CRA accepts the feasibility of having a back-to-back supply of essentially the same service

In its new GST/HST Memorandum on Child Care Services, CRA has provided further confirmation of the rather odd concept of a double supply of essentially the same service. A non-profit organization (NPO), which acts as liaison between parents and in-home child care providers, contracts with the self-employed child care providers for their services (and provides various administrative services to them for a commission), and also contracts for the supply of child care services with the parents, who pay all child care services fees to the NPO. From the fees paid to it, the organization keeps the 5% commission, and pays the balance to the child care provider.

CRA indicated that there was a double supply of an exempt child-care service by the child care worker to the NPO, and by the NPO to the parents (although the 5% commission was taxable). The concept of a double supply of a service was also accepted in Caithkin.

Neal Armstrong. Summary of GST/HST Memorandum 21-1 “Child Care Services“ December 2019 under ETA Sched. V, Pt, IV, s. 1.