This is in reply to your letter addressed to Mitch Bloom of my staff dated December 2, 1993 wherein you requested a GST interpretation of the tax status of supplies by XXXXX of XXXXX[.]
Our understanding of the facts are as follows:
Statement of facts
1. XXXXX has entered into an agreement with XXXXX to sell a product called a XXXXX[.] This product will be provided to XXXXX XXXXX on a consignment basis.
2. XXXXX is a debit card, available in several pre-set denominations which provides the purchaser with XXXXX. The card is merely a card on which a unique number is printed. The card does not contain any magnetically recorded information.
3. The card can be used by the holder to place a XXXXX[.] The switch access number is either a local 7 digit telephone number or a toll free 1-800 number. At the present time, Canadian card users would dial a 1-800 number originating in XXXXX[.]
4. The XXXXX [o]f the balance remaining on the card and asks XXXXX[.]
5. The system calculates and notifies the XXXXX with the current balance on the card.
6. Upon XXXXX the computerized network XXXXX from the opening balance, and records the new balance in its memory.
7. When the XXXXX card balance reaches XXXXX[.]
You have not provided us with a copy of any agreements XXXXX. Our interpretation is based on the premise that XXXXX resells same, and provides no other supplies in relation to the XXXXX[.]
Interpretation given
XXXXX Limited is not providing a telecommunication service to the purchaser of the XXXXX as they neither have the facilities to provide such a service nor are they licensed to do so by the CRTC. Rather, they are providing intangible personal property in the form of a XXXXX XXXXX[.]
The consideration for the supply of the XXXXX card is paid by the purchaser and the XXXXX is physically given to the purchaser at a place in Canada XXXXX therefore the supply in fact takes place in Canada. Paragraph 142(2)(c) of the Excise Tax Act (ETA) deems a supply of intangible personal property to be made outside Canada if the property may not be used in Canada or the property relates to a service to be performed wholly outside Canada. As the XXXXX may be used in Canada, the supply of XXXXX not deemed to be made outside Canada. Based on the facts presented, the supply of a XXXXX by XXXXX to any recipient at one of its stores in Canada is a supply of intangible personal property made in Canada.
As the usage and variations of XXXXX we have decided to research this issue to ensure our approach to each case is consistent. To begin this process we are accumulating background information on all such cases that have been brought to our attention. In this regard, we would appreciate it if you would forward any background information that you have on this specific case, including any agreements that exist between XXXXX[.]
If you have any questions or require additional assistance, please contact any member of the Application team. Team members are Suzanne Leclaire (613) 954-7931, Lalith Kottachchi (613) 952-9588, Ken Mathews (613) 952-9585, and Sara Nixon (613) 952-8812.
H.L. Jones
Director
General Tax Policy
Policy and Legislation
Excise/GST
XXXXX
| c.c.: |
Mitch Bloom
Application Team
Garry Ryhorchuk
Bao Tran, Special Sectors
XXXXX |
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