7 December 1998 GST/HST Ruling HQR0001470 - Services Provided by to

Dear XXXXX

I refer to your facsimile message of November 24, 1998 requesting a ruling with respect to the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the service provided by XXXXX to XXXXX[.] This matter was the subject of a Notice of Objection for which a Notice of Decision, dated November 20, 1998, was issued to XXXXX[.]

Statement of Facts

•   XXXXX is registered for the GST.

•   In the course of its business activities, XXXXX may direct their clients to seek XXXXX a mortgage with the XXXXX[.]

•   If the client receives XXXXX will compensate XXXXX for directing their client to them.

•   The service provided by XXXXX consists of XXXXX completing a form entitled XXXXX[.] The form is an internally produced document and is not provided by XXXXX[.]

•   The form contains the following information:

•   name, current address and phone number of purchaser;

•   address of the property purchased;

•   a space for notes which may indicate that the purchaser is a previous XXXXX customer;

•   Preprinted statements on the form include the following:

•   "A referral fee if any up to and including XXXXX will be paid to XXXXX[";]

•   "XXXXX[";]

•   "When completing the XXXXX application, please ensure XXXXX numbers are completed."

•   XXXXX does not prequalify the customer for XXXXX, nor completes a XXXXX application form or performs any other verification activity on behalf of the bank.

Ruling Requested

What is the tax status of the service provided by XXXXX to XXXXX[.]

Ruling Given

Based on the facts set out above, we rule that the supply of the service provided by XXXXX is subject to the GST at a rate of 7% pursuant to subsection 165(1) of the Excise Tax Act.

With respect to your request for our comments regarding GST which was due on services provided, I have enclosed GST Memorandum 500-2, Returns and Payments which discusses the liability to collect and remit the GST.

On April 1, 1997, the harmonized sales tax (HST) replaced the goods and services tax (GST) and the provincial sales tax (PST) in the three participating provinces of Nova Scotia, New Brunswick and Newfoundland with a harmonized tax rate of 15%. Example: Goods that are delivered or made available in a participating province are subject to the HST, to the extent that they are taxable supplies (which are not zero-rated), tax must be collected at the harmonized rate

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act, or to departmental interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 957-8222.

Yours truly,

Tim A. Krawchuk
Rulings Officer
Financial Institutions Unit
Financial Institutions and Real Property Division
GST/HST Rulings and Interpretations Directorate

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