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XXXXX
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File #: 11680-7(glr)
XXXXX ss 142(2)
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Dear XXXXX
I refer to your facsimile message of April 4, 1996, addressed to Mr. Garry Ryhorchuk of my staff, concerning the application of the Goods and Services Tax (GST) to a hypothetical transaction relating to the sale of a sports franchise.
You describe a situation where a GST-registered resident is relocating its franchise of a sports team to another country. Subsequent to the relocation, the registered resident will sell the franchise, together with the players' contracts, to a non-resident. The operation of the franchise will be restricted to an area outside Canada. The franchise may play a certain number of games in Canada against Canadian-based teams. The sale of the franchise, including the players' contracts, is to be concluded outside Canada.
You inquired if the supply of the franchise and players' contracts would be a single supply and if the supply would be made outside Canada.
Interpretation Given
Whether the supply of the franchise and the players' contracts is considered to be a single supply, or multiple supplies, is a question of fact and can only be determined by a complete review of the specific facts of a given situation. Please refer to the Department's Draft Policy Statement P-077 entitled "Single and Multiple Supplies" for more details.
Under the provisions of subparagraph 142(2)(c)(i) of the Excise Tax Act, a supply of intangible personal property shall be deemed to be made outside Canada if the property may not be used in Canada. For purposes of this interpretation, the term "may not be used in Canada" is equated to mean the location of the sports team. As you state that the franchise only allows the non-resident purchaser to operate the sports team in a city in XXXXX, it appears that the supply would not be subject to the GST under Division II. The fact that some games will be played in Canada is not relevant in this particular hypothetical transaction.
The foregoing comments represent our general views with respect to the subject matter of your message. Proposed or future amendments to the legislation may result in changes to the interpretation. These comments are not rulings and, in accordance with the guidelines set out in Section 1.4 of the GST Memoranda Series, do not bind the Department with respect to a particular situation.
If you have any questions or require further information, please contact Mr. Ryhorchuk at (613) 952-6743 or Mr. Randy Nanner at (613) 952-8810.
Yours sincerely,
H.L. Jones
Director
General Applications Division
GST Rulings and Interpretations
Policy and Legislation Branch
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R. Nanner GAD #: 2868(GEN)
G. Ryhorchuk |
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