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
5th floor, Tower A, Place de Ville
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 179543
Business Number: […]
Dear [Client]:
Subject: GST/HST ruling
Videos posted to […][Platform X]
Thank you for your correspondence of [mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to your original videos that are posted to […][Platform X]. We apologize for the delay in this response.
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 your letter, the agreement you have submitted (which is described below), the terms and conditions of the various programs in which you participate, and general information available from online resources, our understanding of the facts is as follows:
1) You are a sole proprietor registered for the GST/HST under business number […].
2) You operate a video production business […][in Canada] where you produce and post original short videos [through a] web publisher, […] for broadcast on, [(Platform X)].
3) […][The Web Publisher] is a Canadian […] company incorporated under the laws of […][a province in Canada] and has a principal place of business in […][Canada].
4) […]. [The Web Publisher] manages, distributes, and monetizes content on behalf of its contributors, the individual content creators. […].
5) You have entered into […][Agreement A] with [the Web Publisher] on [mm/dd/yyyy] […]. Under this arrangement, [the Web Publisher] works to publish, disseminate, and monetize your videos and increase [your] visibility […][on Platform X]. Your original videos are posted to [Platform X] through […][the Web Publisher].
6) You have provided a copy of [Agreement A], which states the following, in part:
a. [The Web Publisher] agrees to host your videos […].
b. [The Web Publisher] charges, bills, and collects advertising fees […].
c. You agree to make your videos available to [the Web Publisher] for streaming, downloading, and other distribution […] and you agree to promote [the Web Publisher] […].
d. For the term of [Agreement A], you grant to [the Web Publisher], on an exclusive basis, a royalty-free and worldwide license for [the Web Publisher] to:
i. Claim(Footnote 1) and distribute your videos […]
ii. sell and manage advertising and brand integration […], and
iii. do all of the following […]:
1. reproduce, incorporate, and encode your videos, and
2. incorporate [the Web Publisher’s] name, trademark, and/or logo at the beginning and end of your videos.[…].
e. The license also provides [the Web Publisher] with the right to use, publish, reproduce, broadcast, exhibit, and display your name, image, likeness, trademarks, service marks, trade names, and video names in connection with the promotion or sale of advertising […]. These rights are granted on a non-exclusive basis. […]
f. [The Web Publisher] generates revenues from the publication, distribution, and monetization of your videos […] and pays you an amount equal to a percentage of the net revenues that it generates, calculated according to a formula described in [Agreement A]. […]. [The Web Publisher] is not responsible for remitting any taxes on your behalf. […]
g. […]
h. Any proprietary property, including any copyrights, trademarks, service marks, trade names, trade dress, patents, or other intellectual property, that has been provided […] will remain the sole and exclusive property of the providing party. […]
i. You represent and warrant that you have the right to enter into [Agreement A], including without limitation, to grant the rights set out in […]
j. The term of [Agreement A] begins on the effective date of [mm/dd/yyyy], and continues until [Agreement A] is terminated by [the Web Publisher] or yourself. […]
7) […].
8) […]
9) You have provided a copy of […][the Platform Agreement (Agreement B)] which applies to all persons who post videos to [Platform X], […](Footnote 2)
10) […] [the Web Publisher] […] is subject to [Agreement B]. [Agreement B] provide[s] the following, in part:
a) […]
b) In order to access […][Platform X], a person must first create a [Platform X] account. As a [Platform X] account holder, the person may post videos to [Platform X].[…]
c) […][Information about proprietary rights]
d) [Platform X] does not acquire the ownership rights to the videos. […][Information about the distribution rights of Platform X][…]
e) […]
f) […]
g) The person also agrees that any videos it posts to [Platform X] will not contain third party copyrighted material […]
11) […]
12) […](Footnote 3).
13) […]
14) […](Footnote 4).
15) […](Footnote 5). […].
16) […]
17) […](Footnote 6).
18) […], [the Web Publisher] receives from [Platform X], […] advertising revenues […](Footnote 7). […](Footnote 8).
19) In turn, [the Web Publisher] pays any amounts owing to you […] in accordance with the payment terms outlined in [Agreement A].
20) […].
21) […].
22) […].
23) […].
24) […][Information about payments from Platform X to the Web Publisher]
25) […][Additional information about payments from Platform X to the Web Publisher]
RULING REQUESTED
You would like to know whether your supplies are taxable.
RULING GIVEN
Based on the facts set out above, we rule that your supplies, made to [the Web Publisher], are taxable.
EXPLANATION
[…]
Based on the information provided, and in particular under the terms of [Agreement A], you are making supplies of intangible personal property to [the Web Publisher] for consideration calculated based on the formula described in [Agreement A].
Pursuant to paragraph 142(1)(c), a supply of intangible personal property is deemed to be made in Canada if the property may be used in whole or in part in Canada.
In determining whether intangible personal property may be used in Canada, reference may be made to the terms of a written agreement to determine if there are any restrictions regarding the place of use of the intangible personal property. Where there are no such restrictions on where the property may be used, we may conclude that the intangible personal property may be used in whole or in part in Canada.
According to [Agreement A], the rights are granted on a worldwide basis, without any restrictions on where they may be used, from which we conclude that they may be used in Canada. Therefore, your taxable supplies of intangible personal property to [the Web Publisher] are deemed to be made in Canada, pursuant to paragraph 142(1)(c).
You are required to be registered for the GST/HST and to charge and collect tax at the applicable rate on your taxable supplies of intangible personal property to [the Web Publisher].
You mention that you receive payment from [Platform X][…].
[…], you grant [the Web Publisher] the right, […], to post your original videos to [Platform X]. This enables [the Web Publisher] to supply a license to [Platform X] […].
In exchange, [Platform X] pays [the Web Publisher] a share of the advertising revenue generated by displaying advertisements in or around your videos posted to [Platform X], […].
As stipulated in [Agreement A], in exchange for the rights that you grant to [the Web Publisher], [the Web Publisher] pays you a share of the revenues […][generated] from the exploitation of those rights, calculated according to a formula described in [Agreement A], […].
Therefore, we understand that the payment you receive […] is [not] consideration paid […][by Platform X] but by [the Web Publisher] for your taxable supplies of intangible personal property to [the Web Publisher].
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.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 236-335-0893.
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,
Kevin Tran
Rulings Officer
Border Issues Unit 2
General Operations and Border Issues Division
GST/HST Rulings Directorate
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