25 August 2000 GST/HST Interpretation 30631 - The GST/HST Status of the Supply of Advertising Services

Dear XXXXX:

Thank you for your letter of March 29, 2000, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the supply of advertising services made to non-residents through the Internet. Your request has been transferred from the XXXXX to the Border Issues Unit of the General Operations and Border Issues Division of the Excise and GST/HST Rulings Directorate for response.

Interpretation Requested

What is the GST/HST status of the supply of advertising space on a magazine that is published and distributed electronically through the Internet when made to a non-resident person?

Interpretation Given

The supply of an advertising service made in Canada is zero-rated pursuant to section 8 of Part V of Schedule VI to the Excise Tax Act (the "Act") provided the supply is made to a non-resident person who is not registered for GST/HST purposes at the time the supply is made. This zero-rating provision applies in circumstances where the advertisement is supplied electronically or where it is supplied in a tangible form.

Considering the limited information provided in your correspondence regarding the supply of "advertising space", I refer you to GST/HST Memoranda Series section 4.5.3 Exports - Services and Intellectual Property, attached, for an explanation of what the Canada Customs and Revenue Agency (CCRA) generally considers to be an advertising service. The explanation in the Memoranda Series refers to a service of creating a message and a service directly related to the communication of such a message. The message must be oriented towards soliciting business, attracting donations, or calling public attention in the form of an information notice, a political announcement or other similar communication. In order for the supply of advertising space to be an advertising service the person communicating the message must either be in possession of the message or have received sufficient information as to the content of the message prior to the supply of the service and know that the message is in the nature of advertising.

The provision of a "spot" on a web page or an electronically distributed magazine is considered by the CCRA to be a supply of an advertising service provided the person broadcasting or communicating the message has sufficient information prior to the supply of the service to know that the message is in the nature of advertising.

For your convenience, find enclosed a copy of section 1.4 of Chapter 1 of the GST/HST Memoranda Series.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-8812.

Yours truly,

Jeffrey A. Frobel
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate