CRA releases a new Memorandum on the IPP provincial place-of-supply rules

CRA has published a GST/HST Memorandum (supplanting draft B-103) on the rules (other than some specialized rules) governing the determination of the province of supply of intangible personal property.

Various of these rules turn in significant part on identifying the most relevant address of the recipient received by the supplier in the ordinary course of its business. CRA indicates that it generally regards the contracting address (i.e., the address of the recipient from which it hired the supplier) to have primacy over other addresses (such as a billing address, or the address of the office with the most operating contact), assuming that the contracting address is in Canada.

CRA provides 33 examples illustrating how it sees the different rules operating. For example, it provides some examples of where the supply will be deemed to occur at the highest provincial rate:

Example 10

• An Ontario company licenses, to a Quebec company, copyright that can only be used in Ontario and Nova Scotia and, in the ordinary course of business, obtains a Quebec address of the recipient. Since that address in not in a participating province (see Reg. 6(2)(b)(ii)) nor in a province in which the copyright may be used (see Reg. 6(2)(b)(iii)), HST is imposed under Reg. 6(2)(c) at the Nova Scotia rate, i.e., the highest rate for the participating provinces in which the copyright may be used.

Example 33

• A registered supplier with an Ontario business address, which supplies monthly subscriptions to its digitized website content without restrictions on where it may be used, receives in the ordinary course the Texas home address of a non-resident regular GST/HST registrant. Since in the ordinary course of business, the supplier has not obtained a Canadian address of the non-resident, and the content may be used anywhere in Canada, the province of supply under Reg. 11 is whichever of Newfoundland, New Brunswick, PEI and (subject to the upcoming rate reduction) Nova Scotia that is closest in proximity to the supplier’s business address.

Neal Armstrong. Summaries of GST/HST Memorandum 3-3-5 “Place of Supply in a Province – General Rules for Intangible Personal Property” January 2025 under New Harmonized Value-Added Tax System Regulations, s. 2 – Canadian rights, s. 6(1), s. 6(2)(a), s. 6(2)(b)(i)(A), s. 6(2)(b)(i)(B), s. 6(2)(b)(i)(C), s. 6(2)(c), s. 8(b)(i)(A), s. 8(b)(i)(B) and s. 11.