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: 140855r
August 20, 2012
Dear [Client]:
Subject: GST/HST INTERPRETATION
Carrying on business in Canada
Thank you for your letter of May 29, 2012, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to supplies made by your non-resident client (USco). This interpretation is provided further to the interpretation issued to you [mm/dd/yyyy] and our subsequent telephone conversation of [mm/dd/yyyy].
HST applies at the rate of 15% in Nova Scotia, 13% in Ontario, New Brunswick, and Newfoundland and Labrador, and 12% in British Columbia. GST applies at the rate of 5% in the remaining provinces and territories.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
Based on your original request for a GST/HST interpretation dated [mm/dd/yyyy], your letter of [mm/dd/yyyy], and our subsequent telephone conversation, our understanding is that:
1. USco is a non-resident corporation that is not registered for GST/HST purposes and has not collected GST/HST.
2. USco is in the business of providing […] information to its customers. USco has Canadian customers who subscribe to […] for use in Canada, through USco’s Web site.
3. USco’s Web site provides customers with information […].
4. USco’s Web site is operated from servers outside of Canada.
5. USco purchases some […] information from […], Canco.
6. Canco does not have contact with USco’s customers and is not otherwise involved in the supplies made by USco to its Canadian customers.
7. There is no direct human intervention in the supply of the Web site access rights,[…].
8. Canadian customers are typically introduced to USco’s Web site by […] that carry on business in Canada. USco pays […] commissions based on the referrals.
9. USco does not have a bank account in Canada.
10. USco’s customers make payment for the subscriptions by credit card.
11. […][terms of the agreement].
12. […][terms of the agreement].
13. USco employees enter Canada on an irregular basis only.
INTERPRETATION REQUESTED
Based on your original interpretation request of [mm/dd/yyyy] and your subsequent letter of [mm/dd/yyyy], you request confirmation that, based on the information provided, USco is not carrying on business in Canada for GST/HST purposes and that, accordingly, USco is not required to be registered for GST/HST purposes or to collect GST/HST on the supplies it makes to its Canadian customers.
INTERPRETATION GIVEN
Whether a non-resident person is carrying on business in Canada for GST/HST purposes is a question of fact requiring consideration of all the relevant facts.
As explained in GST/HST Policy Statement P-051R2, Carrying on business in Canada, the factors that will be considered in determining whether a non-resident person is carrying on business in Canada for GST/HST purposes 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.
The importance or relevance of a given factor in a specific case depends upon the nature of the business activity under review, and, as always, 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.
Based on the information provided, the place from which transactions are solicited is in Canada. As discussed, the place where business contracts are made may also be in Canada. Further information would be required to determine whether the relevant factor is in Canada. However, even if it were to be determined that the place of contract is in Canada based on additional information, there would be insufficient relevant factors present in Canada to conclude that USco is carrying on business in Canada for GST/HST purposes. Therefore, USco would not be required to be registered for GST/HST purposes or to collect GST/HST on the supplies it makes to its Canadian customers.
The foregoing comments represent our general views with respect to the subject matter of your request. These comments are not rulings and, in accordance with the guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, do not bind the Canada Revenue Agency with respect to a particular situation. Future changes to the ETA, regulations, or our interpretative policy could affect this interpretation.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-952-8812. 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,
Jeff Frobel
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
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