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: 193029
Business Number: […]
[Dear Client]:
Subject: GST/HST ruling
[…][Goods] and delivery services provided through […][the Platform]
Thank you for your correspondence of [mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to […][goods] and delivery services provided through […][the Platform]. […]
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
We understand the following:
1. […] [The] ([…][merchant]) is operating […] in […][Canada].
2. The [merchant] is incorporated as a for-profit entity and registered for GST/HST with Business Number […].
3. The [merchant] entered into an agreement with […][the Platform] for the purpose of accessing […][the Platform] to allow customers to place orders for [goods] and have the [goods] delivered.
4. The relevant provisions of […][the Merchant Agreement] between [the] [merchant] and [the Platform] dated [mm/dd/yyyy] include:
[…]:
[…][The agreement is between the merchant and the Platform]
[…]
[…]:
[…][The merchant makes goods available on the Platform]
[…]:
[…][The Platform provides the merchant with access to delivery drivers and various services related to the merchant’s sale and delivery of goods. The Platform acts as a collection agent for the merchant]
[…]:
[…][The merchant is responsible for the delivery of the good]
[…]:
[…][The merchant provides the good and delivery service and is responsible for the collection and remittance of the GST/HST]
[…][The merchant maintains title to the good until it is delivered to the consumer]
[…][The merchant pays the Platform a service fee]
5. The relevant provisions of the […][the Annex] between [the][merchant] and [the Platform] dated [mm/dd/yyyy] include:
[…]:
[…][The Annex is subject to the Merchant Agreement].
[…]:
[…][The merchant makes goods available on the Platform]
[…]:
[…][Payment and calculation of a service fee that the merchant pays the Platform]
[…][The merchant is required to pay the delivery driver. The Platform charges the consumer a delivery fee and pays the delivery driver on behalf of the merchant]
[…][The Platform remits to the merchant the payments collected minus adjustments]
6. The relevant provisions of the […][Consumer Terms] between […][a consumer] and [the Platform] version last updated [mm/dd/yyyy], include:
[…]:
[…][The Consumer Terms govern a consumer’s access and use of the Platform]
[…]:
[…][Description of services]
[…]
[…]:
[…][The consumer pays for goods or services they receive from a third party provider with the Platform acting as a collection agent for the third party]
[…][The Platform will email the consumer a receipt].
[…]
RULING REQUESTED
You would like to know when a consumer orders a [good] for delivery using [the Platform] who is supplying the delivery service to the consumer?
RULING GIVEN
[…] Based on the facts set out above, we rule that the [merchant] is the supplier of the delivery service to the consumer. The [merchant] is making a single supply of a delivered [good].
EXPLANATION
The roles of the participants are as follows:
The [Consumer Terms], between [a consumer] and [the Platform], is […][an agreement] that applies to individuals who wish to use [the Platform] […].
[…][The Platform] connects consumers, [merchants] and […][delivery drivers] by providing them access to the Platform […].
[…][The Platform is not a merchant or transportation carrier].
[…][The Platform does not assume liability for the delivery of goods]
Apart from acting as a facilitator amongst the various parties to a transaction, […][the Platform is identified as a collection agent that collects] payments on behalf of [delivery drivers] and [merchants] […].
Finally, for use of its services, [the Platform] charges a service fee to the [merchant] […].
[Merchant]
[…][Merchants are fully liable for the goods, are responsible for the delivery of the goods, and maintain title to the goods until they are delivered to the consumer]
[Delivery Driver]
[…], the [merchant] is the person who obtains the delivery services provided by the [delivery driver]. […][The merchant pays the delivery driver through the Platform].
Consumer
Consumers are required to agree to the [Consumer Terms] before they can use the Platform […]
[…][Description of liability and payment provisions]
The liability and payment provisions of the [Consumer Terms] are thus clear regarding […][the Platform’s] limited role in any transaction arranged and facilitated by the Platform. As a result, the electronically-arranged delivery of a [good] is an arrangement between a consumer and the third parties involved in the transaction, not between the consumer and the Platform.
Single and multiple supplies
To help with determining whether a transaction is a single supply or multiple supplies the Canada Revenue Agency (CRA) has published GST/HST Policy Statement P-077R2, Single and Multiple Supplies (P-077R2).
P-077R2 outlines the principles used to determine whether a transaction consisting of several elements is to be regarded as a single supply or multiple supplies. They are as follows:
1. Every supply should be regarded as distinct and independent.
2. A supply that is a single supply from an economic point of view should not be artificially split.
3. There is a single supply where one or more elements constitute the supply and any remaining elements serve only to enhance the supply.
Two or more elements are part of a single supply when the elements are so intertwined or interdependent that they must be supplied together. Conversely, multiple supplies occur when one or more of the elements can sensibly or realistically be broken out.
It should also be remembered that the way in which the price for a transaction is set out does not determine whether there are one or more supplies. A single price does not automatically mean that there is one supply. Equally, separately identified prices for certain elements do not necessarily mean that there are two or more supplies.
P-077R2 provides a number of questions that should be asked:
1. Is the property/service provided by two or more suppliers?
2. Is there more than one recipient?
3. What did the supplier provide for the consideration received?
4. Is the recipient made aware of the elements (in detail) that are part of the package?
5. In the context of the particular transaction, does the recipient have the option to acquire the elements separately or to substitute elements?
From the outset, one must ask whether the elements can sensibly or realistically be broken out, or if those elements are integral to one another. In the case of a consumer ordering a [good] for delivery using the Platform, the expectation is for the [good] to be delivered.
Based on the relevant agreements, a [delivery driver’s] contractual obligation is with a [merchant]. […][The Annex] establishes that the [merchant] is required to pay a delivery fee to the [delivery driver], which the Platform collects from the consumer on the [merchant’s] behalf.
[…][The Merchant Agreement] states that the [merchant] is responsible for the delivery of the [goods] and […] says that the [merchant] maintains title to all […] inventory until each [good] is delivered to the consumer. As a result, the consumer is the recipient of a [good] and delivery service from one supplier, the [merchant]. The [merchant] maintains possession of the [good] until it is delivered to the consumer […].
Where a supplier sells goods on a delivered at destination basis, the delivery of the goods will generally be considered to be part of a single supply of the goods even if a separate charge is itemized on the invoice. In the case of orders made using the Platform, the [merchant] has title to the [good] until it is delivered.
Where a single supply of delivered goods is made and there is a separate charge for the delivery service, that deliver fee is considered to be consideration for the single supply of the specific good which it is shown as relating to. The charge would consequently be subject to tax at the same rate as the supply of the specific good, be it 0%, 5% GST, 13% HST, or 15% HST.
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 Canada Revenue Agency (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 343-553-3972.
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 or by fax to 1-418-566-0319.
Sincerely,
David Phoenix, CPA, CGA
Industry Sector Specialist
Services and Intangibles Unit
General Operations and Border Issues Division
GST/HST Rulings Directorate
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