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.
GST/HST Rulings Directorate
Place de Ville, Tower A, 5th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 245339
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
Application of GST/HST to the supply of marketing and payment services
Thank you for your correspondence of […] [mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to the supply of marketing and payment services.
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
Based on the information contained in your fax on [mm/dd/yyyy], your email of [mm/dd/yyyy], our phone conversations and your website, we understand the following:
1. [ …] (The Corporation) provides services […][through their website].
2. The website contains profiles of […][health care professionals (the Professionals) including their] expertise and credentials and other information. Users can […], identify the Professional that best fit their needs, and schedule consultations through the website.
3. Users pay the fees for their consultation online at the time of booking (The Professional Fees).
4. The Corporation is registered for the GST/HST with GST/HST account number […] since [mm/dd/yyyy].
5. According to the Terms of service found on your website:
a. The Corporation’s services are offered for informational and scheduling purposes only, and are not intended to be medical advice or medical care, or a substitute for medical advice, diagnosis or treatment.
b. The Corporation does not offer […] medical advice or […] medical or diagnostic services. Any […] service obtained by a User through the website is made at the User’s own risk.
c. The Professionals and the information, advice or care they provide are independent from the Corporation. The Corporation is not otherwise associated with any Professional listed on the website.
d. […][Additional caveat regarding the limits of the Corporation’s responsibilities]
e. […][Indicates that the Professionals must meet all the legal and regulatory requirements to practise their profession in the jurisdiction in order to provide health care services to the Users in consultations that are scheduled through the Corporation’s website].
f. The Corporation is designated as Billing Agent of the Professionals. The clause provides that: […]
6. When a Professional accepts to partner with the Corporation, the Professional must confirm a certain number of things on an online form […]:
7. You have indicated that the Corporation collects the GST/HST on the Professional Fees when it is instructed to do so by the Professionals. The Corporation is instructed to collect the GST/HST based on information obtained from the Professionals in the Corporation Payroll Form which is a form sent to each Professional to complete and which asks if the Professional Fees are taxable. The Corporation also obtains the business address of each Professional on the Payroll Form.
8. The Corporation charges a fee for its marketing and payment platform services to the Professionals (the Corporation Fee) equal to […]% of the Professional Fees […].
9. […].
10. According to the current version of your website, the Professionals listed are residents of […][several (participating and non-participating) provinces]. […].
11. The Corporation only allows Professionals and Users residing in Canada to use its website.
12. When a Professional submits or uploads content to the Corporation website, the Professional grants the Corporation an irrevocable, perpetual, non-exclusive, transferable royalty-free licence.
13. The Corporation on the other hand grants the Professional a personal, revocable, limited, non-exclusive and non-transferable licence to (i) access the Website and Services for their personal and non-commercial use; and (ii) to access User or [the Professional’s] Content for their personal and non-commercial use.
14. […].
RULING REQUESTED
You would like to know how the GST/HST applies to the Professional Fees and the Corporation Fee.
RULING GIVEN
Based on the facts set out above, we rule the following:
1. As the Corporation is acting as a billing agent in collecting the Professional Fees on behalf of the Professionals, the Corporation should collect the GST/HST from the Users on the taxable supplies made by the Professionals at the rate applicable in the province where the supply is made based on the instructions provided by the Professionals. The GST/HST collected by the Corporation must be remitted to the Professionals for them to report and remit in their own GST/HST returns.
2. The Corporation is providing to the Professionals a taxable service of marketing their services and collecting on their behalf their Professional Fees for a consideration equal to […] % (Footnote 1) of the Professionals Fees. The GST/HST must be collected by the Corporation on the Corporation Fee at the applicable rate depending on the province in which the supply is made (see explanation below on how to determine in which province a supply is made). The GST/HST collected on the Corporation Fee must be reported and remitted in the Corporation GST/HST return.
EXPLANATION
Generally, all supplies of property and services made in Canada are taxable unless an exemption from the GST/HST applies. Taxable supplies are supplies made in the course of a commercial activity and may be taxable at the rate of 0% (zero-rated supplies), 5%, 13%, or 15% on the value of the consideration for the supply depending on the province in which the supply is made.
A supply of a service is made in a province if, in the ordinary course of the supplier's business practices in connection with the supply, 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 address described in paragraph (A), the address described in that paragraph 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.
The address obtained by the supplier in the ordinary course of business must be an address of the "recipient" of the supply who, under subsection 123(1), is generally the person who is liable under the agreement for the supply to pay the consideration payable for the supply.
For more information on the place of supply rules for services please refer to CRA Technical Information Bulletin B-103, Harmonized Sales Tax – Place of supply rules for determining whether a supply is made in a province.
The Professional Fees:
The Professionals are supplying their consulting services to the Users. The Corporation is not providing the consulting services, it only brings together the Users with the Professionals and collects, from the Users, the Professional Fees on behalf of the Professionals.
As suppliers of the consulting services, it is the responsibility of the Professionals to determine if the supply of their services is taxable and the rate applicable to the province where the supply of the service is made. The Professionals must provide instructions to the Corporation on the tax status of their services and the rate applicable.
The GST/HST collected by the Corporation on the Professional fees must be remitted to the Professionals for them to report and remit in their own GST/HST returns. […].
Possible election between the Corporation and the Professionals
It should be noted that the ETA provides for a joint election (Footnote 2) that can be made between a billing agent (the Corporation) and a principal (the Professional).
A billing agent is a person acting as an agent only for charging and collecting the tax, but not for making the supply. If the billing agent and the principal make the joint election, the billing agent is deemed to have acted as agent of the principal in making the supply and becomes responsible for collecting, reporting, and remitting (as required), the tax on the supply of taxable property or services made on behalf of the supplier. The billing agent and the principal are jointly and severally, or solidarily, liable for, among other things, all obligations that arise upon or as a consequence of the tax becoming collectible and any failure to account for or pay the net tax amount that is reasonably attributable to the supply. The election is required to be made by completing and signing form GST506, Election and Revocation of an Election Between Agent and Principal. The election does not have to be filed with the CRA but is required to be kept in the books and records of both parties.
This means that when an election has been made the GST/HST collected by the billing agent must be reported and remitted in the billing agent’s GST/HST returns instead of the principal’s return. For more detail on this election please refer to the webpage GST/HST in special cases - Canada.ca under the tab Agents.
The Corporation Fee:
The Corporation charges the Professional the Corporation Fee, to advertise, market, feature the Professional on the Corporation’s website and collect the Professional Fees from the Users. Even if the Corporation Fee is deducted from the Professional Fees before payment to the Professionals, the Corporation Fee is consideration for the taxable supply of services rendered by the Corporation to the Professionals on which the GST/HST applies at the applicable rate depending on the province in which the supply is made. The tax must be collected from the Professional on the Corporation fee whether or not the service rendered by the Professional is taxable. The supply of the service is made in the province of the address of the Professional obtained by the Corporation. The Corporation must therefore collect the GST/HST on the consideration for its marketing and collection services at the rate applicable in the province of the address provided by the Professional.
[…]
DISCLAIMER
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1-4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the ruling(s) given in this letter provided that: none of the issues discussed in the ruling(s) are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed. The interpretation(s) given in this letter, including any additional information, is not a ruling and does not bind the CRA with respect to a particular situation. Future changes to the ETA, regulations, or the CRA’s interpretative policy could affect the interpretation(s) or the additional information provided herein.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 438-304-4971. Should you have additional questions on the interpretation and application of the GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Sincerely,
Robert Demers
Industry Sector Specialist
Health Care Sectors Unit
Public Sector Bodies and Governments Division
GST/HST Rulings Directorate
FOOTNOTES
1 […]
2 Subsections 177(1.1) and 177 (1.11).
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