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
Case Number: 153091
Business Number: [...]
May 2, 2013
Dear [Client]:
Subject: GST/HST RULING
[...][TourCo] - Requirement to be Registered
Thank you for your letter of April 25, 2013, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to your client, [...][TourCo].
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 (effective April 1, 2013) and 15% in Nova Scotia. The GST applies in the rest of Canada at the rate of 5%.
Effective April 1, 2013, the 12% HST in British Columbia has been replaced by the 5% GST and a provincial sales tax.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
Statement of Facts
We understand that:
1. [TourCo] is a non-resident of Canada. It is registered for GST/HST purposes and is not a small supplier under section 148 of the ETA. [TourCo] does not believe that it is required to be registered for GST/HST purposes and wishes to de-register.
2. [TourCo] operates "tour packages" (as that term is defined in the ETA) [...]
3. [...].
4. [...].
5. [TourCo] has no office and no other permanent establishment in Canada.
6. For some of the tour packages that [TourCo] operates, [...] [an][individual] is needed to travel along with the tour. The [individual]'s role is generally to ensure that the tour operates smoothly.
7. [...] [the][individual] will be solely employed by the Subsidiary. [...].
8. [TourCo] intends to subcontract with the Subsidiary for the services of the [individuals]. [TourCo] will enter into an arm's-length service contract with the Subsidiary whereby the Subsidiary will supply the services of [individuals] to [TourCo]. The Subsidiary may also contract with other non-related companies for the provision of [an][individual's] services.
9. [...].
10. The Subsidiary will [...][not be a resident of Canada] and will be registered for GST/HST purposes.
11. [TourCo] has a Canadian bank account in order to pay Canadian suppliers in Canadian currency and for [the][individual] in Canada to access Canadian currency to cover any unexpected costs that may arise, [...].
12. The Canadian bank account is generally replenished by [TourCo] through transfers from its [...][foreign] bank account on an "as needed" basis.
13. [...]
14. [...]
Ruling Requested
You would like to know whether, in the facts described above, [TourCo] would be required to be registered for GST/HST purposes under subsection 240(1) of the ETA.
Ruling Given
Based on the facts set out above, [TourCo] would not be required to be registered for GST/HST purposes under subsection 240(1) of the ETA.
This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.
Explanation
Pursuant to subsection 240(1), every person who makes a taxable supply in Canada in the course of a commercial activity engaged in by the person in Canada is required to be registered for GST/HST purposes unless:
(a) the person is a small supplier;
(b) the only commercial activity of the person is the making of supplies of real property by way of sale otherwise than in the course of a business; or
(c) the person is a non-resident person who does not carry on any business in Canada.
Based on the facts, the only exception in subsection 240(1) that would be relevant in this case would be the exception in paragraph 240(1)(c).
As you know, GST/HST Policy Statement P-051R2, Carrying on Business in Canada (P-051R2) sets out factors and principles to be considered in determining whether a non-resident is carrying on business in Canada for GST/HST purposes. As indicated in the policy statement, the determination is a question of fact requiring consideration of all relevant facts. The factors to consider in determining whether a non-resident is, for GST/HST purposes, carrying on business in Canada in a particular situation include:
- the place where agents or employees of the non-resident are located;
- the place of delivery;
- the place of payment;
- the place where purchases are made or assets are acquired;
- the place from which transactions are solicited;
- the location of assets or an inventory of goods;
- the place where the business contracts are made;
- the location of a bank account;
- the place where the non-resident's name and business are listed in a directory;
- the location of a branch or office;
- the place where the service is performed; and
- the place of manufacture or production.
As indicated in P-051R2, the importance or relevance of a given factor in a specific case depends on the nature of the business activity under review and the particular facts and circumstances of each case. Generally, a non-resident must have a significant presence in Canada to be considered to be carrying on business in Canada.
[TourCo], as a supplier of tour packages, is making supplies of services. Based on the facts, the only relevant factor present in Canada in this case would be a bank account. There would therefore be insufficient relevant factors present in Canada to conclude [TourCo] would be carrying on business in Canada for GST/HST purposes. As a result, [TourCo] would not be required to be registered for GST/HST in the facts described above.
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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