18 February 1998 GST/HST Interpretation HQR000031 - Meaning of "disclose to the recipient in writing" under Former Subsection 177(1)

                                                                        GST/HST Rulings and Interpretations
Directorate
Place Vanier, Tower C, 9th Floor
25 McArthur Avenue
Vanier, Ontario
XXXXX                                                                                 K1A 0L5

Dear XXXXX

This refers to your telephone conversation with Ken Mathews, on July 8, 1996. We apologize for the delay in the response. In that conversation, you requested an interpretation concerning the application of the Goods and Services Tax (GST)Harmonized Sales Tax (HST) to what Revenue Canada would accept as sufficient information to identify the principal as the supplier under the former subsection 177(1) of the Excise Tax Act (ETA). For the purposes of this letter, we are assuming that all transactions are taking place before April 1, 1997 (the date on which the HST came into force) and that therefore the HST is not applicable. The HST is applicable to taxable supplies made, after March 31, 1997, in any of the participating provinces which are: Newfoundland, Nova Scotia and New Brunswick.

Interpretation Requested

In a letter, dated December 14, 1995, sent to your representative at XXXXX we stated:

"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."

In your discussion with Mr. Mathews concerning the abovenoted paragraph, you asked him to explain the meaning of the last two lines of that paragraph. Your question specifically was, what would Revenue Canada accept as sufficient information to identify the principal as the supplier ?

Interpretation Given

Subsection 177(1) of the ETA, to which we refer in the above citation, is applicable to the supply of a property or a service for the period of January 1, 1993 to April 23, 1996. For that period, subsection 177(1) of the ETA reads as follows :

" Supply on behalf of registrant - For the purposes of this Part, where a registrant (in this subsection referred to as the "agent"), acting as agent of another registrant (in this subsection referred to as the "principal") in the course of a commercial activity of the agent, makes a taxable supply (otherwise than by auction) of property or a service on behalf of the principal to a recipient and the agent does not disclose to the recipient in writing the name of the principal and the registration number assigned to the principal...."

Where taxable supplies are made on behalf of a registrant, and the principal's name is disclosed in a written agreement or invoice, subsection 177(1) would not apply to the supply. The Department would consider that sufficient information has been given to the recipient when the name and registration number of the principal appears on a document that is provided to that recipient in respect of the supply and that identifies the principal as the supplier. Such documentation could be, in your case: the airline ticket, the invoice sent to the recipient by the agent, or any written agreement between the recipient and the agent relating to the supply. It is important that the recipient receives a document stating the name and registration number of the principal as the supplier.

It is not sufficient to provide the name and registration number of the principal, XXXXX, on a flight schedule. Nor is the fact that the recipient checks in at XXXXX departure gate. Such facts do not clearly identify to the recipient that XXXXX is providing the transportation. If no documents were provided to the recipient to advise the recipient of the name and registration number of the principal, as the supplier, the agency is not considered to be disclosed for purposes of ss. 177(1).

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the Excise Tax Act, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST Memoranda Series, do not bind the Department with respect to a particular situation.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at 613 957-8253.

Yours truly,

Bruno Charron, CA
A/Senior Rulings Officer
Industries Unit
General Operations & Border Issues Division
GST/HST Rulings and Interpretations Directorate

            Claude Englehart, Large Business Audit, (include background)
Audit Directorate
VECR
171 Slater, 13th floor
Ottawa
K1A 0L5

            Interline passenger transportation services
HQR0000314