CRA indicates that the purchase of future contingent royalty payments is subject to GST/HST

Similarly to Ruling 162056, CRA found that the purchase in Canada by a financial institution of the rights of a research company to royalties that the latter expected to receive (but with no guarantee) pursuant to a Royalty Agreement with a drug manufacturer represented the purchase of contingent rights rather than of existing receivables, so that such sale would be subject to GST/HST rather than being an exempt supply of a “debt security.” However, if there were guaranteed minimum payments for the purchased future receivables, they would qualify as debt securities, so that their sale would instead be an exempt financial service.

Neal Armstrong. Summary of 27 February 2020 CBA Roundtable, Q.11 under ETA s. 123(1) – debt security.