Telephone: (613) 954-8585
Fax: (613) 990-1233
File: 11715-1(glr)
s. 42, 50, 123
November 29, 1995
I refer to XXXXX memorandum of August 24, 1994, requesting assistance in establishing the nature of two supplies for Goods and Services Tax (GST) purposes. Please accept my apologies for the delay in this response.
XXXXX provided the following information in his memorandum:
• XXXXX is a non-profit organization.
XXXXX has contracted with XXXXX to supply a needs/feasibility study. XXXXX has agreed to supply to XXXXX "... a needs/feasibility study to identify the precise target-group, to identify an ideal location, and to identify the exact medical, health maintenance and prevention needs of the target group. The first phase would also incorporate a cost-benefit analysis/feasibility study."
• In order to fulfill the contract, XXXXX has contracted with XXXXX to perform the study.
Although XXXXX was primarily concerned with the nature of the supply between XXXXX , I will also deal with the supply by XXXXX
At the outset, let me say that the Department continues to have as an objective the development of policy related to the question of distinguishing property from service (and to a lesser extent, tangible from intangible property). However, as this work remains in the distance, I will try to provide some guidance based on the information you have provided. At its core, the issue relates to the object and substance of the contracts between the particular parties.
From the information provided, XXXXX has a contract with XXXXX to provide a needs/feasibility study. If we assume that the object of the contract was such that XXXXX will undertake all research, review and analysis of the relevant facts, together with the preparation of the final report and that, in substance, the report merely serves as the medium for expressing the results of the "work" conducted by XXXXX , it is reasonable to consider the supply of a needs/feasibility study to be the supply of a service.
XXXXX also has a contract to provide a needs/feasibility study and the same logic applied in the previous paragraph would apply to XXXXX . As stated in the previous paragraph, the supply of a study made in this manner would be considered to be the supply of a service. Whether the service qualifies as an exempt supply under Schedule V, Part VI, sections 6 or 7 to the Act will depend on the terms of the contract between XXXXX .
In XXXXX letter he states that "it is our understanding that under Part V of the Act (FST) the supply of "printed matter" was held to be tangible personal property." XXXXX understanding is correct. However, the FST (federal sales tax) was imposed at the manufacturing level. Therefore, the licensed printer supplying the printed report to XXXXX would have charged the FST calculated on the sale price. Prior to January 1, 1991 (during the FST regime), the supply of the needs/feasibility study by XXXXX and by XXXXX , would also have been considered to be the supply of a service.
If you require further information, please contact Ms. Anny Roy at (613) 954-2560, Mr. Serge Bernier at (613) 952-9580, Mr. Lalith Kottachchi at (613) 952-9588 or Mr. François Paris at (613) 952-8812.
H.L. Jones
Director
General Applications Division
GST Rulings and Interpretations
Policy and Legislation Branch
c.c. G. Ryhorchuk GAD: 781(REG)
Imposition Team
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