10 January 1997 GST/HST Interpretation 11725-1 - Interpretation on Whether Some Services Supplied by Marina Operators are Supplied as an "Agent" for the Purposes of Section 177 of the Excise Tax Act

Dear XXXXX:

In your facsimile of July the 15th., you requested an interpretation on whether some services supplied by marina operators are supplied as an "agent" for the purposes of section 177 of the Excise Tax Act (the Act).

The object of your query is the typical fact pattern that you submitted, which is as follows.

Fact Pattern

1. XXXXX wishes to sell his recreational vessel. He values it at XXXXX He conveys this information to the marina operator.

2. XXXXX advises the marina operator that he is seeking a boat similar to XXXXX boat.

3. The marina operator introduces the sellor and the prospective purchaser.

4. The prospective purchaser depends on the marina operator's familiarity with the boat and seeks his assessment of its seaworthiness, operating characteristics and general condition. The marina operator also advises the purchaser of his obligations with regards to such matters as licence transfer and payment of sales tax.

5. The vendor and the prospective purchaser agree independently on the amount to be paid for the boat. Typically, the purchaser pays the marina operator a service fee of 10 per cent of the purchase price. The marina operator charges, collects and remits the GST on the amount of this fee.

Issue:

Whether the marina operator supplies tangible personal property on behalf of another person for the purposes of the Excise Tax Act (the Act) in the described fact pattern.

The Department's Position

In the described fact pattern, the marina operator is not making any supply of tangible personal property, either as a vendor or on behalf of another person. As a result, section 177 of the Act does not apply to the sale of a boat occurring in the manner described above.

In the submitted example, the marina operator is supplying counseling services to the purchaser for consideration corresponding to XXXXX of the sale price.

Analysis

In the description of the fact pattern at issue, the marina operator does not have the authorization, either explicit or implicit, from any of the parties to bind any of the parties in the sale of a boat. In effect, the prospective purchaser requires the marina operator to meet directly the vendor of the boat, in the knowledge that an agreement would be negotiated directly with the vendor and also entered into directly with the vendor, should an agreement be reached. The marina operator provides counseling services to the prospective purchaser of the boat but does not have a mandate from the vendor to bind the vendor, and that fact is known by the prospective purchaser.

In this fact pattern, none of the parties consent to give the marina operator the authorization to bind one or the other of the parties on the sale of tangible personal property. As a result, the marina operator does not have such authority, and that fact is known by the vendor and the prospective purchaser.

Consequently, the issue of whether the marina operator is supplying the boat on behalf of another person becomes moot, as the vendor is the author of a direct sale to the purchaser: the marina operator is not making a supply of the boat.

Finally, the marina operator supplies the following services: giving a summary evaluation of the boat to the prospective purchaser, indicating the general obligations normally related to the ownership of a boat and arranging a meeting between the vendor of a boat and a prospective purchaser for the purpose of concluding a sale.

The consideration for the service corresponds to XXXXX of the purchase price in the typical case examined. The recipient of the service is the purchaser, who assumes the liability to pay the consideration.

This interpretation is based upon our understanding of the Act and regulations thereunder in their present form. The interpretation does not take into account the effects of any proposed or future amendments thereto or future changes in interpretation.

While we trust our comments are of assistance to you, we would advise that they do not constitute a GST ruling and are, therefore, not binding upon the Department in respect of any particular fact situations.

Should you require further information concerning the above, please contact the undersigned @ (613) 952-8815.

Yours sincerely,

Raymond Labelle
Rulings and Interpretation Officer
Industries Unit
General Operations and Border Issues
GST Rulings and Interpretations

CN: HQR0000220