9 April 2001 GST/HST Interpretation 33818 - Application of GST to Invoice for Professional Services to a Non-Resident

Dear XXXXX:

Thank you for your letter of October 30, 2000, sent by facsimile concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to a supply of professional services made to a non-resident person.

In accordance with GST/HST Memoranda Series Section 1.4, an application ruling can only be issued with reference to a clearly defined fact situation of a particular registrant. Rulings are issued upon request and where the taxpayer has presented all the relevant facts such as the nature of the transactions undertaken, detailed descriptions of services or property involved, the parties involved in all transactions and relevant documentation such as invoices, contracts and other pertinent agreements. Where all the relevant facts are not provided, an interpretation may be issued.

Your letter stated that professional services are provided to a non-resident insurer with regard to the liability of the non-resident under an insurance contract relating to the insurance of real or tangible personal property situated in Canada. The advice that is being provided is related to the contractual obligation of the insurer under the terms of the policy.

Interpretation Requested

Does the GST apply to the charges for professional services rendered to the non-resident insurer?

Interpretation Given

Based on the limited information provided, it appears that the supply of the professional services to the non-resident insurer is in relation to a contract of insurance or potential liability under an insurance contract, rather than real or tangible personal property. As such, the supply may be zero-rated pursuant to section 23 of Part V of Schedule VI to the Excise Tax Act.

Rationale

In order to determine the tax status of the professional services, reference must be made to

Policy Statement, P-169R, Meaning of "In Respect of Real Property Situated in Canada" and "In Respect of Tangible Personal Property That is Situated in Canada at the Time the Service is Performed" and GST/HST Memorandum Section 4.5.3 Exports - Services and Intellectual Property. Copies of the policy statement and memorandum are enclosed for your information.

In this case, although the professional services relate to a liability of the insurer in relation to an insurance contract in respect of real or tangible personal property situated in Canada, the real or tangible personal property does not appear to be the direct object of the professional service. Consequently, the supply of the professional service would not be excluded from zero-rating under either paragraph 23(b) or (c) of Part V of Schedule VI to the Excise Tax 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