7 September 1999 GST/HST Interpretation HQR0001927 - GST/HST Implications for Non-resident Actors Entering Canada to Work

This is further to your inquiry concerning the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) implications for non-resident actors entering Canada to work. In particular, you wish to know under what circumstances a non-resident actor would be required to collect GST/HST on his/her remuneration.

The first factor to be considered is whether a person is providing his/her services and being remunerated as an employee or as a self-employed contractor. A person making a supply of his/her services would not be required to collect GST/HST if he/she was not engaged in a commercial activity. The definition of commercial activity in the Excise Tax Act (the "Act") includes a business, but the definition of business in the Act excludes an office or employment. Accordingly, remuneration paid to an employee is not subject to GST/HST and a person is not required nor allowed to register for GST/HST in respect of his/her employment activities. The employment status of a person should be the same for income tax and GST/HST purposes.

Where a person is self-employed, the next factor to consider is whether he/she is carrying on business in Canada. A non-resident person who is not carrying on any business in Canada is not required under the Act to register for GST/HST. Furthermore, a supply of personal property or a service made in Canada by a non-resident who is not registered and not carrying on business in Canada is deemed under the Act to be made outside Canada and therefore is not subject to GST/HST. An exception to these rules is discussed further on.

It is a question of fact whether a person is carrying on business in Canada. The Department has published Policy Statement P-051R, Carrying on Business in Canada (copy attached), to provide guidelines in making this determination. As noted in the policy statement, it is not necessarily true that a person carrying on business in Canada for GST/HST purposes would in all cases be considered to be carrying on business in Canada for income tax purposes.

The Department has provided an interpretation (the relevant portions of which are attached) on non-resident actors working in Canada. The Department was asked whether a person would be carrying on business in Canada in the following cases:

1. a non-resident performer who provides acting services in Canada during the shooting of a film;

2. a non-resident performer who provides acting services in Canada during the making of thirteen episodes of a series for television; and

3. a non-resident performer who provides acting services in Canada during the shooting of three separate films in one calendar year.

The Department responded that in the second and third case, the person likely was carrying on business in Canada, but not in the first case. However, the answer in the first case could be different depending on the length of time it took to shoot the film.

With certain exceptions, a person carrying on business in Canada and making a supply in Canada in the course of that business is required to register and collect tax on his/her supplies. One common exception is if the person qualifies as a small supplier; that is, the consideration for his/her taxable supplies made worldwide (with certain exceptions such as sales of capital property) exceeds $30,000 over four calendar quarters or in any one calendar quarter. Therefore, an actor carrying on business in Canada and receiving remuneration in excess of the small supplier threshold (for all of his/her services supplied as a self-employed person anywhere in the world) would be required to register for GST/HST and collect tax on his/her supplies made in Canada. Since his/her services while in Canada would be performed in whole or in part in Canada, his/her services would be deemed under the Act to have been supplied in Canada. Of course, this would be determined on a contract-by-contract basis (i.e., tax would not apply to any services performed wholly outside Canada where a particular contract did not require the actor to perform in Canada).

In certain circumstances, supplies are zero-rated; that is, taxed at a rate of zero per cent. This can include services provided to a non-resident person if certain requirements are met. Whether this would apply to an actor providing his/her services in Canada to a non-resident person would have to be determined on a case-by-case basis.

Notwithstanding the above, the Act requires every person to register who enters Canada to make taxable supplies (i.e., supplies made in the course of a commercial activity) of admissions in respect of a place of amusement or other event. However, an actor performing on a film set, or performing live in a show where the admissions were supplied by the promoter of the show, would not be caught by this provision.

The Act allows for voluntary registration in certain cases. This includes a non-resident person who in the ordinary course of carrying on business outside Canada enters into an agreement for the supply by the person of services to be performed in Canada. This allows the person to claim input tax credits on any tax paid or payable by the person on expenses incurred in the course of providing his/her services.

An actor who is not required to register and does not voluntarily register may recover some of the tax paid by them on his/her expenses through the Visitors Rebate Program. For example, the rebate would be available in respect of some of the tax paid by the actor on short-term accommodation.

In the film industry, it is not unusual in the case of film crew other than actors to be hired through sub-contracts. Our comments above apply here as well. A sub-contractor will not be required to register and collect GST/HST if he/she is hired as an employee. If self-employed, then it must be determined whether he/she is carrying on business in Canada, whether he/she is a small supplier, and so on, as discussed above.

As can be seen, there are a number of factors that must be considered when determining whether a non-resident actor working in Canada must register and collect GST/HST. Inquiries on this issue received at Headquarters should be referred to the GST/HST Rulings and Interpretations Directorate for response.

Adrien Venne
Director
General Operations and Border Issues Division
GST/HST Rulings and Interpretations Directorate

attach.