CRA indicates that zero-rating under ETA Sched. VI, Pt. V, s. 2(a) for supplies to an airline relates to connected property or services, but not to the aircraft itself

ETA Sched. VI, Pt. V, s. 2(a) refers to a non-resident person who is not registered under the general (Subdivision d) registration provisions and who carries on a business of transporting passengers or property to or from Canada or between places outside Canada by inter alia aircraft, and zero-rates a supply of property or a service made to such a person “in the course of so transporting passengers or property.” Would an aircraft that is being leased or purchased for consumption and use by the airline in transporting passengers qualify for zero-rating?

CRA indicated that the quoted words indicated that “the consumption, use or supply of the property or service by the person must be connected with or arise from the provision of the service of transporting the passengers or property” and then indicated that it was not aware of any situation where the aircraft itself was to be considered as “the actual property being supplied under the provision.”

Neal Armstrong. Summary of 7 April 2022 CBA Roundtable, Q.14 under ETA Sched. VI, Pt. V, s. 2(a).