24 July 2000 GST/HST Interpretation 30452 - Application of the GST to the Supply of Website Design Services

Dear XXXXX:

Thank you for your letter of March 9, 2000, which you faxed to our XXXXX XXXXX, concerning the application of the Goods and Services Tax (the GST) to the supply of the website design service made to you by XXXXX of XXXXX.

Interpretation Requested

XXXXX, an unregistered non-resident person, has an agreement with XXXXX, a GST registrant, operation out of XXXXX, to supply XXXXX with a service of designing a website and uploading it onto the internet, which server is located in the U.S.

XXXXX, has been charging and collecting from XXXXX the GST in connection with the above supply. XXXXX wishes to confirm whether XXXXX has correctly applied the GST or if it should have charged tax at all.

Interpretation Given

Based on the above information and pursuant to our telephone conversation of July 14 last, I am pleased to provide you with the following interpretation:

Generally speaking, a supply of a service made in Canada by a GST registrant is a taxable supply and subject to tax at the full rate of 7 per cent, unless the supply of the service is relieved from tax under specific provisions of the Excise Tax Act (the Act).

Part V of Schedule VI to the Act, provides for the zero-rating of certain services supplied in Canada to non-resident persons. A zero-rated supply means a taxable supply subject to tax at the rate of 0 per cent.

More particularly, section 7 of Part V of Schedule VI, which is the general zero-rating provision for services not included elsewhere in Part V of Schedule VI, zero-rates a supply of a service made in Canada to a non-resident person.

The supply of the services made by XXXXX of designing a website and uploading it onto the internet (i.e., a programming service), is considered by the Canada Customs and Revenue Agency (CCRA) to be a supply of a service in respect of intangible personal property. Accordingly, section 7 of Part V of Schedule VI would apply to zero-rate the supply of the service made by XXXXX.

Therefore, XXXXX should either refund or credit to XXXXX the excess amount of tax that was charged or collected, in respect of a supply of services that is zero-rated as described above, within two years after the day the amount was so charged or collected, pursuant to subsection 232(1) of the Act.

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/HST Memoranda Series, do not bind the Canada Customs and Revenue Agency 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) 957-8220.

Yours truly,

Daniel E.B. Chamaillard, Senior Technical Analyst
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate