Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 158766
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
Place of supply of […][Service X]
Thank you for your letter of [mm/dd/yyyy], concerning the application of GST/HST to the supply of […][Service X] made by […]([…][ACo]) to its customers in Canada. We apologize for the delay in our response.
The HST applies in the participating provinces at the following rates: 13% in Ontario, New Brunswick and Newfoundland and Labrador, 14% in Prince Edward Island and 15% in Nova Scotia. The Government of New Brunswick has proposed to increase the rate of the HST in that province from 13% to 15%, effective July 1, 2016. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
Based on the information provided, which included a sample […]([…][Agreement]) between [ACo] and [the Recipient] […], and invoices to […]([…][the Recipient]) […], we understand the following:
* [ACo] is a Canadian company that is registered for GST/HST purposes. [ACo] operates in […] locations across Canada, […].
* […]
* […], [ACo] provides [Service X] both on-site and off-site […].
* […][information about [ACo] operations]
RULING REQUESTED
You would like to confirm that [ACo]’s […][on-site and off-site supplies of Service X] are supplies of services in relation to tangible personal property (TPP) and that [ACo] should be collecting GST/HST based on the province where the TPP is situated at the time the services are performed.
RULING GIVEN
Based on the facts, we rule that each [on-site and off-site] supply of [Service X] made by [ACo] is a service in relation to TPP that is made in the province where the TPP, to which the services relate, is situated at the time the services are performed.
EXPLANATION
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the ruling given in this letter provided that: none of the issues discussed in the ruling are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed.
As stated in GST/HST Policy Statement P-077R2, Single and Multiple Supplies, the determination of whether a transaction consisting of several elements is a single supply or multiple supplies is a determination of fact. In general, multiple supplies occur when one or more of the elements of a transaction can sensibly or realistically be broken out from the other elements. Conversely, two or more elements of a transaction are generally part of a single supply when the elements are integral components, the elements are inextricably bound up with each other, the elements are so intertwined and interdependent that they must be supplied together, or one element of the transaction is so dominated by another element that the first element has lost any identity for fiscal purposes.
[…]
[ACo]’s [supplies of Service X] are characterized, for GST/HST purposes, as services in relation to TPP. As indicated in GST/HST Technical Information Bulletin B-103, Harmonized Sales Tax – Place of supply rules for determining whether a supply is made in a province, whether a service is considered to be in relation to TPP depends on whether there is a direct connection between the service and the property, taking into account the objectives of the service and the particular circumstances of each case. With respect to determining the objectives of the service, it must be determined whether the service is designed, developed or undertaken to fulfill or serve a particular need or requirement arising from or relating to the property. It must then be determined whether the relationship between the purpose or objective of the service and the property is direct rather than merely indirect. In the case of [the Recipient], [ACo] is retained specifically […][to provide Service X].
A taxable (other than zero-rated) supply made in Canada is subject to GST at the rate of 5% if it is made in a non-participating province, and is subject to HST at the applicable harmonized rate if it is made in a participating province.
Pursuant to paragraph 142(1)(g), a supply of a service is deemed to be made in Canada if the service is, or is to be, performed in whole or in part in Canada. Because […][Service X is] performed by [ACo] at specified locations in Canada, the supply of those services are deemed to be made in Canada for GST/HST purposes.
Whether a supply made in Canada is made in a participating province or non-participating province is determined by section 144.1 and Schedule IX, and where applicable, the […][New Harmonized Value-Added Tax System Regulations (the Regulations)]. Section 144.1 provides that a supply is deemed to be made in a province if it is made in Canada and is, under the rules set out in Schedule IX, made in the province. Further, under section 144.1, a supply made in Canada that is not made in any participating province is deemed to be made in a non-participating province.
Pursuant to section 3 of Part IX of Schedule IX, a supply of property or a service is made in a province if the supply is prescribed to be made in the province.
Generally, in order to apply the place of supply rules for services in relation to TPP, it is necessary to determine where the TPP is situated while the service is performed. Note that the place of supply rules for services in relation to TPP rely on the “Canadian element” of the service, which is defined under section 2 of the Regulations to mean the portion of the service that is performed in Canada.
Under section 15 of the Regulations, if a person makes a supply of a service that is in relation to TPP that is situated in one or more provinces at the particular time when the Canadian element of the service begins to be performed and, at all times when the Canadian element of the service is performed, the TPP remains in the province in which it was situated at the particular time, the supply is made:
a) in a participating province if the TPP is situated primarily in participating provinces at the particular time and
(i) an equal or greater proportion of the TPP is not situated in another participating province at the particular time, or
(ii) if subparagraph (i) does not apply, the tax rate for the participating province is the highest among the participating provinces for which no greater proportion of the TPP is situated in another participating province at the particular time; and
b) in a non-participating province if the TPP is not situated primarily in participating provinces at the particular time.
Under section 16 of the Regulations, if a person makes a supply of a service that is in relation to tangible personal property that is situated in one or more provinces at the particular time when the Canadian element of the service begins to be performed and, at any time during the period when the Canadian element of the service is performed, the tangible personal property does not remain in the province in which it was situated at the particular time, the supply is made:
a) in a participating province if the tangible personal property is situated primarily in participating provinces at any time when the service is performed, the Canadian element of the service is performed primarily in participating provinces and
(i) an equal or greater proportion of the service is not performed in another participating province, or
(ii) if subparagraph (i) does not apply, the tax rate for the participating province is the highest among the participating provinces for which no greater proportion of the service is performed in another participating province; and
b) in a non-participating province if the tangible personal property is not situated primarily in participating provinces at all times when the service is performed or the Canadian element of the service is not performed primarily in participating provinces.
Thus, in respect of each supply of […][Service X to the Recipient], where the […][TPP remains] in the same province while [Service X is] performed, […], the place of supply of those services will be that province, pursuant to section 15 of the Regulations. However, where, during the time the Canadian element of the service is performed, the […][TPP does] not remain in the same province where […][it was] located when the Canadian element of the service began to be performed, it will be necessary for [ACo] to apply the rules under section 16 of the Regulations to determine the place of supply of the services.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-952-4294. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Donato Licursi
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
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