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DATE May 17, 2012 FROM Paul Lafond Financial Institutions Unit Financial Institutions and Real Property Division TO [Addressee] FILE 97556 SUBJECT : GST/HST Interpretation- Referral services associated to point-of-sale processing services Further to […][your inquiry], we are writing in response to your concerns on the application of the GST/HST to supplies of referral services provided by […](Supplier) in connection with point-of-sale (POS) debit and credit card processing services (Processing Services). ... Member for the provision of the Processing Services in connection to the debit and credit card transactions. ... This determination will generally be based on written agreements between the person providing the service and the person’s client detailing the actions, responsibilities and obligations of the person in connection with the supply. ...

As indicated in GST/HST Technical Information Bulletin B-103, Harmonized Sales Tax – Place of supply rules for determining whether a supply is made in a province (available on the CRA website at http://www.cra-arc.gc.ca/E/pub/gm/b-103/b-103-e.pdf), whether a service is considered to be in relation to real property depends on whether there is a direct connection between the service and the particular circumstances of each case. ... There are several guidelines that are used to determine whether there is a direct connection between a service and real property. ... If something else comes between the service and the property, the connection will not be considered to be direct. ...

TO: XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX CASE NUMBER: 102898 DATE: May 12, 2008 SUBJECT:_GST/HST Interpretation GST Treatment of Assignment of Lease and Related Payments This memorandum is in response to your XXXXX to Dawn Weisberg XXXXX, wherein you requested an opinion as to the application of the GST to payments made in connection with assignments of leases to XXXXX. ... Authorization by XXXXX to XXXXX to wire funds in connection with an advance relating to the assignment of a lease with XXXXX dated XXXXX; 2. ... These documents purport to re-characterize the assignment as follows: (i) Advance: There is an advance by XXXXX to XXXXX; repayments of the advance are drawn from XXXXX account concurrent with lease payment due dates; (ii) Assignment: There is an assignment by XXXXX to XXXXX of lease-related assets to secure repayment of the advance; (iii) Possible Administrative Services: XXXXX is to continue to collect lease payments and taxes from XXXXX XXXXX; XXXXX is to be responsible for expenses in connection with admin services relating to the administration of the leases. ...

As set out in GST/HST policy statement P-169R (P-169R Meaning of "in respect of real property situated in Canada" and "in respect of tangible personal property that is situated in Canada at the time the service is performed", for purposes of Schedule VI, Part V, sections 7 and 23 to the Excise Tax Act), and GST/HST Memorandum Series, Section 4.5.3, Exports- Services and Intellectual Property, the CRA's position is that there must be more than a mere indirect or incidental connection between a service and the underlying tangible personal property before the supply of the service will be considered to be "in respect of" the property and consequently excluded from zero-rating. ... The following guidelines will be applied to determine whether the connection between the service and the tangible personal property is sufficiently direct for the service to be "in respect of" the property for purposes of paragraph 7(e) of Part V of Schedule VI to the Act: (a) Whether the service is designed, developed or undertaken to fulfil or serve a particular need or requirement arising from or relating to the tangible personal property, which involves determining the purpose or objective of the service. ... If some object comes between the service and the property, the connection becomes increasingly remote. ...

This has resulted in the availability of additional funds to pay costs related to the environmental remediation activities and, resultantly, the payment of an increased amount of GST in connection with the costs of those activities. Interpretation Requested You would like to know: 1) if input tax credits (ITCs) claimed for services acquired, and refunds of GST generated by or on behalf of XXXXX are: a) consumed, used or supplied to XXXXX in the course of commercial activities of XXXXX for purposes of section 169(1) of the ETA; or b) consumed, used or supplied to XXXXX in connection with the termination of a commercial activity of XXXXX and therefore deemed to have been done in the course of commercial activities of XXXXX for purposes of section 141.1(3) of the ETA; and 2) are disbursements by or on behalf of XXXXX used: a) to fund environmental remediation costs for court-approved environmental remediation activities; b) to fund administrative and receivership costs incurred in the course of the approval, conduct and implementation of those court-approved environmental remediation activities; or c) to repay any advances that may hereafter be made by the XXXXX to fund the costs of those court-approved environmental remediation activities not "distributions" of property of XXXXX in the possession or control of XXXXX in its capacity as court-appointed XXXXX Receiver of certain property and assets of XXXXX for purposes of section 270 of the ETA. Interpretation Given Based on the information provided, it is our interpretation that given the facts outlined above that GST paid by the XXXXX on behalf of XXXXX on property or services acquired or imported for consumption or use in environmental remediation would generally qualify under subsection 141.1(3) as "anything (other than make a supply) in connection with the... termination of a commercial activity of the person" if the criteria for claiming ITCs is met as outlined below. ...

Subsection 2(1) of that Act contains the following definitions: " 'continental shelf' means the seabed and subsoil of those submarine areas that extend beyond the territorial sea throughout the natural prolongation of the land territory of Canada to the outer edge of the continental margin or to a distance of two hundred nautical miles from the inner limits of the territorial sea, whichever is the greater, or that extend to such limits as are prescribed pursuant to paragraph (2)(a);" " 'federal laws' includes Acts of Parliament, regulations as defined in section 2 of the Interpretation Act and any other rules of law within the jurisdiction of Parliament but does not include ordinances within the meaning of the Northwest Territories Act or the Yukon Act;" " 'marine installation or structure' includes (a) any ship, offshore drilling unit, production platform, subsea installation, pumping station, living accommodation, storage structure, loading or landing platform, dredge, floating crane, pipelaying or other barge or pipeline and any anchor, anchor cable or rig pad used in connection therewith, and (b) any other work or work within a class of works prescribed pursuant to paragraph (2)(b);" Section 5 of that Act provides as follows: "5.(1) Subject to any regulations made pursuant to subsection (2) or (3), federal laws apply (a) on or under any marine installation or structure from the time it is attached or anchored to the continental shelf in connection with the exploration of that shelf or the exploitation of its mineral or other non-living resources until the marine installation or structure is removed from the waters above the continental shelf; (b) on or under any artificial island constructed, erected or placed on the continental shelf; and (c) within such safety zone surrounding any marine installation or structure or artificial island referred to in paragraph (a) or (b) as is determined by or pursuant to regulation. ... In that subsection, "Canada" includes "(a) the sea bed and subsoil of the submarine areas adjacent to the coasts of Canada in respect of which the government of Canada or of a province may grant a right, licence or privilege to explore for or exploit any minerals; and (b) the seas and airspace above the submarine areas referred to in paragraph (a) in respect of any activities carried on in connection with the exploration or exploitation of minerals. ...

According to subsection 123(1), a person will be engaged in a commercial activity where the person: (a) is carrying on a business, and where the person is an individual or a partnership, whose members are all individuals, there is a reasonable expectation of profit, except to the extent to which the business is involved in making exempt supplies, (b) is involved in an adventure or concern in the nature of trade, and where the person is an individual or a partnership, whose members are all individuals, there is a reasonable expectation of profit, except to the extent to which the adventure or concern is involved in making exempt supplies, or (c) is making a supply (other than an exempt supply) of real property of the person, including anything done by the person in the course of or in connection with the making of the supply. In addition, paragraph 141.1(3)(a) will deem anything done in the connection with the acquisition, establishment, disposition or termination of a commercial activity to be done in the course of the commercial activity. ... Pursuant to paragraph 141.1(3)(a) anything the operator does in connection with the establishment (e.g. construction) of the unit will be deemed to be done in the course of the commercial activity. ...

. •   Pursuant to Paragraph 3 of both agreements, the owner gives certain specific authority and powers to XXXXX, and agrees to assume the expenses in connection with same. ... XXXXX must get prior approval from the owner, except under certain specific circumstances, for single expenses exceeding $1000. •   Most expenses incurred by XXXXX in connection with the authority and powers granted it under Paragraph 3 of a standard agreement have been invoiced to XXXXX, with reference to the particular property, and not directly to a specific property owner. XXXXX is then reimbursed by the property owner for the expense. •   Pursuant to Paragraph 4a of both agreements, the owner agrees to save XXXXX harmless from all damage suits in connection with the management of the property and from liability from injury suffered by an employee or other person. ...

XXXXX (the "Trust") was established by its trustee, XXXXX as the "issuer trustee", for (among other things) the purpose of arranging for the distribution of mutual fund units through registered dealers and brokers and performing certain administrative duties in connection with the mutual funds (the "Funds"). 2. ... XXXXX as administrative agent, is entitled to reimbursement for all expenses incurred on behalf of the Trust and is paid such fees in connection with its activities and services as may be agreed to by the Trust and itself from time to time. ... The Trust Administration Agreement states that XXXXX "... shall be entitled to reimbursement for all expenses incurred on behalf of the Trust in accordance with the Distribution and Administration Agreements and shall be paid such fees in connection with its activities and services as may be agreed to by the Trust and the Administrative Agent from time to time". ...