1 February 2006 GST/HST Ruling 53100 - Review of GST/HST Ruling 45733 - Supplies of Books with CD-ROMs and/or Online Access in the Participating Provinces

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.

Dear XXXXX:

Thank you for the information you provided concerning the application of the Goods and Services Tax/Harmonized Sales Tax (GST/HST) to the activities of your client, the XXXXX Group Inc. XXXXX. We regret our delay in responding to your request.

All legislative provisions cited below refer to the Excise Tax Act (the "ETA"), which is the legislative authority for the GST/HST.

You have provided the following information:

XXXXX is incorporated in the United States and its offices are located in XXXXX. It provides management information systems services to banks, as well as to software vendors and developers who service the banking industry and related enterprises. It is not registered for the GST/HST.

XXXXX Inc. XXXXX is a Canadian company with offices in the province of XXXXX. XXXXXprovides item processing (check processing, payment processing, statement production, document management) and customer communication services to residents of Canada and to non-residents. It is registered for the GST/HST.

XXXXX and XXXXX entered a pro forma "consulting services agreement" XXXXX (the "Agreement") whereby XXXXX retains XXXXX in an advisory capacity and XXXXX has agreed to provide, as required, certain services listed in XXXXX the Agreement.

In XXXXX, XXXXX began work on a project whereby it provided XXXXX:

-    XXXXX.

-    XXXXX.

-    XXXXX.

-    XXXXX.

You also advised us that XXXXX has not carried out any other projects nor otherwise made any supplies ^[xxvi]1 in Canada, and at present XXXXX has no other Canadian projects planned. It does not have any employees or agents in Canada, has no assets in Canada, has no Canadian office or telephone number, and does not maintain a bank account in Canada.

Interpretation Requested

You would like to know if XXXXX is required to register for the GST/HST and, if XXXXX is not required to register, you would appreciate receiving a succinct description of our registration requirements in case XXXXX, in the future, undertakes other projects involving services performed in Canada.

As we discussed, since we do not have all the documentation concerning the project, and since you are interested in receiving general guidelines concerning our registration requirements, our reply is in the nature of an interpretation letter rather than an application ruling.

Interpretation Given

Based on the information provided, XXXXX is not required to register for the GST/HST. Accordingly, XXXXX is not required to collect and remit GST/HST in respect of the supplies made to XXXXX.

Pursuant to subsection 240(1), every person ^[xxvii]2 who makes a taxable supply in Canada in the course of a commercial activity engaged in by the person in Canada is required to be registered for GST/HST unless:

•   the person is a small supplier (generally, a person with annual worldwide taxable sales, including those of associates, of $30,000 or less);

•   the only commercial activity of the person is the making of supplies of real property by way of sale otherwise than in the course of a business; or

•   the person is a non-resident person who does not carry on any business in Canada.

As set out in the enclosed GST/HST Policy Statement P-051R2: Carrying on Business in Canada, whether a non-resident is carrying on business in Canada for GST/HST purposes is a question that requires consideration of all relevant facts. The factors to consider in determining whether, for GST/HST purposes, a non-resident person is carrying on business in Canada 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 the facts and circumstances of each case.

Based the information provided, there do not appear to be any factors present in this case other than the performance of the service in Canada to support a conclusion that XXXXX is carrying on business in Canada for GST/HST purposes. In particular, XXXXX does not appear to have any presence in the form of employees or agents in Canada.

Since XXXXX does not appear to be carrying on business in Canada, it is not required to register for GST/HST purposes. If XXXXX at some point undertakes to make taxable supplies in Canada using its own employees, it may then be considered to be carrying on business in Canada for GST/HST purposes and would be required to register for the tax.

XXXXX situation appears similar to that described in Example #21 of the enclosed policy statement. Other examples in the policy dealing with the supply of services are examples # 18, #19 and #20.

In the circumstances described, XXXXX may voluntarily register for the tax pursuant to subsection 240(3). Under this subsection, a non-resident person may voluntarily apply for registration where, in the ordinary course of carrying on business outside Canada, the non-resident has entered into an agreement for the supply by the person of services to be performed in Canada. If XXXXX registers, it would be required to collect tax on its taxable supplies of services performed in whole or in part in Canada, but would also be entitled to input tax credits to recover the tax, if any, that it pays on expenses related to its commercial activity.

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the Excise Tax Act, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST/HST Memoranda Series, do not bind the Canada Revenue Agency with respect to a particular situation.

For your convenience, find enclosed a copy of section 1.4 of Chapter 1 of the GST/HST Memoranda Series.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at 613-954-4291.

Yours truly,

Michael Place
Senior Rulings Officer
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

2006/02/20 — RITS 53901 — Sale of Intermodal Cargo Containers in Canada