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: 123466
Business Number: [...]
April 18, 2011
Dear [Client]:
Subject:
GST/HST INTERPRETATION
Application of the GST/HST to supplies made by the [...] [Association]
Thank you for your letter of April 16, 2010, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to supplies made by the [...] ([Association]) to its members. We apologize for the delay in responding to your enquiry.
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.
From the information in your letter, your web site, and from our telephone conversation we understand that:
1. You are the Financial Services Officer for the [Association], [...].
2. The [Association] is GST/HST registered and is an association with members throughout Canada. Its Head Office is in [...] [Province X]. The [Association] was founded in [yyyy] for [...].
3. The [Association] is made up of [...].
4. The [Association] charges annual membership dues and fees for [...]
5. The [...] is valid for [...] and is purchased separately from the [Association] membership. [...] are delivered to recipients.
6. [...] may apply any time for member status. Membership is valid for one year and the renewal is due by December 31st for the following year.
7. Membership fees vary from $[...] to $[...] depending on the applicant and the fee for [...].
8. Memberships can be paid [...].
9. Members of the [Association] may participate in [...]. Once [...], the [Association] levies an administration charge against [...] if they request any changes to [...].
10. At the conclusion of the above [...], they are required to submit a fee of $[...] to the [Association] to cover the costs of the [Association] in administering the [...].
Interpretation Requested
You wish to confirm the application of tax to the various taxable supplies made by the [Association].
Interpretation Given
Intangible personal property
A taxable supply (other than a zero-rated supply) of property or 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 supplies of the memberships by the [Association] are supplies of intangible personal property (IPP) for GST/HST purposes.
A supply of intangible personal property is made in Canada under subsection 142(1) of the ETA it may be used in whole or in part in Canada. Based on the information provided, the supplies of the memberships by the [Association] are made in Canada.
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 under the New Harmonized Value-Added Tax System Regulations (the "Regulations") to be made in the province.
Based on the information provided, the supply of the memberships would be subject to the general rule for supplies of IPP in paragraph 8(b) of the Regulations. This rule applies where in the ordinary course of business of the supplier the supplier obtains an address that is
• 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,
• if the supplier obtains more than one home or business address of the recipient in Canada, the address described in that clause that is most closely connected with the supply, or
• in any other case, the address in Canada of the recipient that is most closely connected with the supply, where the particular address is in the particular province, and the IPP can be used in the particular province.
Based on this rule, if the [Association] obtains a single address of the recipient in the ordinary course of its business that is in a province, the supply of the membership will be made in that province and subject to GST or HST depending on whether the province is a non-participating or participating province.
For example, if in the ordinary course of its business the [Association] obtains a single address in Canada of the recipient that is in Québec, the supply of the IPP is therefore made in Québec and subject to GST at a rate of 5%.
However, if the single address of the recipient in Canada obtained by the [Association] in the ordinary course of its business is in Ontario the supply of the IPP is therefore made in Ontario and subject to HST at a rate of 13%.
Services
The administrative fees charged by the [Association] are for the supply of services.
The supply of a service is made in Canada under subsection 142(1) if it is, or is to be, performed in whole or in part in Canada.
Based on the information provided, the services that are supplied in this case would be subject to the general place of supply rules for services in section 13 of the Regulations.
The general place of supply rules for supplies of services are generally based on the home or business address of the recipient obtained by the supplier in the ordinary course of business of the supplier.
If the [Association] obtains an address of the recipient in Canada in the ordinary course of its business, the relevant place of supply rule is in subsection 13(1) of the Regulations. Subsection 13(1) generally 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 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.
Based on this rule, if the [Association] obtains a single address of the recipient in the ordinary course of its business that is in a province, the supply of the services will be made in that province and subject to GST or HST depending on whether the province is a non-participating or participating province.
For your additional information, there is a different rule in section 28 of the Regulations that applies in certain circumstances with respect to services in relation to a location-specific event. Specifically, this rule applies with respect to a supply of a service in relation to a performance, athletic or competitive event, festival, ceremony, conference or similar event is made in a province, but only if the service is to be performed primarily at a location of the event in the province. If based on the facts, the service is not performed primarily at a location of the event, then, the service is subject to the previously explained general rule for services. Note that the service would be considered supplied in the same province under both rules where the event is held in the same province as the province of the obtained address of the recipient.
Tangible personal property
The supplies of the [...] are subject to the rules for supplies of tangible personal property by way of sale.
A supply of tangible personal property by way of sale is deemed under subsection 142(1) to be made in Canada if it is, or is to be, delivered or made available in Canada to the recipient of the supply.
The province in which the supply of the [...] is made would be determined by the rule in section 1 of Part II of Schedule IX which provides that a supply by way of sale of tangible personal property is made in a province if the supplier delivers the property or makes it available in the province to the recipient of the supply. This rule is generally based on the province in which legal delivery of the tangible personal property occurs. However, for purposes of the rule, tangible personal property is also deemed to be delivered in a particular province, and not in any other province, if the supplier either
• ships the property to a destination in the particular province that is specified in the contract for carriage of the property; or
• transfers possession of the property to a common carrier or consignee that the supplier has retained on behalf of the recipient to ship the property to such a destination; or
• sends the property by mail or courier (the common meaning of "courier" applies for purposes of this rule) to an address in the particular province.
Therefore, if the [Association], for example, ships the [...] to a participating province such as Ontario, the supply would be made in Ontario and subject to HST at a rate of 13%. If the [Association] ships the [...] to a non-participating province such as Manitoba, the supply would be made in Manitoba and subject to GST at a rate of 5%.
Further information on the HST place of supply rules including examples can be found in our publication; GST/HST Technical Information Bulletin B-103: Harmonized Sales Tax
Place of Supply Rules for Determining Whether a Supply Is Made in a Province. A copy of this publication can be found on our Web site at http://www.cra-arc.gc.ca/E/pub/gm/b-103/README.html.
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 613-952-8530. 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,
Carolle Mercier
Unité des questions frontalières / Border Issues Unit
Division des opérations générales et des questions frontalières /
General Operations & Border Issues Division
Direction de l'accise et des décisions de la TPS/TVH /
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
Email this Content