Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
XXXXX
XXXXX
XXXXX
Case Number: 107416
BN: XXXXX
August 19, 2008
Subject:
GST/HST INTERPRETATION
GST/HST Status of the Supply of an Exported Service
Dear XXXXX:
Thank you for your XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the supply of a software development and maintenance service.
All legislative references are to the Excise Tax Act (ETA) and the regulations thereunder, unless otherwise specified.
Based on your letter and our subsequent telephone conversations, it is our understanding that:
• You are registered for GST/HST purposes with BN XXXXX.
• You have entered into an agreement to supply a software development and maintenance service to XXXXX.
• XXXXX is situated in XXXXX and is considered a non-resident of Canada for GST/HST purposes.
• You perform the software development and maintenance services at your place of business in XXXXX.
• You do not own or have any rights to the software you develop or maintain.
Interpretation Requested
You would like to know the GST/HST status of the software development and maintenance services you supply to XXXXX.
Interpretation Given
Under section 165, a taxable supply of a service made in Canada is subject to tax at the GST rate of 5% (HST rate of 13% when made in a participating province: Nova Scotia, New Brunswick, or Newfoundland and Labrador) on the value of the consideration for the supply unless the supply is zero-rated (taxed at 0%).
Pursuant to paragraph 142(1)(g), a supply of a service, other than a service in relation to real property, is deemed to be made in Canada if the service is, or is to be, performed in whole or in part in Canada. Based on the fact that the services you supply to XXXXX are performed wholly at your place of business in XXXXX the supply of the service is considered to be made in Canada, and, more specifically, in the province of XXXXX.
Section 7 of Part V of Schedule VI is the general zero-rating provision for a supply of a service made to a non-resident person. Section 7 of Part V of Schedule VI zero-rates the supply of a service made in Canada to a non-resident person unless the service is specifically excluded by paragraphs 7(a) through 7(h) of that section (the exclusions to this section are discussed in paragraphs 18-23 of the enclosed GST/HST Memoranda Series Chapter 4.5.3 Exports - Services and Intellectual Property). Based on the information provided, none of the exclusions in section 7 of Part V of Schedule VI apply to the supply of software development and maintenance services that you make to XXXXX, and therefore the supply is zero-rated (taxed at 0%).
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
UNCLASSIFIED
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