Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 124451a
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
[…][Supply of a Program made by ACo]
Thank you for your letter of [mm/dd/yyyy], concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to supplies made by […][ACo]. […]
The HST applies in the participating provinces at the following rates: 13% in Ontario, New Brunswick and Newfoundland and Labrador, 14% in Prince Edward Island and 15% in Nova Scotia. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
Based on the information provided, we understand the following:
1) [ACo] is a company resident in Canada and registered for GST/HST purposes.
2) [ACo] created and developed […][the Program] […]. Specifically, the Program’s objective is to provide […] (Participants) with training, tools, knowledge and […].
3) To qualify for the Program, a Participant […] ([…][examples of who uses the program and information about the application and fee structure]).
4) The […][main part] of the Program is delivered through […] workshops […]. […][Indicates participants are from Canada and outside Canada]
5) The suggested minimum commitment in the Program for Participants is […][a period of time], which encompasses attendance at [#] workshops. […][Information about the required periodic commitment in time and money].
6) […][Information about the application for the workshops]
7) […][Information about workshop activities]
8) […][Outline of the progression of the program]
9) […][Outline of persons conducting a typical workshop]
10) […][Describes the role and responsibility of program staff]
11) […][Describes some administrative aspects of the Program]
12) […][Outlines additional support available only to Participants]
13) […][Describes an aspect of customer support only available to Participants]
14) […][Describes related workshops only available to Participants]. […]
15) […]
16) A number of additional Program Terms and Conditions […][for Program Participants, including cancellation fees]
17) […][Describes conduct expected of Participants]
RULING REQUESTED
1) You would like to confirm that the supply of the Program to a Participant by [ACo] is a supply of a service.
2) You would like to confirm that the supply of the Program to a non-resident is zero-rated under section 23 of Part V of Schedule VI as an advisory, professional or consulting service.
RULING GIVEN
Based on the facts set out above, we rule that:
1) The supply of the Program by [ACo] is a supply of intangible personal property.
2) The supply of the Program to a non-resident is not zero-rated as a supply of a service under section 23 of Part V of Schedule VI.
EXPLANATION
Ruling #1 – Characterization of the supply
The characterization of a supply depends on the consideration of all relevant facts.
As stated in GST/HST Policy Statement P-077R2, Single and Multiple Supplies, the determination of whether a transaction consisting of several elements is a single supply or multiple supplies is a determination of fact. In general, multiple supplies occur when one or more of the elements of a transaction can sensibly or realistically be broken out from the other elements. Conversely, two or more elements of a transaction are generally part of a single supply when the elements are integral components, the elements are inextricably bound up with each other, the elements are so intertwined and interdependent that they must be supplied together, or one element of the transaction is so dominated by another elements that the first element has lost any identity for fiscal purposes.
[ACo] is, based on the facts, making a single supply to each Participant. In accordance with the Terms and Conditions on the application form, Participants apply to attend […][# of workshops]; Participants do not have the option of applying to attend fewer workshops, […][or of choosing] which workshops, […], to attend. The other elements to the supply by [ACo], such as […], cannot be acquired separately by Participants, and they do not, on their own, satisfy Participants’ needs in learning […]. Finally, the consideration for participating in the Program is paid as a lump sum, in full, before the date of the first workshop, and encompasses all elements of the Program without the elements being separately identified.
In addition, as stated in GST/HST Technical Information Bulletin B-103, Harmonized Sales Tax – Place of supply rules for determining whether a supply is made in a province, when determining whether a particular supply is a supply of a service or intangible personal property a number of factors must be considered. The nature of the agreement between the supplier and the customer, and whether the agreement is in substance for work (or work and materials), or for property (including a right or interest of any kind), must be determined. A key factor in making this distinction is whether the supply includes the provision of any rights and if so, whether those rights are the predominant element of the supply. If the supply includes the provision of rights and the rights are the predominant part of the supply, the supply is likely a supply of intangible personal property; if the rights are merely incidental, the supply is likely a supply of a service.
Based on the information provided, [ACo]’s supply of the Program is a supply of intangible personal property to each Participant. While some elements of the Program are services, the Program’s paramount element is the right to attend [#] workshops. This right is consistent with the definition of “admission” under subsection 123(1), which means, in respect of a seminar, activity or an event, a right of entry or access to, or attendance at, the seminar, activity or event. A supply of an admission, such as the right to attend a workshop or seminar, is considered to be a supply of intangible personal property for GST/HST purposes.
[…]. […], characterization of a supply [as a service or an intangible] is dependent upon the nature of the agreement between the supplier and recipient. […].
As a result, based on the information provided, the supply of the Program by [ACo] is a supply of intangible personal property.
Ruling #2 – Zero-rating of the supply
The supply of the Program by [ACo] cannot be zero-rated under section 23 of Part V of Schedule VI because [ACo] is not making a supply of a service.
ADDITIONAL INFORMATION
A taxable (other than zero-rated) supply of property or a service that is made in Canada is subject to the GST at a rate of 5% if made in a non-participating province and is subject to the HST at the applicable rate if it is made in a participating province.
In the case of a supply of intangible personal property, such as the supply made by [ACo] to each Participant, the supply is deemed to be made in Canada if, pursuant to paragraph 142(1)(c), the intangible personal property may be used in whole or in part in Canada. In contrast, paragraph 142(2)(c) deems a supply of intangible personal property to be made outside Canada if the property may not be used in Canada.
Based on the information provided, the Program may be used in Canada by Participants, and as a result, the supply of the Program by [ACo] is deemed to be made in Canada, pursuant to paragraph 142(1)(c). Further, as a single supply of intangible personal property, the supply of the Program to a Participant is deemed to have been made at the time that [ACo] and the Participant enter into an agreement for that supply. Section 133 provides that, for purposes of the GST/HST, where an agreement is entered into to provide property or a service,
(a) the entering into of the agreement shall be deemed to be a supply of the property or service made at the time the agreement is entered into; and
(b) the provision, if any, of property or a service under the agreement shall be deemed to be part of the supply referred to in paragraph (a) and not a separate supply.
Section 10.1 of Part V of Schedule VI zero-rates a supply of intangible personal property made to a non-resident who is not registered for GST/HST purposes at the time the supply is made, but not including:
(a) a supply made to an individual unless the individual is outside Canada at that time;
(b) a supply of intangible personal property that relates to
(i) real property situated in Canada,
(ii) tangible personal property ordinarily situated in Canada, or
(iii) a service the supply of which is made in Canada and is not a zero-rated supply described by any section of this Part or Part VII or IX;
(c) a supply that is the making available of a telecommunications facility that is intangible personal property for use in providing a service described in paragraph (a) of the definition “telecommunication service” in subsection 123(1);
(d) a supply of intangible personal property that may only be used in Canada; or
(e) a prescribed supply.
Based on the information provided, the exclusions in section 10.1 of Part V of Schedule VI would not apply in respect of a supply of intangible personal property by [ACo] in circumstances where the supply is made to a non-resident Participant who is neither registered for GST/HST purposes nor in Canada at the time of the supply, such that the supply to the Participant may be zero-rated. [ACo] would be required to verify and maintain satisfactory evidence of a recipient’s registration status and residency, as well as the physical location of the Participant, at the time a supply is made, in order to support zero-rating of the supply under that provision. For more information, please see GST/HST Info Sheet GI-034, Exports of Intangible Personal Property.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the ruling(s) given in this letter provided that: none of the issues discussed in the ruling(s) are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed. The interpretation(s) given in this letter, including any additional information, is not a ruling and does not bind the CRA with respect to a particular situation. Future changes to the ETA, regulations, or the CRA's interpretative policy could affect the interpretation(s) or the additional information provided herein.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-4291. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Geoff Macmillan
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
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