Place of Supply in a Province – General Rules for Intangible Personal Property

Source URL

https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/3-3-5/plc-sppl-prvnc-gnrl-rls-ntngbl-prsnl-prprt.html

Disclaimer

We do not guarantee the accuracy of this copy of the CRA website.

Scraped Page Content

Place of Supply in a Province – General Rules for Intangible Personal Property

GST/HST Memorandum 3-3-5
January 2025

This memorandum cancels and replaces, in part, Draft GST/HST Technical Information Bulletin B-103, Harmonized Sales Tax – Place of supply rules for determining whether a supply is made in a province.

This memorandum explains the place of supply rules included in Schedule IX of the Excise Tax Act (ETA) and in the New Harmonized Value-added Tax System Regulations that determine whether a supply of intangible personal property made in Canada is made in a participating province and consequently subject to the provincial part of the HST in addition to the federal part of the HST.

This memorandum does not provide detailed information about the new digital economy measures applicable to digital economy businesses including businesses that are registered or required to be registered under the simplified GST/HST registration regime of Subdivision E of Division II of Part IX of the ETA, and to platform operators and non-resident digital economy businesses that are registered or required to be registered under the regular GST/HST registration regime. For more information, you may visit GST/HST for digital economy businesses: Overview or call the Canada Revenue Agency (CRA) at 1‑833‑585‑1463 (from Canada and the U.S.) or 1‑613‑221‑3154 (from elsewhere – collect calls are accepted).

The following memoranda in this series describe in detail the provincial place of supply rules for specific taxable supplies:

GST/HST Memorandum 3-3-2, Place of Supply in a Province – Overview
GST/HST Memorandum 3-3-3, Place of Supply in a Province – Tangible Personal Property
GST/HST Memorandum 3-3-4, Place of Supply in a Province – Real Property
GST/HST Memorandum 3-3-5-1, Place of Supply in a Province – Specific Rules for Intangible Personal Property
GST/HST Memorandum 3-3-6, Place of Supply in a Province – General Rules for Services
GST/HST Memorandum 3-3-6-1, Place of Supply in a Province – Specific Rules for Services
GST/HST Memorandum 3-3-7, Place of Supply in a Province – Transportation

NOTE: This series of memoranda is being published in stages. Please continue to refer to GST/HST Technical Information Bulletin B-103 for additional information until the new memorandum that replaces the corresponding rules is published.

Except as otherwise noted, all statutory references in this publication are to the provisions of the Excise Tax Act (ETA), and all references to the Regulations are to the New Harmonized Value-added Tax System Regulations. The information in this publication does not replace the law found in the ETA and its regulations.

If this information does not completely address your particular situation, you may wish to refer to the ETA or relevant regulation, or call GST/HST Rulings at 1‑800‑959‑8287 for additional information. If you require certainty with respect to any particular GST/HST matter, you may request a ruling. GST/HST Memorandum 1-4, Excise and GST/HST Rulings and Interpretations Service, explains how to obtain a ruling or an interpretation and lists the GST/HST rulings centres.

If you are located in Quebec and wish to request a ruling related to the GST/HST, please call Revenu Québec at 1‑800‑567‑4692. You may also visit the Revenu Québec website at revenuquebec.ca to obtain general information.

For listed financial institutions that are selected listed financial institutions (SLFIs) for GST/HST or Quebec sales tax (QST) purposes or both, whether or not they are located in Quebec, the CRA administers the GST/HST and the QST. If you wish to make a technical GST/HST or QST enquiry related to SLFIs, please call 1‑855‑666‑5166.

GST/HST rates

Reference in this publication is made to supplies that are subject to the GST or the HST. 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%.

General

1. Taxable supplies of property or services that are made in Canada are generally subject to the GST (the federal part of the HST) under subsection 165(1) at the rate of 5%. In addition, taxable supplies that are made in a participating province are subject to the provincial part of the HST under subsection 165(2) at the provincial rate for the province, which results in the application of the HST at the relevant harmonized rate.

2. In the case of a taxable supply that is made in Canada, it is necessary to determine the province where the supply is made in order to apply the applicable tax and rate. Provincial place of supply rules exist for GST/HST purposes to determine the province in which a supply is deemed to be made.

3. Generally, the place of supply rules described in Chapter 3 of the GST/HST Memoranda Series are also used to determine if the First Nations goods and services tax (FNGST) applies to supplies where a First Nation or an Indigenous government has imposed the FNGST. For more information, refer to paragraphs 66 to 72 of this memorandum.

4. For further information regarding the legislative framework as well as the issues to consider before applying the provincial place of supply rules, refer to GST/HST Memorandum 3-3-2, Provincial Place of Supply – Overview. For further information regarding the specific rules for certain types of intangible personal property, refer to GST/HST Memorandum 3-3-5-1, Place of Supply in a Province – Specific Rules for Intangible Personal Property.

5. Unless otherwise indicated, all references in this memorandum to supplies are to taxable (other than zero-rated) supplies made in Canada.

6. References in this memorandum to terms, concepts and examples are made in the context of the provincial place of supply rules for persons registered under Subdivision D of Division V of Part IX of the ETA (the regular GST/HST regime).

7. The rules explained in this memorandum do not apply to supplies of digital property or services made or facilitated by persons registered under the digital economy provisions of Subdivision E of Division II of Part IX of the ETA (simplified GST/HST registration). Subdivision E contains separate registration and place of supply rules for distribution platform operators and non-resident suppliers of digital property and services. For additional information on the digital economy provisions, go to GST/HST for digital economy businesses: Overview.

8. The Canada Revenue Agency (CRA) generally does not administer provincial taxes, duties or fees imposed by provincial legislation, other than the QST for persons that are selected listed financial institutions (SLFIs) for GST/HST or QST purposes or both. To determine whether any provincial taxes, duties or fees are applicable in respect of a supply (for example, the QST in Quebec for persons that are not SLFIs), contact the appropriate provincial taxation authority.

Applying the place of supply rules for intangible personal property

9. The general place of supply rules for intangible personal property are subject to specific place of supply rules that may apply to certain supplies of intangible personal property. In particular, there are specific place of supply rules for intangible personal property that relates to passenger transportation services, tangible personal property and real property, which are discussed in GST/HST Memorandum 3-3-5-1. In addition, specific place of supply rules for intangible personal property to which the telecommunication service or postage rules apply may be found in GST/HST Memorandum 3-3-6-1, Place of Supply in a Province – Specific Rules for Services and GST/HST Memorandum 3-3-7, Place of Supply in a Province - Transportation respectively.

10. Where the specific place of supply rules do not determine the place of supply of a particular type of intangible personal property because the conditions for the application of those rules are not met, it is the general place of supply rules for intangible personal property that will determine the place of supply of the intangible personal property.

Exceptions

11. The place of supply rules for intangible personal property are generally set out in Division 2 of Part 1 of the Regulations. However, pursuant to section 5 of the Regulations, the place of supply rules for supplies of intangible personal property related to postage are found in Part VII of Schedule IX. In addition, the place of supply rules for intangible personal property related to telecommunication services are found in Part VIII of Schedule IX.

12. The following flowchart illustrates the application of the specific place of supply rules and general place of supply rules for supplies of intangible personal property:

Intangible Personal Property – Applying the rules

Flow chart – Text version

Does the intangible personal property (IPP) (other than IPP to which the postage or telecommunication services rules apply) relate to either passenger transportation services (section 22 of the Regulations), tangible personal property (section 10 of the Regulations) or real property (section 9 of the Regulations) and are the conditions for that rule met:

If the answer is Yes, the supply is made in the province determined by the specific rule.
If the answer is No, the supply is made in the province determined by the General rules for IPP.

General Rule 1 – Primarily used in non-participating provinces (section 7 of the Regulations). Can the Canadian rights only be used primarily in non-participating provinces?

If the answer is Yes, the supply is made in a non-participating province.
If the answer is No, go to General Rule 2.

General Rule 2 – Primarily used in participating provinces (section 6 of the Regulations). Can the Canadian rights only be used primarily in participating provinces?

If the answer is Yes, go to Rule 2A.
If the answer is No, go to General Rule 3 – No restrictions on primary location of use.

Rule 2A - Does subsection 6(1) of the Regulations apply?

If the answer is Yes, the supply in made in that province.
If the answer is No, go to Rule 2B.

Rule 2B - Does paragraph 6(2)(a) of the Regulations apply?

If the answer is Yes, the supply is made in that province.
If the answer is No, go to Rule 2C.

Rule 2C - Does paragraph 6(2)(b) of the Regulations apply?

If the answer is Yes, the supply is made in that province.
If the answer is No, go to Rule 2D.

Rule 2D - Does paragraph 6(2)(c) of the Regulations apply?

If the answer is Yes, the supply is made in that province.
If the answer is No, go to General Rule 4 – Same highest tax rate.

General rule 3 – No restrictions on primary location of use (section 8 of the Regulations). The Canadian rights can be used otherwise than only primarily in, and otherwise than only primarily outside, participating provinces.

Go to Rule 3A.

Rule 3A - Does paragraph 8(a) of the Regulations apply?

If the answer is Yes, the supply is made in that province.
If the answer is No, go to Rule 3B.

Rule 3B - Does paragraph 8(b) of the Regulations apply?

If the answer is Yes, the supply is made in that province.
If the answer is No, go to Rule 3C.

Rule 3C - Does paragraph 8(c) of the Regulations apply?

If the answer is Yes, the supply is made in that province.
If the answer is No, go to General Rule 4.

General rule 4 – Same highest tax rate (section 11 of the Regulations)

Canadian rights

13. The Canadian rights in respect of intangible personal property mean that part of the property that can be used in Canada.

14. The general place of supply rules can require a determination of the extent, if any, to which the use of the Canadian rights is limited to one or more provinces, which may generally be found in the terms of the agreement for the supply governing the use of the rights. It is important to note that the location where the Canadian rights are actually used does not determine whether such rights are limited to being used in particular provinces; instead, it is only necessary to determine the provinces where the rights are allowed to be used.

15. However, the use of the rights may be limited to one or more provinces by the nature of the rights being supplied without such a restriction being explicitly stated in the terms of the agreement. For instance, if as a matter of fact, the right that is supplied could only ever be used from a single location in a single province, then the use of the right would be considered to be limited to that province regardless of whether this is explicitly stated in the terms of the agreement.

16. If there are no limitations with respect to the province in which the rights can be used and it is possible for those rights to be used in a particular province, then the rights can be, but are not limited to being, used in that particular province.

Lease intervals – deemed supplies of intangible personal property

17. Pursuant to subsection 136.1(1), where a supply of property, including intangible personal property, is made by way of lease, licence or similar arrangement for consideration that is attributable to a period (referred to as a lease interval) that is the whole or a part of the period during which possession or use of the property is provided under the arrangement, a separate supply of the property for separate consideration is deemed to be made by the supplier and received by the recipient for each lease interval.

18. The supply for each lease interval is deemed to be made on the earliest of the following days:

the first day of the lease interval
the day on which the lease payment attributable to that lease interval becomes due
the day that the lease payment is made

19. As a result, separate supplies of intangible personal property that are deemed to be made for each lease interval may be subject to the GST or the HST at a different rate, to the extent that those supplies are deemed to be made in a different province based on the application of the place of supply rules for intangible personal property.

General rules

20. The general place of supply rules for supplies of intangible personal property are based on the location where the intangible personal property may be used, but some of these rules may also be based on the home or business address of the recipient (or another address of the recipient) in Canada that the supplier obtains in the ordinary course of its business.

21. When applying the general place of supply rules for intangible personal property, it is not necessary to determine if the intangible personal property is actually used in a particular location. It is only necessary that the intangible personal property is allowed to be used in the location.

22. Although a supply of intangible personal property may be deemed to be made in a particular province based on the general place of supply rules, self-assessment of the provincial part of the HST by the recipient in respect of the intangible personal property may still be required in some cases where it is established that the property is acquired for consumption, use or supply in whole or in part in another province. The rules are not intended to replace the self-assessment provisions by requiring a supplier to determine the province or provinces in respect of which the recipient has acquired the intangible personal property for consumption, use or supply. Instead, the self-assessment rules complement the place of supply rules and account for different tax rates. For further information regarding self assessment, refer to GST/HST NOTICE266, Draft GST/HST Technical Information Bulletin, Harmonized Sales Tax – Self-assessment of the provincial part of the HST in respect of property and services brought into a participating province.

23. Under sections 6, 7, 8 and 11 of the Regulations, there are four general place of supply rules that apply to supplies of intangible personal property made in Canada that can be summarized as follows:

Supplies of intangible personal property that can only be used primarily (more than 50%) in non-participating provinces are made in a non-participating province and subject to the GST. For further information refer to paragraph 25 of this memorandum.
Supplies of intangible personal property that can only be used primarily in the participating provinces are made in a participating province and subject to the HST, with additional factors used to determine the particular province and HST rate. For further information refer to paragraphs 26 to 57 of this memorandum.
Supplies of intangible personal property that have no primary province of use are made in a particular province and subject to the GST or the HST based on a number of additional factors. For further information refer to paragraphs 58 to 63 of this memorandum.
Where the above rules do not result in a supply being made in a single participating province because two or more relevant participating provinces have the same highest tax rate for the provincial part of the HST, the place of supply will be determined using additional factors. For further information refer to paragraphs 64 and 65 of this memorandum.

24. Sections 9, 10 and 22 of the Regulations provide exceptions to these general rules for supplies of intangible personal property that relate to real property, to tangible personal property and to passenger transportation services. These specific rules are discussed in GST/HST Memorandum 3-3-5-1.

General Rule 1 – Intangible personal property that can only be used primarily in non-participating provinces

25. Under section 7 of the Regulations, a supply of intangible personal property in respect of which the Canadian rights can only be used primarily (more than 50%) in non-participating provinces is made in a non-participating province, illustrated in the flowchart below.

General Rule 1 – Primarily used in non-participating provinces

Example 1 – Rights can only be used primarily in a non-participating province

An individual in Quebec purchases a theatre pass that provides the right to attend seven plays in Quebec and three plays in New Brunswick from a supplier in Quebec.

The supply is made in a non‑participating province since the intangible personal property can only be used primarily in Quebec and is therefore subject to the GST at a rate of 5%.

General Rule 2 – Intangible personal property that can only be used primarily in participating provinces

26. Under section 6 of the Regulations, four rules may apply where the Canadian rights in respect of a supply of intangible personal property can only be used primarily (more than 50%) in participating provinces, as illustrated in the following flowchart:

General Rule 2 – Primarily used in participating provinces

Flow chart – Text version

Canadian rights can only be used primarily in participating provinces

Rule 2A - Can an equal or greater proportion of those Canadian rights be used primarily in another participating province?

If the answer is Yes, go to Rule 2B.
If the answer is No, the supply in made in that province.

Rule 2B - Are all of the following conditions met?

the consideration is $300 or less
the supply is made through a specified location of the supplier in a participating province and in the presence of an individual who is, or who acts on behalf of, the recipient
the IPP can be used in the province
- If the answer is Yes, the supply is made in that province.
- If the answer is No, go to Rule 2C.

Rule 2C - In the ordinary course of business, does supplier obtain any of the following addresses of the recipient in a participating province in which IPP can be used?

only a home or business address in Canada of the recipient
the home or business address in Canada of the recipient that is most closely connected with the supply if several such addresses are obtained
another address in Canada of the recipient that is most closely connected with the supply
- If the answer is Yes, the supply is made in that province.
- If the answer is No, go to Rule 2D.

Rule 2D - Is the tax rate for a participating province the highest among the tax rates for the participating provinces in which the IPP can be used?

If the answer is Yes, the supply is made in that province.
If the answer is No, refer to General Rule 4 - Same highest tax rate.

Rule 2A – Intangible personal property that can only be used primarily in participating provinces with a province of primary use

27. Pursuant to subsection 6(1) of the Regulations, if the Canadian rights in respect of a supply of intangible personal property can only be used primarily in the participating provinces, the supply is made in a particular participating province if an equal or greater proportion of the Canadian rights cannot be used in another participating province.

28. This rule applies where both of the following conditions are met:

The Canadian rights can only be used primarily in the participating provinces.
The province in which the greatest proportion of those rights can be used can be determined because the use of at least some of those rights is specifically limited to one or more of those provinces.

29. Rule 2A does not apply if the use of the rights is not specifically limited to one or more of the participating provinces. This would be the case, for example, if the rights can be used on an unlimited basis in more than one participating province.

Example 2 – Rights can only be used primarily in a participating province

A supplier in Ontario supplies software by way of licence to a company in Ontario for use by its employees at its head office in Ontario. The software is downloaded electronically over the Internet. The licence provides that the software can only be used from the head office of the Ontario company.

The Canadian rights in respect of the software can only be used primarily in participating provinces and an equal or greater proportion of the Canadian rights cannot be used in a participating province other than Ontario.

The supply of the intangible personal property for each lease interval is therefore made in Ontario and is subject to the HST at a rate of 13%.

Example 3 – Rights can only be used primarily in a participating province

A company in Nova Scotia supplies to another Nova Scotia company a franchise that provides the right to operate a retail business in Ontario.

The Canadian rights in respect of the franchise can only be used primarily in participating provinces and an equal or greater proportion of the Canadian rights cannot be used in a participating province other than Ontario.

The supply of the intangible personal property is therefore made in Ontario and is subject to the HST at a rate of 13%.

Example 4 – Rights can only be used primarily in a participating province

An individual purchases a pass in Ontario that entitles the individual to admission to two plays at two theatres in Ontario and to admission to one play at a theatre in New Brunswick.

The Canadian rights in respect of the pass can only be used primarily in participating provinces and an equal or greater proportion of the Canadian rights cannot be used in a participating province other than Ontario.

The supply of the intangible personal property is therefore made in Ontario and is subject to the HST at a rate of 13%.

Rule 2B – Intangible personal property that can only be used primarily in participating provinces with no province of primary use

30. If Rule 2A does not determine the place of supply in a province, paragraph 6(2)(a) of the Regulations provides that where the Canadian rights in respect of a supply of intangible personal property can only be used primarily in the participating provinces, the supply is made in a particular participating province if all of the following are met:

the value of the consideration for the supply of the intangible personal property is $300 or less
the supply is made through a specified location of the supplier (a permanent establishment of the supplier or a vending machine) in the particular participating province and in the presence of an individual who is, or who acts on behalf of, the recipient
the intangible personal property can be used in the particular participating province

31. Subsection 132.1(2) defines permanent establishment for the purposes of section 132.1 and Schedule IX. The definition relies on the meanings assigned to permanent establishment under certain provisions of the Income Tax Regulations. The definition also relies on the definition of business under subsection 248(1) of the Income Tax Act (ITA), which includes a profession, calling, trade, manufacture or any undertaking and generally an adventure or concern in the nature of trade but does not include an office or employment. For detailed information regarding the definition of permanent establishment for purposes of section 132.1, refer to paragraphs 44 to 49 of GST/HST Memorandum 3-4, Residence.

32. Subsection 132.1(3) also provides that a prescribed person, or a person of a prescribed class, is deemed, under prescribed circumstances and for prescribed purposes, to have a permanent establishment in a prescribed province. Under subsection 2(1) of the New Harmonized Value‑added Tax System Regulations No. 2, the following classes of persons are prescribed for purposes of subsection 132.1(3) are:

charities
non-profit organizations
selected public service bodies as defined in section 259

33. Selected public service body is defined in section 259 to "mean:

a hospital authority,
a school authority that is established and operated otherwise than for profit,
a university that is established and operated otherwise than for profit,
a public college that is established and operated otherwise than for profit,
a municipality,
a facility operator, or
an external supplier."

34. Under subsection 2(2) of the New Harmonized Value‑added Tax System Regulations No. 2, a person prescribed by subsection 2(1) is deemed to have a permanent establishment in a province if a place in the province would be a permanent establishment (as defined for the purposes of Part IV of the Income Tax Regulations) of the person where both of the following conditions are met:

the person were a corporation
the person's activities were a business for the purposes of the ITA

Example 5 – Purchased for less than $300 through a specified location

A fitness club with facilities situated throughout New Brunswick and Ontario supplies fitness memberships to individuals for a single fee of $250 for a six‑month membership to the club. The membership entitles members to unlimited access to all club facilities at any location, exercise classes, access to nutritional and fitness seminars, a towel service and a one‑time fitness evaluation. A student from New Brunswick attending university in Ontario acquires a six‑month membership to the fitness club at the membership desk at the club's facility that is closest to the university in Ontario. The student provides their permanent address in New Brunswick as their home address.

The Canadian rights in respect of the membership can only be used primarily in the participating provinces, but with no single province of primary use. The supply is made for less than $300 through a specified location (that is, a permanent establishment of the supplier) in Ontario in the presence of the recipient and the intangible personal property can be used in Ontario.

The supply of the intangible personal property is therefore made in Ontario and is subject to the HST at a rate of 13%.

Example 6 – Purchased for less than $300 through a specified location

An individual purchases a movie pass that provides 10 adult admissions to any of a movie chain's five cinemas situated in Nova Scotia and New Brunswick. The individual purchases the pass for less than $300 at one of the chain's New Brunswick locations.

The Canadian rights in respect of the movie pass can only be used primarily in the participating provinces but with no single province of primary use. The supply is made for less than $300 through a specified location of the supplier in New Brunswick in the presence of the recipient and the pass can be used in New Brunswick.

The supply of the intangible personal property is therefore made in New Brunswick and is subject to the HST at a rate of 15%.

Rule 2C – Address in Canada obtained

35. If Rule 2B does not determine a supply to be made in a participating province, the supply may be made in a participating province if the supplier obtains an address of the recipient in the province in the ordinary course of business. Under paragraph 6(2)(b) of the Regulations, a supply of intangible personal property is made in a particular participating province if all of the following conditions are met:

in the ordinary course of business of the supplier, the supplier obtains one of the following addresses:
- the home or business address in Canada of the recipient, 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 of the recipient that is most closely connected with the supply, if the supplier obtains more than one such address
- in any other case, the address in Canada of the recipient that is most closely connected with the supply
the address is in the particular participating province
the intangible personal property can be used in the particular participating province

Determining the relevant address of the recipient

36. The relevant address for purposes of this rule is generally the location of the recipient based on an address in Canada of the recipient that the supplier obtains in the ordinary course of its business. The type of address obtained must be an address of the recipient that represents an actual specific physical location that is situated in a province. For instance, an e-mail address or an IP address obtained by a supplier that does not represent a specific physical location address of the recipient is not relevant.

37. Generally, a home address means the address at which the primary residence of an individual is located.

38. A business address is generally considered to be an address at which a business is located. A business address can therefore include, among other things, the address of an office, a branch, a factory or a workshop of the recipient. A PO Box (a locked compartment within a Post Office) is not considered to be a business address however, a PO Box address could be considered to be another address of the recipient if the supplier does not obtain a home or business address of the recipient in Canada, as explained at paragraphs 53 to 55 of this memorandum.

39. For purposes of clauses 6(2)(b)(i)(A) and (B) of the Regulations (and clauses 8(b)(i)(A) and (B) of the Regulations, as outlined in Rule 3B), which are based on a specific type of address, it must be reasonable for the supplier to be able to conclude that the type of address obtained is a business address of the recipient based on information that is available to the supplier. For example, if an online supplier asks its customers to provide what it identifies on its website as a business address for billing purposes and this is the only address of the recipient that the supplier obtains in the ordinary course of its business, the supplier is not required to verify whether the address provided by the recipient is actually a business address of the recipient.

40. This part of General Rule 2 (and General Rule 3) also applies if the supplier obtains a business address that the supplier knows is a business address based on the supplier's knowledge of the recipient (for instance, based on interactions that the supplier has with the recipient).

41. Rule 2C (and Rule 3B) does not require a supplier to obtain an address of the recipient that the supplier does not already obtain in the ordinary course of its business. The determination of the relevant address in respect of a supply is based on the facts taking into account the ordinary business practice of each supplier with respect to each supply.

42. An address of the recipient obtained by a supplier is only relevant for purposes of General Rule 2 (and General Rule 3) if it is obtained in the ordinary course of the supplier's business practices in connection with the supply. However, any address of the recipient obtained in the ordinary course of business of the supplier should be taken into consideration in applying the rule. The relevant address of the recipient also does not have to be an address obtained in respect of every supply made to the recipient for it to be considered a relevant address obtained in the ordinary course of business.

43. An address of the recipient obtained by a supplier in the ordinary course of business could therefore include any of the following:

an address of the recipient from which the supplier is hired in connection with a supply pursuant to an agreement for the supply (the contracting address)
an address of the recipient that the supplier deals with in connection with a supply
a billing address of the recipient in connection with a supply

44. The address obtained by the supplier in the ordinary course of business must be an address of the recipient of the supply. The recipient is generally the person who is liable under the agreement for the supply to pay the consideration payable for the supply.

45. Under subsection 123(1), a recipient of a supply of property or a service, "means

(a) where consideration for the supply is payable under an agreement for the supply, the person who is liable under the agreement to pay that consideration,

(b) where paragraph (a) does not apply and consideration is payable for the supply, the person who is liable to pay that consideration, and

(i) in the case of a supply of property by way of sale, the person to whom the property is delivered or made available,

(ii) in the case of a supply of property otherwise than by way of sale, the person to whom possession or use of the property is given or made available, and

(iii) in the case of a supply of a service, the person to whom the service is rendered, and any reference to a person to whom a supply is made shall be read as a reference to the recipient of the supply".

46. The rule is straightforward where a supplier only obtains a single address of the recipient in the ordinary course of its business. However, where a supplier obtains several addresses of the recipient that are connected to the supply, a determination must be made with respect to which of these addresses is the address that is most closely connected to the supply.

Multiple addresses – determining the one most closely connected to the supply

47. A supplier can obtain multiple addresses of the recipient in the ordinary course of its business. To the extent that the obtained addresses of the recipient are not different from supply to supply, the relevant address of the recipient for purposes of the place of supply rule should also not vary. However, if the addresses of the recipient vary from supply to supply, the relevant address may also vary for purposes of the place of supply rule.

48. Since the home or business addresses obtained by each supplier can vary, the address that is most closely connected with the supply is not necessarily the same for all suppliers, or the same for all suppliers in a given industry, or even the same with respect to all supplies made by the same supplier. The determination of the relevant address obtained in respect of a supply under this place of supply rule is made according to the ordinary business practice of each supplier with respect to each supply.

49. The rule does not provide the option of selecting a particular address of the recipient among several addresses obtained in the ordinary course of business of the supplier. Rather, the rule requires a determination of the address of the recipient that is most closely connected with the supply where multiple addresses are obtained.

50. The 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 is made where it is in Canada and is obtained by the supplier in the ordinary course of its business.

51. The determination of the place of supply can therefore be made with certainty at the time the supply is first made where the contracting address is identified in the agreement for the supply or, if it is not identified in the agreement, it has otherwise been obtained by the supplier in the ordinary course of its business. Where the recipient is a corporation, the contracting address could be the corporation's head office.

52. If the contracting address of the recipient is not obtained, the address most closely connected with the supply would be the address of the recipient that the supplier has the most contact with and that the supplier mostly uses in connection with the supply.

Address in Canada other than a home or business address obtained

53. Clause 6(2)(b)(i)(C) of the Regulations (and clause 8(b)(i)(C) of the Regulations, as outlined in Rule 3B) further provides that if the supplier does not obtain a home or business address in Canada of the recipient in the ordinary course of its business, but in the ordinary course of its business the supplier obtains another address in Canada of the recipient, the supply is made in the province in which the address that is most closely connected with the supply is located.

54. For purposes of this part of General Rule 2 (and General Rule 3), there is no requirement for the address of the recipient to be an address at which the recipient is located.

55. The types of addresses that could fall under this part of Rule 2C (and Rule 3B) could include an address of the recipient such as a billing address. The address must be obtained by the supplier for a legitimate underlying business reason. This address may correspond to an address that is in fact a home or business address of the recipient but that the supplier does not know is a home or business address because it is not the supplier's ordinary business practice to obtain this type of address. For instance, this could be the case where the supplier does not require recipients to identify the address as being a home or a business address.

Example 7 – Home address obtained when not purchased through a specified location

An individual in Nova Scotia purchases an air transportation pass over the Internet from a supplier in Ontario that provides the individual with unlimited travel between Nova Scotia and Ontario. The only address of the individual obtained by the supplier in the ordinary course of its business is the home address of the individual in Nova Scotia.

The Canadian rights in respect of the pass can only be used primarily in the participating provinces. In the ordinary course of its business, the supplier only obtains a home address of the recipient that is in Nova Scotia and the transportation pass can be used in that province.

The supply is therefore made in Nova Scotia and is subject to the HST at a rate of 15%.

The specific place of supply rule regarding intangible personal property that relates to passenger transportation services does not apply in this example because there are no restrictions on where the transportation can begin. For more information, refer to that topic in GST/HST Memorandum 3-3-5-1.

Example 8 – Home address obtained when not purchased through a specified location

A regional fitness club with facilities situated throughout New Brunswick and Ontario supplies fitness memberships to individuals for a single fee of $250 for a six‑month membership to the club. A student from New Brunswick attending university in Ontario originally acquires a six‑month membership to the fitness club at the membership desk at the club's facility in Ontario. The student provides their permanent address in New Brunswick as their home address.

The memberships to the fitness club are subject to an automatic six‑month renewal upon expiration of the original membership. The renewal fee of $250 is automatically billed to the student's credit card with confirmation sent by mail to the home address on file in New Brunswick.

Example 5 addressed the place of supply of the original membership purchase. With regard to the automatic membership renewal, the purchase is not made through a specified location of the supplier in the presence of the recipient. The Canadian rights in respect of the membership can only be used primarily in the participating provinces. In the ordinary course of business, the supplier only obtains a home address of the recipient that is in New Brunswick and the membership can be used in that province.

The supply is therefore made in New Brunswick and is subject to the HST at a rate of 15%.

Example 9 – Business address obtained when not purchased through a specified location

A supplier in Quebec supplies software by way of licence to a company in Newfoundland and Labrador with an office in each of Newfoundland and Labrador, New Brunswick and Quebec, for use by the company's employees at each of its offices. The software is downloaded electronically over the Internet. The licence provides that the software may only be used from the offices of the recipient in Newfoundland and Labrador, New Brunswick, and Quebec. In the ordinary course of its business, the supplier only obtains a business address of the recipient that is in Newfoundland and Labrador and that is also the billing address for the supply.

The Canadian rights in respect of the software can only be used primarily in the participating provinces. In the ordinary course of its business, the supplier only obtains a business address of the recipient that is in Newfoundland and Labrador and the software can be used in that province.

The supply of intangible personal property for each lease interval is therefore made in Newfoundland and Labrador and is subject to the HST at a rate of 15%.

Rule 2D – Highest tax rate

56. If the supply of intangible personal property is not made in a participating province under Rule 2A, Rule 2B or Rule 2C, paragraph 6(2)(c) of the Regulations provides that the supply is made in the participating province for which the tax rate is the highest among the tax rates for the participating provinces where the property can be used.

57. If a supply of intangible personal property cannot be determined under Rule 2D to be made in a single participating province because the highest tax rates for two or more participating provinces are the same, refer to General Rule 4 beginning at paragraph 64 of this memorandum.

Example 10 – Highest tax rate among the participating provinces in which the rights can be used

A company in Ontario supplies a Quebec company with a copyright for $500 that can only be used in Ontario and Nova Scotia. The business address of the recipient obtained by the Ontario company in the ordinary course of business is in Quebec.

The Canadian rights in respect of the copyright can only be used primarily in participating provinces. Since an equal or greater proportion of the rights cannot be used primarily in a particular participating province, Rule 2A does not apply. Rule 2B does not apply because the consideration is more than $300. Although the supplier obtains a business address of the recipient, that address is in Quebec, which is neither a participating province nor a province in which the copyright can be used as required under Rule 2C.

Therefore, the supply of the copyright is made in the participating province that has the highest tax rate among the participating provinces where the copyright can be used, which in this case is Nova Scotia. As a result, the supply is made in Nova Scotia and is subject to the HST at a rate of 15%.

Example 11 – Highest tax rate among the participating provinces in which the rights can be used

An individual in New Brunswick purchases an air transportation pass over the Internet from a supplier in Ontario that provides the individual with unlimited travel between Nova Scotia and Ontario. The individual's home address obtained by the supplier in the ordinary course of business is in New Brunswick.

The Canadian rights in respect of the air transportation pass can only be used primarily in participating provinces. Since an equal or greater proportion of the rights cannot be used primarily in a particular participating province, Rule 2A does not apply. Rule 2B does not apply because the supply is not made in the presence of an individual who is the recipient. Although the supplier obtains a home address of the recipient, that address is in New Brunswick, which is not a province in which the pass can be used as required under Rule 2C.

Therefore, the supply is made in the participating province that has the highest tax rate among the participating provinces in which the intangible personal property can be used, which in this case is Nova Scotia.

As a result, the supply is made in Nova Scotia and is subject to the HST at a rate of 15%.

General Rule 3 – Intangible personal property that can be used otherwise than only primarily in and otherwise than only primarily outside participating provinces

58. Pursuant to section 8 of the Regulations, three rules generally apply where the Canadian rights in respect of a supply of intangible personal property can be used otherwise than only primarily (50% or less) in participating provinces and otherwise than only primarily outside participating provinces. Basically, these rules can apply where the Canadian rights in respect of the property are not limited to being used only primarily in the participating provinces or to being used only primarily outside the participating provinces. Also, these rules can result in the supply of intangible personal property being deemed to be made in a province that is not a participating province.

59. The following flowchart illustrates the application of this place of supply rule:

General Rule 3 – No restrictions on primary location of use

Flow chart - Text version

Canadian rights can be used otherwise than only primarily in, and otherwise than only primarily outside, participating provinces.

Rule 3A - Are all of the following conditions met?

the consideration is $300 or less
the supply is made through a specified location of the supplier in the province and in the presence of an individual who is, or who acts on behalf of, the recipient
the IPP can be used in the province
- If the answer is Yes, the supply is made in that province.
- If the answer is No, go to Rule 3B.

Rule 3B - In the ordinary course of business, does supplier obtain any of the following addresses of recipient in the province in which IPP can be used?

only a home or business address in Canada of the recipient
the home or business address in Canada of the recipient that is most closely connected with the supply if several such addresses are obtained
another address in Canada of the recipient that is most closely connected with the supply
- If the answer is Yes, the supply is made in that province.
- If the answer is No, go to Rule 3C.

Rule 3C - Is the tax rate for a province the highest among the tax rates for the provinces in which the IPP can be used?

If the answer is Yes, the supply is made in that province.
If the answer is No, refer to General Rule 4 - Same highest tax rate.

Rule 3A – Consideration of $300 or less through a specified location

60. Under paragraph 8(a) of the Regulations, where intangible personal property can be used otherwise than only primarily in participating provinces and otherwise than only primarily outside participating provinces, the supply is made in a particular province if all of the following apply:

the value of the consideration for the supply of the intangible personal property is $300 or less
the supply is made through a specified location of the supplier (a permanent establishment of the supplier or vending machine) in the particular province and in the presence of an individual who is, or who acts on behalf of, the recipient
the intangible personal property can be used in the particular province

Example 12 – Purchased for less than $300 through a specified location

An individual who lives in British Columbia is a member of a national organization. The Canadian rights in respect of the membership can be used anywhere in Canada. While on vacation, the individual renews the membership for $250 at a storefront location of the national organization in Ontario.

The Canadian rights in respect of the membership can be used less than primarily in the participating provinces and less than primarily outside the participating provinces because there are no restrictions regarding the extent to which the membership can be used in Canada. In addition, the intangible personal property is supplied in the presence of the recipient through a specified location (that is, a permanent establishment) of the supplier that is in Ontario and the intangible personal property can be used in Ontario.

The supply of the intangible personal property is therefore made in Ontario and is subject to the HST at a rate of 13%.

Example 13 – Purchased for less than $300 through a specified location

An individual purchases a rail pass at a train station in Quebec for $200. The pass entitles the individual to unlimited rail travel for 60 days anywhere in Ontario and Quebec.

The Canadian rights in respect of the rail pass can be used less than primarily in the participating provinces and less than primarily outside the participating provinces because there are no restrictions regarding the extent to which the rail pass can be used in Quebec and Ontario. In addition, the pass is sold for less than $300 in the presence of the recipient through a specified location of the supplier that is in Quebec and the pass can be used in Quebec.

The supply of the intangible personal property is therefore made in Quebec, which is a non-participating province, and is subject to the GST at a rate of 5%.

The specific place of supply rule regarding intangible personal property that relates to passenger transportation services does not apply to this example because there are no restrictions on where the transportation can begin. For more information, refer to that topic in GST/HST Memorandum 3-3-5-1.

Rule 3B – Address in Canada obtained

61. If Rule 3A does not determine a supply to be made in a province, paragraph 8(b) of the Regulations provides that the supply may be made in a province if the supplier obtains an address of the recipient in the province in the ordinary course of business. Specifically, a supply of intangible personal property is made in a particular province if all of the following conditions are met:

in the ordinary course of business of the supplier, the supplier obtains one of the following addresses:
- the home or business address in Canada of the recipient, 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 of the recipient that is most closely connected with the supply, if the supplier obtains more than one such address
- in any other case, the address in Canada of the recipient that is most closely connected with the supply
the address is in the particular province
the intangible personal property can be used in the particular province

62. For an explanation of how to determine the relevant address of the recipient for purposes of this rule, refer to paragraphs 36 to 46 of this memorandum.

Example 14 – Business address obtained when not purchased through a specified location

A supplier in British Columbia supplies software by way of licence to a company in British Columbia for use by its employees at its various offices throughout Canada. The software is downloaded electronically over the Internet. There are no restrictions with respect to where the software may be used. The only business address of the recipient obtained by the supplier in the ordinary course of its business with respect to the supply of the software is in British Columbia.

The Canadian rights in respect of the software can be used less than primarily in the participating provinces and less than primarily outside the participating provinces because there are no restrictions regarding the extent to which the software can be used in Canada. In addition, the purchase is made electronically and not through a specified location of the supplier in the presence of the recipient. In the ordinary course of its business, the supplier only obtains a business address of the recipient that is in British Columbia and the intangible personal property can be used in British Columbia.

The supply of the intangible personal property for each lease interval is therefore made in British Columbia, which is a non-participating province, and is subject to the GST at a rate of 5%.

Example 15 – Business address obtained when not purchased through a specified location

A supplier in Ontario supplies software by way of licence to a company in Quebec for use by its employees at its various offices throughout Canada. The software is downloaded electronically over the Internet. There are no restrictions with respect to where the software may be used. The only business address of the recipient obtained by the supplier in the ordinary course of its business with respect to the supply of the software is in Quebec.

The Canadian rights in respect of the software can be used less than only primarily in the participating provinces and less than only primarily outside the participating provinces because there are no restrictions regarding the extent to which the software can be used in Canada. In addition, the purchase is made electronically and not through a specified location of the supplier in the presence of the recipient. In the ordinary course of its business, the supplier only obtains a business address of the recipient in Canada that is in Quebec and the intangible personal property can be used in Quebec.

The supply of the intangible personal property for each lease interval is therefore made in Quebec, which is a non-participating province, and is subject to the GST at a rate of 5%.

Example 16 – Home address obtained when not purchased through a specified location

An individual who lives in Ontario purchases a membership online in a professional organization in Quebec that can be used in any province. It is the ordinary business practice of the supplier to obtain a home address of the recipient to which the membership card and invoice can be sent.

The Canadian rights in respect of the membership can be used less than primarily in the participating provinces and less than primarily outside the participating provinces because there are no restrictions regarding the extent to which the membership can be used in Canada. In addition, the purchase is not made through a specified location of the supplier in the presence of the recipient. In the ordinary course of its business, the supplier obtains a home address of the recipient that is in Ontario and the membership can be used in Ontario.

The supply of the intangible personal property is therefore made in Ontario and is subject to the HST at a rate of 13%.

Example 17 – Home and billing addresses obtained when not purchased through a specified location

An individual who lives in Ontario purchases a membership over the telephone that can be used in any province. When supplying a membership, it is the ordinary business practice of the supplier in British Columbia to obtain the home address of the recipient verified with credit card authorization and a billing address to which the membership card and invoice can be sent. As part of this process, the supplier obtains a home address of the recipient that is in Ontario and a billing address in Quebec.

The Canadian rights in respect of the membership can be used less than primarily in the participating provinces and less than primarily outside the participating provinces because there are no restrictions regarding the extent to which the membership can be used in Canada. In addition, the purchase is not made through a specified location of the supplier in the presence of the recipient. In the ordinary course of its business, the supplier obtains a home address of the recipient that is in Ontario. The supplier also obtains the billing address of the recipient that is in Quebec. Since the supplier obtained a home address of the recipient, that is the relevant address.

The supply of the intangible personal property is therefore made in Ontario and is subject to the HST at a rate of 13%.

For further information regarding determining the relevant address of the recipient, refer to paragraphs 36 to 46 of this memorandum.

Example 18 – Home address obtained when not purchased through a specified location

An individual purchases a digital music album from an online vendor based in Ontario. There are no restrictions on where the album can be used in Canada. As part of the purchase process, the supplier only obtains the individual's home address in British Columbia.

The Canadian rights in respect of the digital music album can be used less than primarily in the participating provinces and less than primarily outside the participating provinces because there are no restrictions regarding the extent to which the digital music album can be used in Canada. In addition, the purchase is not made through a specified location of the supplier in the presence of the recipient. In the ordinary course of its business, the supplier only obtains a home address of the recipient in Canada that is in British Columbia and the intangible personal property can be used in British Columbia.

The supply of the intangible personal property is therefore made in British Columbia, which is a non-participating province, and is subject to the GST at a rate of 5%.

Example 19 – Home address obtained when not purchased through a specified location

A registered supplier supplies website access by monthly subscriptions from its business address in Ontario. The website access provides consumers with a right to access and use digitized content on the website, including information and images in a database and the right to download a copy of the digitized content. The supplier has clients throughout the world. There are no restrictions with respect to where subscribers may use the access. When subscribers pay for their website access, it is the supplier's ordinary business practice to obtain a home address of the recipient.

Where the recipient's home address is in a participating province, the supply of the intangible personal property for each lease interval is made in that participating province and is subject to the HST at the applicable rate for that province.

Where the recipient's home address is in a non‑participating province, the supply of the intangible personal property for each lease interval is made in that non-participating province and is subject to the GST at a rate of 5%.

Where the recipient's home address is outside Canada and the supply is not zero-rated, Rule 4 applies as explained in example 33.

Under certain conditions, supplies made to a non-registered or simplified GST/HST-registered non-resident may be zero-rated. For more information, refer to GST/HST Info Sheet GI‑034, Exports of Intangible Personal Property or to GST/HST Memorandum 4-5-3, Exports – Services and Intangible Personal Property.

Example 20 – Business address obtained when not purchased through a specified location

A regular GST/HST registered non-resident supplier supplies website access by monthly subscriptions to Canadian customers. The website access provides subscribers with a right to access and use digitized content on the website that is intended for businesses. There are no restrictions with respect to where subscribers may use the access. When subscribers pay for their website access, it is the supplier's ordinary business practice to obtain a business address of the recipient.

Where the recipient's business address is in a participating province, the supply of the intangible personal property for each lease interval is made in that participating province and is subject to the HST at the applicable rate for that province.

Where the recipient's business address is in a non-participating province, the supply of the intangible personal property for each lease interval is made in that non-participating province and is subject to the GST at a rate of 5%.

Example 21 – Business and home addresses obtained when not purchased through a specified location

A lawyer who operates a law firm in Ontario and lives in Quebec purchases access to an online law website by a subscription from a content provider in Ontario. The website access provides access and use of digitized content that is stored on the website of the content provider. There are no restrictions with respect to where subscribers may use the access. It is the ordinary business practice of the provider to obtain a business address and a billing address of the recipient. The lawyer completes the purchase and provides the business address of the law firm in Ontario as the business address and the lawyer's home address in Quebec as the billing address.

In the ordinary course of its business, the supplier obtains the business address of the recipient that is in Ontario. The supplier also obtains the home address in Quebec of the recipient as the billing address. The business address in Ontario (the contracting address) is the address most closely connected with the supply and the intangible personal property can be used in Ontario.

The supply of the intangible personal property is therefore made in Ontario and is subject to the HST at a rate of 13%.

For further information regarding the address most closely connected with the supply when multiple addresses are obtained by a supplier, refer to paragraphs 47 to 52 of this memorandum.

Example 22 – Business address obtained when purchased for more than $300

An Ontario publishing company enters into a contract with an author in Nova Scotia to purchase, for more than $300, the Canadian copyright to produce copies and sell the author's latest novel. The contract states that the publishing company's address is in Ontario.

The Canadian rights in respect of the copyright can be used less than primarily in the participating provinces and less than primarily outside the participating provinces because there are no restrictions regarding the extent to which the copyright can be used in Canada. The purchase was made for more than $300. In addition, in the ordinary course of its business, the supplier only obtains a business address of the recipient that is in Ontario and the intangible personal property can be used in Ontario.

The supply of the intangible personal property is therefore made in Ontario and is subject to the HST at a rate of 13%.

Example 23 – Business address obtained when purchased for more than $300

A company in Quebec sells a customer list to a company in Ontario for $5,000. No other assets of the Quebec company are sold. All of the Quebec company's customers are located in Quebec and Ontario and there are no restrictions on where the Ontario company can use the customer list. The Ontario company's business address is in Ontario.

The Canadian rights in respect of the intangible personal property can be used less than primarily in the participating provinces and less than primarily outside the participating provinces because there are no restrictions regarding the extent to which the customer list can be used in Canada. The purchase was made for more than $300. Also, in the ordinary course of its business, the supplier only obtains a business address of the recipient that is in Ontario and the intangible personal property can be used in Ontario.

The supply of the intangible personal property is therefore made in Ontario and is subject to the HST at a rate of 13%.

Example 24 – Business address obtained when purchased for more than $300

A company in New Brunswick supplies a franchise to another New Brunswick company for $10,000 that provides the right to operate a retail business in New Brunswick and Quebec. The business address of the recipient obtained by the supplier in the ordinary course of its business is in New Brunswick.

The Canadian rights in respect of the franchise can be used less than primarily in participating provinces and less than primarily outside participating provinces because there are no restrictions regarding the extent to which the franchise can be used in New Brunswick and Quebec. The purchase was made for more than $300. In the ordinary course of its business, the supplier only obtains a business address of the recipient in New Brunswick and the rights can be used in New Brunswick.

The supply of the intangible personal property is therefore made in New Brunswick and is subject to the HST at a rate of 15%.

Example 25 – Home address obtained when not purchased through a specified location

An individual in Ontario purchases an air transportation pass over the Internet from a supplier in Ontario that provides the individual with unlimited travel between Ontario, Manitoba, Saskatchewan and Alberta. The individual's home address is in Ontario.

The Canadian rights in respect of the pass can be used less than primarily in the participating provinces and less than primarily outside the participating provinces because there are no restrictions regarding the extent to which the air transportation pass can be used in Ontario, Manitoba, Saskatchewan and Alberta. In addition, the purchase was made over the Internet and not through a specified location of the supplier in the presence of the recipient. In the ordinary course of its business, the supplier obtains a home address of the recipient that is in Ontario and the intangible personal property can be used in Ontario.

The supply of the intangible personal property is therefore made in Ontario and is subject to the HST at a rate of 13%.

Example 26 – Home address obtained when purchased for more than $300

An individual who lives in Quebec purchases a rail pass at a train station in Quebec for $400. The pass entitles the individual to unlimited rail travel for 90 days anywhere in Ontario and Quebec. It is the ordinary business practice of the supplier to obtain the recipient's home address when a pass is purchased.

The Canadian rights in respect of the rail pass can be used less than primarily in the participating provinces and less than primarily outside the participating provinces because there are no restrictions regarding the extent to which the rail pass can be used in Ontario and Quebec. The purchase was made for more than $300. In the ordinary course of its business, the supplier obtains a home address of the recipient that is in Quebec and the intangible personal property can be used in Quebec.

The supply of the intangible personal property is therefore made in Quebec, which is a non-participating province, and is subject to the GST at a rate of 5%.

Example 27 – Home address obtained when not purchased through a specified location

An individual who lives in Ontario purchases a rail pass over the Internet from the website of a supplier based in Ontario for $200. The pass entitles the individual to unlimited rail travel for 60 days anywhere in Ontario and Quebec. It is the ordinary business practice of the supplier in Ontario to obtain the recipient's home address when a pass is purchased from its website. The pass is mailed to the recipient's address in Ontario.

The Canadian rights in respect of the rail pass can be used less than primarily in the participating provinces and less than primarily outside the participating provinces because there are no restrictions regarding the extent to which the rail pass can be used in Ontario and Quebec. In addition, the purchase was made over the Internet and not through a specified location of the supplier in the presence of the recipient. In the ordinary course of its business, the supplier obtains a home address of the recipient that is in Ontario and the intangible personal property can be used in Ontario.

The supply of the intangible personal property is therefore made in Ontario and is subject to the HST at a rate of 13%.

Rule 3C – Highest tax rate

63. If Rule 3A or Rule 3B does not determine the supply of the intangible personal property to be made in a province, the supply is deemed by paragraph 8(c) of the Regulations to be made in the particular province for which the tax rate is the highest among the tax rates for the provinces where the intangible personal property can be used. If a supply of intangible personal property cannot be determined under Rule 3C to be made in a single participating province because the highest tax rate for two or more participating provinces is the same, refer to General Rule 4 beginning at paragraph 64 of this memorandum.

Example 28 – Address not obtained, no province of primary use

An individual in Ontario purchases an air transportation pass for $500 that provides the individual with unlimited travel between Ontario, Manitoba, Saskatchewan and Alberta. The supplier in Ontario does not obtain an address of the individual.

The Canadian rights in respect of the air transportation pass can be used less than primarily in the participating provinces and less than primarily outside the participating provinces because there are no restrictions regarding the extent to which the air transportation pass can be used in Ontario, Manitoba, Saskatchewan and Alberta. The recipient's home or business address was not obtained by the supplier in the ordinary course of the supplier's business. Ontario is the province in which the intangible personal property can be used that has the highest tax rate.

The supply of the intangible personal property is therefore made in Ontario and is subject to the HST at a rate of 13%.

Example 29 – Address not obtained, no province of primary use

An individual in Quebec purchases an air transportation pass that provides the individual with unlimited travel between Ontario, Quebec and New Brunswick. The supplier in Ontario does not obtain an address of the individual.

The Canadian rights in respect of the air transportation pass can be used less than primarily in the participating provinces and less than primarily outside the participating provinces because there are no restrictions regarding the extent to which the air transportation pass can be used in Ontario, Quebec and New Brunswick. The recipient's home or business address was not obtained by the supplier in the ordinary course of the supplier's business. New Brunswick is the province in which the intangible personal property can be used that has the highest tax rate.

The supply of the intangible personal property is therefore made in New Brunswick and is subject to the HST at a rate of 15%.

Example 30 – Address in Canada not obtained, no province of primary use

A non‑resident individual visiting Ontario purchases a rail pass for $500. The pass entitles the individual to unlimited rail travel for 90 days anywhere in Ontario and Quebec. It is the ordinary business practice of the supplier to obtain the recipient's home address when a pass is purchased.

The supply of the intangible personal property is therefore made in Ontario and is subject to the HST at a rate of 13% because it is the province in which the intangible personal property can be used that has the highest tax rate.

Example 31 – Address not obtained, no province of primary use

A Manitoba company purchases an online self-study leadership course for its employees in Ontario and Quebec. Instructions to access the course content are sent to the purchaser's email address. The particular course is a supply of intangible personal property that can only be accessed by employees in Ontario and Quebec. Employees work through the course content and exercises at their own pace and there are no assignments or personalized support provided by the supplier. The company pays for the purchase through a third-party online payment processor. The supplier does not receive address information from the third-party payment processor, other than an email address.

The Canadian rights in respect of the course can be used less than primarily in the participating provinces and less than primarily outside the participating provinces because there are no restrictions regarding the extent to which the access to the course can be used in Ontario and Quebec. In the ordinary course of its business, the supplier does not obtain an address of the recipient from the third-party payment processor. An email address is not considered a relevant address, as discussed in paragraph 36 to 46 of this memorandum.

For further information regarding the factors that determine whether a supply is characterized as a service of instruction or admission to an event, refer to paragraphs 74 to 84 of GST/HST Memorandum 20-4, Vocational Schools and Courses.

General Rule 4 – Participating provinces with the same highest tax rate

64. If a supply of intangible personal property cannot be determined under Rule 2D or Rule 3C to be made in a single participating province because the highest tax rates for two or more participating provinces (each of which is referred to as a specified province) are the same, section 11 of the Regulations provides that the supply is made in the specified province based on the business address of the supplier that is most closely connected with the supply. If that address is:

located in a specified province, the supply is made in that province
not located in a specified province, the supply is made in the specified province that is closest in proximity, determined in any reasonable manner, to that address

65. This rule is illustrated in the following flowchart:

Flow chart – Text version

The place of supply of IPP cannot be determined to be made in a single participating province under Rule 2D or Rule 3C because the highest tax rate among two or more participating provinces is the same.

The supply is made in the participating province among provinces having the same highest tax rate in which one of these applies:

the business address of the supplier that is most closely connected with the supply is located in that province
if the business address of the supplier is not located in one of those provinces, in the province closest in proximity to that address.

Example 32 – Address not obtained, no restrictions on use

An individual in New Brunswick purchases an air transportation pass that provides the individual with unlimited travel between New Brunswick, Nova Scotia, Ontario and Quebec. The supplier in New Brunswick does not obtain an address of the individual.

The Canadian rights in respect of the air transportation pass can be used less than primarily in the participating provinces and less than primarily outside the participating provinces because there are no restrictions regarding the extent to which the air transportation pass can be used in New Brunswick, Nova Scotia, Ontario and Quebec. The supplier does not obtain an address of the recipient. Two of the participating provinces in which the pass can be used, New Brunswick and Nova Scotia, have the same highest tax rate of 15% (specified provinces).

Since the business address of the supplier is located in a specified province, the supply of the intangible personal property is therefore made in New Brunswick and is subject to the HST at a rate of 15%.

The specific place of supply rule regarding intangible personal property that relates to passenger transportation services does not apply this example because there are no restrictions on where the transportation can begin. For more information, refer to that topic in GST/HST Memorandum 3-3-5-1.

Example 33 – Address in Canada not obtained, no restrictions on use

A registered supplier supplies website access by monthly subscription from its business address in Ontario. The website access provides customers with a right to access and use digitized content on the site, including information and images in a database and the right to download a copy of the digitized content. The supplier has clients throughout the world and makes a supply of website access to a regular GST/HST registered non-resident. There are no restrictions with respect to where subscribers may use the website access. In the ordinary course of business, the supplier obtains a home address of the recipient in Texas.

The Canadian rights in respect of the website access can be used less than primarily in the participating provinces and less than primarily outside the participating provinces because there are no restrictions regarding the extent to which the website access can be used in Canada. In the ordinary course of the supplier's business, the supplier has not obtained an address in Canada of the non-resident recipient. The supply is therefore subject to the highest tax rate. New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island are participating provinces (specified provinces) that each have the same highest rate of 15%. The supplier's business address is not located in a specified province.

The supply would be made in the province among these specified provinces that is closest in proximity to the supplier's business address and would be subject to the HST at the rate for that province. The supplier would have to determine, in a reasonable manner, to which of the specified provinces its business address is in closest proximity.

Under certain conditions, supplies made to a non-registered or simplified GST/HST registered non-residents may be zero-rated. For more information, refer to GST/HST Info Sheet GI‑034 or to GST/HST Memorandum 4-5-3.

First Nations goods and services tax – place of supply

66. The FNGST is a tax that may be imposed by a band council, other governing body of a First Nation or an Indigenous government on the lands that it governs. The FNGST at the rate of 5% applies to most supplies of property and services made on these lands.

67. Everyone has to pay the FNGST on the supply of property and services made on lands where the FNGST applies including Indians, Indian bands, or band-empowered entities. However, certain provincial and territorial governments do not pay the FNGST. The CRA uses the term Indian in this memorandum because it has legal meaning under the Indian Act.

68. For more information on the FNGST and the First Nations and Indigenous governments that impose the FNGST, go to First Nations Goods and Services Tax. You may also refer to GST/HST Technical Information Bulletin B-102, First Nations Goods and Services Tax – Place of Supply.

Supply is deemed to be made on FNGST lands in a non-participating province

69. The FNGST replaces the GST where the provincial place of supply rules deem the supply to be made on the lands where an FNGST is imposed and where those lands are located in a non-participating province. The supply is subject to the FNGST at the rate of 5%.

Supply is deemed to be made on FNGST lands in a participating province

70. The FNGST replaces the federal part of the HST where the provincial place of supply rules deem the supply to be made on the lands where an FNGST is imposed and where those lands are located in a participating province. The supply is subject to the FNGST at the rate of 5%.

71. Provided the purchaser meets the criteria set out in GST/HST Technical Information Bulletin B-039, GST/HST Administrative Policy – Application of the GST/HST to Indians, the provincial part of the HST would be relieved. Where the purchaser does not qualify for relief of the provincial part of the HST under Technical Information Bulletin B-039, registered vendors are required to collect the provincial part of the HST in participating provinces unless relief of that part is provided by some other legislation or policy.

Supply is deemed to be made in Canada, but not on FNGST lands

72. Where the provincial place of supply rules deem the supply to not have been made on FNGST lands, and the supply is made in Canada, then either the GST or the HST will apply depending on whether or not the supply is deemed to be made in a participating province.

Further infomation

All GST/HST technical publications are available at GST/HST technical information.

To make a GST/HST enquiry by telephone:

for GST/HST general enquiries, call Business Enquiries at 1‑800‑959‑5525
for GST/HST technical enquiries, call GST/HST Rulings at 1‑800‑959‑8287

If you are located in Quebec, call Revenu Québec at 1‑800‑567‑4692 or visit their website at revenuquebec.ca.

If you are a selected listed financial institution (whether or not you are located in Quebec) and require information on the GST/HST or the QST, go to GST/HST and QST information for financial institutions, including selected listed financial institutions or:

for general GST/HST or QST enquiries, call Business Enquiries at 1‑800‑959‑5525
for technical GST/HST or QST enquiries, call GST/HST Rulings SLFI at 1‑855‑666‑5166

Page details

Date modified:: 2025-01-06

You are here

Place of Supply in a Province – General Rules for Intangible Personal Property

Source URL

Disclaimer

Scraped Page Content

Place of Supply in a Province – General Rules for Intangible Personal Property

Table of Contents

General

Applying the place of supply rules for intangible personal property

Exceptions

Intangible Personal Property – Applying the rules

Canadian rights

Lease intervals – deemed supplies of intangible personal property

General rules

General Rule 1 – Intangible personal property that can only be used primarily in non-participating provinces

General Rule 1 – Primarily used in non-participating provinces

Example 1 – Rights can only be used primarily in a non-participating province

General Rule 2 – Intangible personal property that can only be used primarily in participating provinces

General Rule 2 – Primarily used in participating provinces

Rule 2A – Intangible personal property that can only be used primarily in participating provinces with a province of primary use

Example 2 – Rights can only be used primarily in a participating province

Example 3 – Rights can only be used primarily in a participating province

Example 4 – Rights can only be used primarily in a participating province

Rule 2B – Intangible personal property that can only be used primarily in participating provinces with no province of primary use

Example 5 – Purchased for less than $300 through a specified location

Example 6 – Purchased for less than $300 through a specified location

Rule 2C – Address in Canada obtained

Determining the relevant address of the recipient

Multiple addresses – determining the one most closely connected to the supply

Address in Canada other than a home or business address obtained

Example 7 – Home address obtained when not purchased through a specified location

Example 8 – Home address obtained when not purchased through a specified location

Example 9 – Business address obtained when not purchased through a specified location

Rule 2D – Highest tax rate

Example 10 – Highest tax rate among the participating provinces in which the rights can be used

Example 11 – Highest tax rate among the participating provinces in which the rights can be used

General Rule 3 – Intangible personal property that can be used otherwise than only primarily in and otherwise than only primarily outside participating provinces

Rule 3A – Consideration of $300 or less through a specified location

Example 12 – Purchased for less than $300 through a specified location

Example 13 – Purchased for less than $300 through a specified location

Rule 3B – Address in Canada obtained

Example 14 – Business address obtained when not purchased through a specified location

Example 15 – Business address obtained when not purchased through a specified location

Example 16 – Home address obtained when not purchased through a specified location

Example 17 – Home and billing addresses obtained when not purchased through a specified location

Example 18 – Home address obtained when not purchased through a specified location

Example 19 – Home address obtained when not purchased through a specified location

Example 20 – Business address obtained when not purchased through a specified location

Example 21 – Business and home addresses obtained when not purchased through a specified location

Example 22 – Business address obtained when purchased for more than $300

Example 23 – Business address obtained when purchased for more than $300

Example 24 – Business address obtained when purchased for more than $300

Example 25 – Home address obtained when not purchased through a specified location

Example 26 – Home address obtained when purchased for more than $300

Example 27 – Home address obtained when not purchased through a specified location

Rule 3C – Highest tax rate

Example 28 – Address not obtained, no province of primary use

Example 29 – Address not obtained, no province of primary use

Example 30 – Address in Canada not obtained, no province of primary use

Example 31 – Address not obtained, no province of primary use

General Rule 4 – Participating provinces with the same highest tax rate

Example 32 – Address not obtained, no restrictions on use

Example 33 – Address in Canada not obtained, no restrictions on use

First Nations goods and services tax – place of supply

Supply is deemed to be made on FNGST lands in a non-participating province

Supply is deemed to be made on FNGST lands in a participating province

Supply is deemed to be made in Canada, but not on FNGST lands

Further infomation

Page details