17 January 2013 GST/HST Ruling 130479 - […] – Place of supply [in a Province] – [Intangible Personal Property and Services]

Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.

Dear [Client]:

Thank you for your fax of October 19, 2010, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) in respect of certain supplies that are made by or to the […] ([…][Organization]). We apologize for the delay in responding.

HST applies at the rate of 15% in Nova Scotia, 13% in Ontario, New Brunswick, and Newfoundland and Labrador, and 12% in British Columbia. GST applies at the rate of 5% in the remaining provinces and territories.  

All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.

Statement of Facts

We understand the following:

1. The [Organization] is the national […] for […]. The [Organization] is registered for GST/HST purposes.

2. The [Organization] was incorporated to pursue the following objectives: […]

3. […]

4. Each […] [member] pays an annual fee to the [Organization] (the "Annual fees") for a membership in the [Organization] […]

* In the ordinary course of its business, the [Organization] obtains the business address in Canada of each [member] that contracts for the supply of the membership.

5. The [Organization] sponsors […] conferences held in various locations in Canada. […]. A fee is charged by the [Organization] for admission to these conferences (the "Registration fees").

[…]

Rulings Requested

You would like to know:

1. The province in which the supply to a [member] of a membership in the [Organization] is made.

2. The province in which the supply of an admission to a […] conference, for which the Registration fees are charged, is made.

3. […].

4. The province in which the supply of […] [Service X], for which [Service X] fees are charged, is made.

5. The province in which the supply of […] [Service Y], for which [Service Y] fees are charged, is made.

With respect to ruling requests #4 and #5, as outlined in GST/HST Memoranda Series 1.4, Excise and GST/HST Rulings and Interpretations Service, a GST/HST ruling provides the Canada Revenue Agency's (CRA's) position on how the relevant provisions of the legislation apply to a clearly defined fact situation. The CRA will issue a ruling only when all of the relevant facts of a transaction or series of transactions are available. Therefore, we are providing you with an interpretation in respect of these ruling requests. The interpretation can be found under the heading "Interpretation Given" below.

Rulings Given

Based on the facts set out above, we rule that:

1. The supply of a membership in the [Organization] to a [member], for which the Annual fees are charged, is made in the province in which the business address of the [member] that is the contracting address that is obtained by the [Organization] in the ordinary course of its business is located.

2. The supply of an admission to a […] conference, for which the Registration fees are charged, is made in the participating province in which the conference is held, or in a non-participating province where the conference is held in a non-participating province.

3. […].

This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.

Explanation

A taxable supply (other than a zero-rated supply) of property or a service made in Canada is subject to GST at 5% when it is deemed to be made in a non-participating province, and is subject to HST at the applicable rate when it is deemed to be made in a participating province.

The ETA has various rules to determine whether a supply that is made in Canada is made in a province. Under section 144.1, a supply that is made in Canada is also considered to be made in a particular province if it is determined to be made in the province under the place of supply rules in Schedule IX. In any other case, the supply is deemed to be made in a non-participating province. Pursuant to section 3 of Part IX of Schedule IX, notwithstanding the rules in Schedule IX, a supply is made in a province if the supply is prescribed under the New Harmonized Value-Added Tax System Regulations (the "Regulations") to be made in the province.

1. Membership in the [Organization]

The supply of the membership is a supply of intangible personal property (IPP).

The membership may be used in Canada. Under paragraph 142(1)(c), a supply of IPP is deemed to be made in Canada if the IPP may be used in whole or in part in Canada.

Based on the facts, there are no restrictions with respect to the province in which the membership may be used. Generally, for supplies of IPP (other than IPP that relates to real property or to tangible personal property) with respect to which there are no restrictions regarding where in Canada the IPP may be used, paragraph 8(b) of the Regulations provides that the supply of IPP is made in a particular province if:

(i) in the ordinary course of business of the supplier, the supplier obtains a particular address that is:

(a) if the supplier obtains only one address that is a home or business address in Canada of the recipient, the home or business address in Canada obtained by the supplier,

(b) if the supplier obtains more than one such address, the home or business address in Canada of the recipient that is most closely connected with the supply, or

(c) in any other case, the address in Canada of the recipient that is most closely connected with the supply,

(ii) the particular address is in the province, and

(iii) the IPP can be used in the province.

The business address of the recipient from which the supplier is hired pursuant to the agreement for the supply (the "contracting address") is generally the address that is most closely connected with the supply. This address will therefore determine the province in which the supply of the IPP is made where it is in Canada and is obtained by the supplier in the ordinary course of its business.

Based on the facts, in the ordinary course of its business, the [Organization] obtains the business address of the [member] that contracts for the supply of the membership to the [member] and the membership can be used in the province where that address is located. The supply of the membership by the [Organization] to the [member] is therefore made in the province in which the contracting address of the [member] is located.

2. Registration Fees for […] Conferences

Under subsection 123(1), an "admission" in respect of a place of amusement or a seminar, an activity or an event, means a right of entry or access to, or attendance at, the place of amusement or the seminar, activity or event. For purposes of the ETA, a supply of an admission to an event, such as a conference, is considered to be a supply of IPP.

Under paragraph 142(1)(c), the supply of the admission to a […] conference is made in Canada since it may be used in Canada.

Under subsection 6(1) of the Regulations, a supply of IPP (other than IPP that relates to real property or to tangible personal property) in respect of which the Canadian rights can only be used primarily in participating provinces is made in a participating province if an equal or greater proportion of those Canadian rights cannot be used in another participating province. Conversely, under section 7 of the Regulations, a supply of IPP (other than IPP that relates to real property or to tangible personal property) in respect of which the Canadian rights can only be used primarily in non-participating provinces is made in a non-participating province.

Based on the facts, the Registration fees that the [Organization] collects from individuals who attend a particular […] conference are consideration for a supply of IPP in respect of which the Canadian rights can only be used in the province in which the […] conference takes place. Therefore, if the conference takes place in a participating province, the supply of the IPP is made in that participating province. If the conference takes place in a non-participating province, the supply of the IPP is made in a non-participating province.

3. […]

Interpretation Given

[Service X]

Under paragraph 142(1)(g), the supply of a service is made in Canada if the service is, or is to be, performed in whole or in part in Canada. [Services X] are performed in Canada and are therefore deemed to be supplied in Canada.

Generally, under subsection 13(1) of the Regulations, a supply of a service is made in a province if, in the ordinary course of business of the supplier, the supplier obtains an address in the province that is:

(a) if the supplier obtains only one address that is a home or a business address in Canada of the recipient, the home or business address in Canada obtained by the supplier,

(b) if the supplier obtains more than one such address, the home or business address in Canada of the recipient that is most closely connected with the supply, or

(c) in any other case, the address in Canada of the recipient that is most closely connected with the supply.

Therefore, the province in which the supply of [Service X] is made would be determined by these rules where in the ordinary course of its business, the [Organization] obtains an address in Canada of the recipient.

Generally, under subsection 13(2) of the Regulations, if the supplier does not, in the ordinary course of its business, obtain an address in Canada of the recipient of the supply, then the supply of the service is made:

(a) in a participating province if the Canadian element of the service is performed primarily in participating provinces and

(i) an equal or greater proportion of the Canadian element of the service is not performed in another participating province, or

(ii) if subparagraph (i) does not apply, the tax rate for the participating province is the highest among the participating provinces for which no greater proportion of the service is performed in another participating province; and

(b) in a non-participating province if the Canadian element of the service is not performed primarily in participating provinces.

Therefore, the province in which the supply of [Service X] is made would be determined by the rules in subsection 13(2) of the Regulations where the [Organization] does not, in the ordinary course of its business obtain an address in Canada of the recipient of the supply.

Under section 7 of Part V of Schedule VI, a supply of a service made to a non-resident person is a zero-rated supply unless it is a supply of:

(a) a service made to an individual who is in Canada at any time when the individual has contact with the supplier in relation to the supply;

(a.1) a service that is rendered to an individual while that individual is in Canada;

(b) an advisory, consulting or professional service;

(c) a postal service;

(d) a service in respect of real property situated in Canada;

(e) a service in respect of tangible personal property that is situated in Canada at the time the service is performed;

(f) a service of acting as an agent of the non-resident person or of arranging for, procuring or soliciting orders for supplies by or to the person;

(g) a transportation service; or

(h) a telecommunication service.

Therefore, if an individual who is the recipient of [Service X] is not resident in Canada, the supply of the service would be a zero-rated supply where none of the exceptions described in paragraphs (a) through (h) of section 7 of Part V of Schedule VI applies.

[Service Y]

The place of supply of [Service Y] and tax that would apply in respect of those supplies would be determined based on the rules for services that are explained in the [Service X] section of this letter.

For more information regarding the place of supply rules please refer to GST/HST Memoranda Series Chapter 3.3 - Place of Supply and GST/HST Technical Information Bulletin B-103 - Place of supply rules for determining whether a supply is made in a province.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-952-8812. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.

Yours truly,

Jeff Frobel
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate