5 January 2000 GST/HST Ruling 13389 - Application of the GST/HST to Financial Services

Dear XXXXX

Thank you for your letter of November 9, 1999 with the attached draft agreement, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transactions described below.

Statement of Facts

Our understanding of the facts is as follows:

XXXXX has entered into an agreement with XXXXX XXXXX XXXXX XXXXX[.]

Some of the services to be provided by XXXXX as outlined in XXXXX of the agreement include the following:

•   "offer for sale through its sales force and any other means acceptable to XXXXX the XXXXX[,]

•   "negotiate on XXXXX behalf the pricing and terms of agreement XXXXX, XXXXX XXXXX[,]

•   "perform activities for Customers including ... managing Customer satisfaction, providing value-added business analysis and re-engineering services and Best Practice Reviews, and extending use of the XXXXX, and

•   "sign agreements for the XXXXX on behalf of XXXXX as it agent with Customers ... and provide such agreements to XXXXX compensation is outlined in XXXXX of the agreement and is based on a percentage of the volume of XXXXX over the term of the agreement.

Ruling Requested

Are the services provided by XXXXX to XXXXX supplies of exempt financial services pursuant to paragraph (l) of the definition of financial services in subsection 123(1) of the Excise Tax Act (ETA)?

Ruling Given

Based on the facts set out above, we rule that the services provided by XXXXX to XXXXX are supplies of exempt financial services pursuant to paragraph (l) of the definition of financial services in subsection 123(1) of the ETA.

On November 1, 1999, Revenue Canada became the Canada Customs and Revenue Agency (CCRA). Example: Goods that are delivered or made available in a participating province are subject to the HST

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act, or to departmental interpretative policy; and that you have fully described all necessary facts and transactions for which you requested a ruling.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-9577 or Duncan Jones at (613) 952-9210.

Yours truly,

Marilena Guerra
Senior Technical Analyst
Financial Institutions Unit
Financial Institution and Real Property Division
Excise and GST/HST Rulings Directorate