11725-9(sl)
Dear XXXXX
In reference to certain information provided to you in June and July of 1992, we wish to clarify what constitutes a disclosed agency relationship. Specifically, we refer to our letters to you that discussed the criteria that would constitute a disclosed agency relationship between XXXXX[.]
If an agency relationship does exist between XXXXX section 177 of the Excise Tax Act may apply. That section discusses the application of tax where an agent makes a supply on behalf of the principal who is not disclosed as required by that section. Conversely, if the disclosure requirements are fulfilled, then section 177 does not apply.
For supplies before 1993, subsection 177(1) required that for subsection 177(1) not to apply, the agent who makes a taxable supply on behalf of the principal must enter into a written agreement with the recipient, or issue an invoice for the supply, in the name of the principal. Note that for supplies before April 1991, the agent simply had to be acting on behalf of a vendor (i.e., not necessarily as agent) and an additional form of disclosure was acceptable, i.e., the agent issues a receipt in the name of the vendor.
For supplies after 1993, subsection 177(1) was amended so that in order for subsection 177(1) not to apply, the agent who makes a taxable supply on behalf of the principal must disclose, in writing, to the recipient of the supply, both the name of the principal and the registration number assigned to the principal. More specifically with respect to the meaning of "disclose, in writing," it is not sufficient to simply state the name and the registration number of the principal; rather, there must be sufficient information to identify the principal as the supplier of the taxable supply.
Therefore, the disclosure requirements for purposes of subsection 177(1) are not considered to be fulfilled simply because a passenger checks in at a particular airline's gates. What a passenger may or may not know is not sufficient to absolve the agent of the responsibility to disclose, in writing, information as required by the legislation. On the basis of the information available, it appears that an entry in a flight schedule does not constitute "entering into a written agreement" for the purposes of subsection 177(1).
If we can be of further assistance in this matter, please contact Ken Mathews at (613) 952-9585 or Sara Nixon at (613) 954-4397.
H.L. Jones
Director
General Applications Division
GST Rulings and Interpretations
894REG
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