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.
[Addressee]
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 140575
March 5, 2012
Dear [Client]:
Subject:
GST/HST RULING
Services Rendered in Connection with Litigation
Thank you for your letter of November 11, 2011, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to certain services provided by [...]([...][the Company]) to [...]([...][ABC]) in connection with [...][litigation].
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.
Statement of Facts
We understand the following:
1. [...]. [The Company] is registered for GST/HST purposes.
2. [The Company] was hired by [ABC] [...] to provide services to [ABC] in respect of the [litigation].
3. [The Company] was hired by [ABC] after [...] in respect of the [litigation].
4. According to [...] (Statement of Work) to the agreement between [the Company] and [ABC], [the Company] is being hired [...][Direct quote]. In addition, the assistance of [the Company] is required to [...]
5. Also according to [...] the agreement between [the Company] and [ABC], [the Company] will be requested to carry out a number of services and deliverables including: [...]
6. The [litigation] is under the jurisdiction of the [...], which was established under the laws of [...][participating province X].
Ruling Requested
You request a ruling that the services described above and in the [Statement of Work] that are supplied by [the Company] to [ABC] are services in connection with litigation in [participating province X] that are made in [participating province X] and subject to HST at a rate of [...]%.
Ruling Given
Based on the information provided, we rule that the services described above and in the [Statement of Work] that are supplied by [the Company] to [ABC] are services in connection with litigation in [participating province X] that are made in [participating province X] and subject to HST at a rate of [...]%.
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
A taxable supply (other than a zero-rated supply) of a service made in Canada is subject to GST at 5% when it is deemed to be made in a non-participating province, and is subject to HST at the applicable rate when it is deemed to be made in a participating province. The participating provinces are Ontario, Nova Scotia, New Brunswick, British Columbia, and Newfoundland and Labrador.
The ETA has various rules to determine whether a supply that is made in Canada is made in a province. Under section 144.1, a supply that is made in Canada is also considered to be made in a particular province if it is determined to be made in the province under the place of supply rules in Schedule IX. In any other case, the supply is deemed to be made in a non-participating province. Pursuant to section 3 of Part IX of Schedule IX, notwithstanding the rules in Schedule IX, a supply is made in a province if the supply is prescribed by regulation to be made in the province.
Section 27 of Part 1 (Place of Supply) of the New Harmonized Value-Added Tax System Regulations (Regulations) reads as follows:
27. Services rendered in connection with litigation - A supply of a service rendered in connection with criminal, civil or administrative litigation (other than a service rendered before the commencement of such litigation) that is under the jurisdiction of a court or other tribunal established under the laws of a province, or in the nature of an appeal from a decision of a court or other tribunal established under the laws of a province, is made in that province.
The determination of when civil litigation commences for purposes of section 27 of the Regulations is made based on the same guidelines that are set out in GST/HST Policy Statement P-206 - Litigation Services Supplied to Non-Resident Individuals. In accordance with these guidelines, the Canada Revenue Agency generally considers that civil litigation commences on the day that the originating process (i.e., Statement of Claim, Writ of Summons in the province of Quebec, Notice of Application, Petition, etc.) is filed with the court in accordance with the rules of civil procedure in a particular provincial or territorial jurisdiction.
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
Industry Sector Specialist
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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