement funding received by the City of Calgary from the Alberta government did not detract from the related transit assets being provided by the City as part and parcel of its supply of exempt municipal transit services to the Calgary public.  Although it was arguable that the Province was also the "recipient" of this single supply, that did not detract from it being an exempt supply, given that the wording of the exemption did not require that the traveling public be the exclusive recipients of the supply.

This suggests that an exempt supply (or, presumably, a zero-rated supply) potentially can have multiple "recipients" (generally, the persons liable to pay the consideration), not all of whom satisfy the conditions for exemption.  For example, if it is agreed that the fee of a professional firm for services rendered to a non-resident bank will be borne in part by the Canadian borrower, this case would suggest that all of the fee is zero-rated.

Neal Armstrong.  Summary of Calgary v. Canada, 2012 SCC 20 under s. 123(1) -"supply" and "recipient."