30 May 2007 GST/HST Ruling 87783 - XXXXX

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 your XXXXX concerning the application of the Goods and Services Tax (GST) to services performed by XXXXX (the "Contractor") and XXXXX (the "Sub-Contractor").

All legislative references are to the Excise Tax Act (ETA) and the regulations thereunder, unless otherwise specified.

Statement of Facts

We understand from the contracts attached to your XXXXX and from a letter XXXXX, the following:

The Contractor has an agreement with XXXXX (the "Company") from XXXXX to provide expertise and guidance as a XXXXX at the Company's heavy oil projects in the XXXXX.

The Contractor hires the Sub-Contractor to perform the service work outside Canada.

Ruling Requested

You would like to know if the supply of the services by the Contractor to the company is subject to 6% GST, GST exempt or zero-rated (taxable at 0%).

Further, you would like to know if the supply of services by the Sub-Contractor to the Contractor is subject to 6% GST, GST exempt or zero-rated (taxable at 0%).

Ruling Given

Based on the facts set out above, we rule that, the supply by the Contractor to the Company is not subject to GST as the supply is made outside Canada pursuant to paragraph 142(2)(d) of the Excise Tax Act by virtue of the fact that the services are in relation to real property situated outside Canada.

Furthermore, the services supplied by the Sub-Contractor is not subject to GST as the supply is made outside Canada pursuant to paragraph 142(2)(d) of the Excise Tax Act by virtue of the fact that the services are in relation to real property situated outside Canada.

Explanation

A taxable (other than zero-rated) supply made in Canada is subject to GST at 6% or HST at 14% if it is made in a participating province (Nova Scotia, New Brunswick and Newfoundland and Labrador).

Where the supply is made outside Canada, the supply is not subject to tax under Division II of the ETA; that is, the recipient of the supply is not liable to pay the tax and the supplier is not liable to collect the tax.

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.

For your convenience, find enclosed a copy of GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 957-8220.

Yours truly,

Kevin W. Smith
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

2007/05/10 — RITS 91261 — Application of GST/HST to a XXXXX Levy