9 October 2001 GST/HST Interpretation 32754 - GIS Services

Dear XXXXX

Thank you for your letter of September 14, 2000 concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to your operations. Your request has been transferred from the XXXXX to the Border Issues Unit of the General Operations and Border Issues Division for response. We regret the delay in responding.

XXXXX. is a geographic information technology firm specializing in photogrammetry, Geographic Information System (GIS), data conversion, quality control and related information services.

Your focus is on database creation for GIS applications and digital mapping for engineers, surveyors, planners and land developers as well as serving the transportation, utilities, forestry, mining, environmental and government sectors. You offer products delivered in digital format.

Your enquiry relates to the following situation. You receive on CD or in a zipped digital file sent through the Internet, an aerial image of real property situated in the United States from your client an American mapping firm. By using specific computer hardware and software you add land information in digital format from the aerial images/photos. This information is sent back to the non-resident in the same format you received it, either as a zipped digital file through the Internet or on CD.

In accordance with GST/HST Memoranda Series Section 1.4, an application ruling can only be issued with reference to a clearly defined fact situation of a particular registrant. Rulings are issued upon request and where the taxpayer has presented all the relevant facts such as the nature of the transactions undertaken, detailed descriptions of services or property involved, the parties involved in all transactions and relevant documentation such as invoices, contracts and other pertinent agreements. Where all the relevant facts are not provided, an interpretation may be issued. I am pleased to issue you an interpretation which will elaborate on how the GST/HST applies to the supply described in your letter.

Interpretation Requested

What is the GST/HST status of the supply of adding land information to a digital file, as described above, when supplied to a non-resident client?

Interpretation Given

Based on the information provided, we offer the following interpretation:

The process of adding information to an existing file, as described above, is considered to be a supply of service for GST/HST purposes. Pursuant to paragraph 142(1)(g) of the Excise Tax Act (the Act), a supply of a service is deemed to be made in Canada if the service is performed in whole or in part in Canada. A supply of a service made in Canada, is taxable for GST/HST purposes at the rate of 7% (15% where the supply is made in a participating province: Nova Scotia, New Brunswick, or Newfoundland) unless the supply is zero-rated.

Section 7 of Part V of Schedule VI to the Act zero-rates a supply of a service when made to a non-resident person provided none of the exclusions of the provision apply. For example, the supply of a service to a non-resident is zero-rated provided it is not rendered to an individual while that individual is in Canada; made to an individual who is in Canada at any time when the individual has contact with the supplier in relation to the supply; or a service in respect of real property situated in Canada. None of these exclusions appear to apply in the situation you described.

It is the supplier's responsibility to verify that the recipient is a non-resident and to ensure that all of the remaining zero-rating criteria are satisfied. The supply of services as described above would qualify for zero-rating under this provision when made to a non-resident person. For your information, we have enclosed GST/HST Memoranda Series Chapter 4.5.1 Exports - Determining Residence Status. Appendix B of this Memorandum describes the documentation that CCRA will generally accept as proof that the recipient is not resident in Canada and is not registered for GST/HST purposes. We have also enclosed for your information, GST/HST Memoranda Series Chapter 4.5.3, Exports - Services and Intellectual Property.

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the Excise Tax Act, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST/HST Memoranda Series, do not bind the Canada Customs and Revenue Agency with respect to a particular situation.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-5124.

Yours truly,

Gabrielle Nadeau
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate