15 June 2000 GST/HST Interpretation 31364 - Application of GST to Billings to Non-Residents

Dear XXXXX

Thank you for your facsimile of May 24, 2000 (with attachments) concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to billings to non-residents.

The following facts were presented in your facsimile and telephone conversations.

•   A United States (U.S.) individual is involved in a motor accident in Canada.

•   The individual requests that the non-resident company, under which the individual is insured, represent the individual in court.

•   The non-resident insurance company is not registered for the GST/HST.

•   The non-resident insurance company retains the services of a law firm in Canada to represent the individual in the ensuing litigation.

•   The Canadian law firm invoices its client, the non-resident insurance company, for the professional fees incurred.

Interpretation Requested

The supply of legal services, made to the non-resident insurance company, is zero-rated pursuant to section 23 of Part V of Schedule VI to the Excise Tax Act ("the Act"), providing the supply does not include a supply of a service rendered to an individual in connection with criminal, civil or administrative litigation in Canada.

Interpretation Given

The supply of legal services, made to the non-resident insurance company is not zero-rated pursuant to section 23 of Part V of Schedule VI to the Act.

Rationale

Although the supply of legal services is made to the non-resident insurance company, the supply is actually being rendered to the client, who is an individual, in connection with litigation in Canada. Such a supply is excluded from zero-rating pursuant to paragraph 23(a) of Part V of Schedule VI to 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.

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) 952-6743.

Yours truly,

Cheryl R. Leyton
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate