IPP that can only be used primarily in participating provinces - Participating province of greatest proportion of use can be determined
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IPP that can only be used primarily in participating provinces - Participating province of greatest proportion of use can be determined
If the Canadian rights for a supply of IPP (other than a supply of IPP that relates to real property or goods or a supply of IPP that relates to services that is deemed to be made in a province based on the specific place of supply rule for IPP that relates to services), can only be used primarily (more than 50%) in the participating provinces, the supply is made in a participating province if an equal or greater proportion of the Canadian rights cannot be used in another participating province.
This rule is intended to apply where the Canadian rights can only be used primarily (more than 50%) in the participating provinces and 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. This rule therefore does not apply if the use of the rights is not specifically limited to one or more of the participating provinces, which will be the case, for example, if the rights can be used on an unlimited basis in more than one of those provinces.
Example 1
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 may only be used from the head office of the Ontario company. The Canadian rights for 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 IPP is therefore made in Ontario and the HST will apply at a rate of 13%.
Example 2
A franchise company in New Brunswick supplies a franchise to a New Brunswick company. The franchise provides the right to operate a franchise retail business in Prince Edward Island. The Canadian rights for 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 Prince Edward Island. The supply of the IPP is therefore made in Prince Edward Island and the HST will apply at a rate of 15%.
Example 3
An individual purchases a pass in Nova Scotia that entitles the individual to admission to two plays at two theatres in Nova Scotia and to admission to one play at a theatre in Ontario. The Canadian rights for 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 Nova Scotia. The supply of the IPP is therefore made in Nova Scotia and the HST will apply at a rate of 15%.
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- Date modified:
- 2016-09-30