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.
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Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th Floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 124124
August 27, 2010
Dear XXXXX:
Subject:
GST/HST INTERPRETATION
Place of Supply Rules
Thank you for your XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) as it relates to the place of supply rules for determining whether a supply of a service is made in a province. We apologize for the delay in responding to your enquiry.
HST applies at the rate of 15% in Nova Scotia, 13% in New Brunswick, Newfoundland and Labrador, and Ontario, and 12% in British Columbia. GST applies at the rate of 5% in the remaining provinces and territories.
Interpretation Requested
You wish to clarify what address should be used under place of supply rules when your company makes a supply of a service to clients that are individuals, mutual fund corporations, limited partnerships, segregated funds or corporations in general. You also have the following questions concerning trusts and pension plans.
1. For a trust (e.g., mutual fund trust), would the address of the trustee determine the place of supply for a service to a trust or would the address of the fund manager be used?
2. In the case of a pension plan, should the address of the administrator be used or the address where the plan was constituted, in determining place of supply of a service to a pension plan?
3. For pension plans, where there are plan expenses and sponsor expenses in two locations and the initial invoice may go to either, which address should be used to determine the place of supply of the service?
Interpretation Given
Subsection 13(1) of the New Harmonized Value-Added Tax System Regulations (the Regulations) provides general rules for the place of supply of services. These rules will not apply if any of the following exceptions apply: personal services; services in relation to real property; services in relation to tangible personal property; and certain other services. Please refer to Part 5, Services, of Technical Information Bulletin B-103, Harmonized Sales Tax Place of Supply Rules for Determining Whether a Supply is Made in a Province, for further details.
Subsection 13(1) provides that a supply of a service is made in a province if, in the ordinary course of business of the supplier, the supplier obtains an address (referred to as the "particular address") in the province that is
(a) if the supplier obtains only one address that is a home or a business address in Canada of the recipient, the home or business address in Canada obtained by the supplier;
(b) if the supplier obtains more than one address described in paragraph (a), the address described in that paragraph that is most closely connected with the supply; or
(c) in any other case, the address in Canada of the recipient that is most closely connected with the supply.
The term "recipient" is defined in subsection 123(1) of the Excise Tax Act (ETA) and is generally the person liable to pay for the supply. Thus, a supply of a service is considered to be made in a province that is the home or business address of the recipient, where, in the ordinary course of business of the supplier, the supplier obtains only one address of the recipient. Where the supplier obtains more than one address in the ordinary course of their business, the address that is most closely connected with the supply or, where neither of paragraphs 13(1)(a) or (b) apply, the Canadian address of the recipient that is most closely connected with the supply will be used to determine place of supply.
Subject to subsection 13(1) and certain other exceptions mentioned earlier, subsection 13(2) lists other criteria to be used in determining in which province a supply of a service is made.
Section 30 of the Regulations, which applies despite section 13 and other provision of the Regulations, provides:
A supply of a service in respect of a trust governed by a registered retirement savings plan (RRSP), a registered retirement income fund (RRIF), a registered education savings plan (RESP), a registered disability savings plan (RDSP) or a tax-free savings account (TFSA) provided by a trustee of the trust is made in a particular province if the mailing address of the annuitant of the RRSP, or RRIF, of the subscriber of the RESP or of the holder of the RESP or TFSA is in that province. (Emphasis added.)
The following are examples of an address that may be obtained by a supplier when applying paragraph 13(1)(a) where the supplier obtains only one address that is a home or a business address in Canada of the recipient:
• an individual - the home or business address of the individual in Canada;
• a corporation - the business address of the corporation in Canada (this is likely the head office of the corporation or the billing address of the corporation)
• a limited partnership - the business address of the limited partnership in Canada (this may be the same as general partner of the partnership's address);
• a segregated fund of an insurer - the business address of the segregated fund in Canada (this is likely the business address of the insurer or the billing address related to the segregated fund);
• a trust - the business address of the trust in Canada (this may be the same as the trustee of the trust);
• a bare trust - the business address of the beneficiaries of the bare trust;
• a pension plan governed by a trust - where the pension trust is the recipient of the supply, the business address of the pension trust (this may be the same as the trustee); and where the employer is the recipient of the supply, the business address of the employer.
A supplier can obtain multiple business addresses of the recipient in the ordinary course of its business. To the extent that the obtained addresses of the recipient do not vary, the address of the recipient that is most closely connected with the supply for purposes of the place of supply rule should also not vary. However, if the addresses of the recipient vary from supply to supply, so too can the relevant address for purposes of the place of supply rule.
The determination of the "address ... that is most closely connected with the supply" under the place of supply rules is based on the facts taking into account the ordinary business practice of each supplier with respect to each supply. The business address of the recipient from which the supplier is hired pursuant to the agreement for the supply (the "contracting address") will generally be the address that is most closely connected with the supply. This address will therefore determine the province in which the supply of the service is made where it is in Canada and is obtained by the supplier in the ordinary course of business.
The determination of the place of supply can therefore be made with certainty at the time the supply is first made where the contracting address is identified in the agreement for the supply. Where the recipient is a corporation, the contracting address could be the corporation's head office. If the contracting business address of the recipient is not obtained, the address most closely connected with the supply would be the business address of the recipient that the supplier has the most contact with and that is most used by the supplier in connection with the supply.
For example, where the supply is in respect of both plan expenses and sponsor expenses of a recipient pension plan, the business address in Canada of the plan, subject to the factors described above, should be used to determine the place of supply.
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 613-952-9577. 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,
Kirk Moore
Financial Institutions Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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