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.
[Addressee]
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 139282
March 19, 2012
Dear [Client]:
Subject:
GST/HST INTERPRETATION
Place of Supply of Services
Thank you for your fax of October 12, 2011 and November 14, 2011, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the supply of services.
HST applies at the rate of 15% in Nova Scotia, 13% in Ontario, New Brunswick, and Newfoundland and Labrador, and 12% in British Columbia. GST applies at the rate of 5% in the remaining provinces and territories.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
Interpretation Requested
Your question relates to the determination of the relevant address of the recipient of a supply of a general service made in Canada for purposes of subsection 13(1) of the new Harmonized Value-Added Tax System Regulations (the "Regulations"). In particular, whether in a given situation, an address would be considered to be the relevant address on the basis that it is the address of the place where the mind and management of a company that is the recipient of the supply is located. Also, whether in a given situation, an address would be considered to be the relevant address on the basis that the address is the address of the agent of a company that is the recipient of the supply.
Interpretation Given
A taxable supply (other than a zero-rated supply) of property or a service made in Canada is subject to GST at 5% when it is deemed to be made in a non-participating province, and is subject to HST at the applicable rate when it is deemed to be made in a participating province. The participating provinces are Ontario, Nova Scotia, New Brunswick, British Columbia, and Newfoundland and Labrador.
The ETA has various place of supply rules to determine whether a supply that is made in Canada is made in a province. Under section 144.1, a supply that is made in Canada is also considered to be made in a particular province if it is determined to be made in the province under the place of supply rules in Schedule IX. In any other case, the supply is deemed to be made in a non-participating province. Pursuant to section 3 of Part IX of Schedule IX, notwithstanding the place of supply rules in Schedule IX, a supply is made in a province if the supply is prescribed under the Regulations to be made in the province.
Based on the information provided, the services that are supplied in this case would be subject to the general place of supply rules for services in subsection 13(1) of the Regulations. These rules are generally based on the home or business address of the recipient obtained by the supplier in the ordinary course of business of the supplier.
For purposes of subsection 13(1), the address obtained by the supplier in the ordinary course of business must be an address of the "recipient" of the supply who, under subsection 123(1) of the ETA, is generally the person who is liable under the agreement for the supply to pay the consideration payable for the supply.
An address of the recipient obtained by a supplier will only be relevant for purposes of subsection 13(1) 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. The relevant address of the recipient 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. An address of the recipient obtained by a supplier in the ordinary course of business could therefore include: 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; or a billing address of the recipient in connection with a supply. 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. The contracting address will generally be the address that is most closely connected with the supply.
An address would not be determined to be the relevant address for purposes of subsection 13(1) of the Regulations on the basis that it is the location of the mind or management of the recipient or the location of its agent. Where the supplier of the service does not obtain a business or home address of the recipient in Canada in the ordinary course of its business, but obtains another single address of the recipient in Canada in the ordinary course of its business, pursuant to paragraph 13(1)(c) of the Regulations, the location of this other address can determine the province in which the supply is made.
As stated in GST/HST Technical Bulletin B-103 Place of supply rules for determining whether a supply is made in a province, there is no requirement for the address of the recipient in this case to be the address at which the recipient is located. The types of addresses that could fall under this part of the rule could, for example, 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.
Although a supply of a service may be deemed to be made in a particular province based on subsection 13(1) of the ETA, self-assessment of the provincial component of the HST by the recipient in respect of the service may still be required in some cases under Division IV.1 and the New Harmonized Value-Added Tax System Regulations No. 2, where it is established that the service was acquired for consumption, use or supply in another province. Subsection 13(1) is not intended to replace the self-assessment provisions by requiring a supplier to determine the province in respect of which the recipient has acquired the service for consumption, use or supply, which in some cases can be in multiple provinces. The self-assessment rules complement the place of supply rules.
The foregoing comments represent our general views with respect to the subject matter of your request. These comments are not rulings and, in accordance with the guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, do not bind the Canada Revenue Agency with respect to a particular situation. Future changes to the ETA, regulations, or our interpretative policy could affect this interpretation.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-957-8220. 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,
Kevin W. Smith
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
Email this Content