Please find attached a letter sent to us by XXXXX, in respect of ITC entitlement for Division III tax. We have made a preliminary review of the case and have attached the resulting case synopsis summarizing the issues raised by XXXXX. The letter does not identify the specific service supplied by the agent. The letter only mentions that the agent "assists" the non-resident in the transaction. However, in a telephone conversation between Raymond Labelle of my staff and XXXXX specified that the services of an agent were basically the services of a "selling agent" or representation services.
Depending on the nature of the service supplied by the agent to the non-resident, the service may or may not be a "commercial service" as defined at subsection 123(1) of the Excise Tax Act (the "Act"). If the service is a "commercial service", the agent would be entitled to an ITC pursuant to subsection 169(2) of the Act. For your convenience, we have attached a copy of the policy statement on the interpretation of the term "commercial service" defined at subsection 123(1) of the Act. You may want to contact XXXXX to specify the nature of the agent's services for determining whether these services are "commercial services". If the agent's services are not "commercial services", the GST treatment would be as described in the attached briefing note.
It seems unlikely however that the service supplied by the agent to the non-resident would be a "commercial service". The Policy Review Committee has adopted in principle the position according to which a service has to have a close nexus to a good to be considered as "in respect of" the good.
If you have you need more information, please do not hesitate to call Raymond Labelle at (613) 952-8815.
H.L. Jones
Director
General Tax Policy
Policy and Legislation/GST
XXXXX
Att.
XXXXX
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