Section 135 - Sponsorship of Public Sector Bodies

See Also

Children's Clean Air Network Society v. The Queen, 2013 TCC 352 (Informal Procedure)

The appellant ("CCAN") was a not-for-profit organization which, in connection with the promotion of environmental responsibility, would produce and distribute tailgate magnetic stickers, posters, signs, etc., to discourage idle engine operation. These materials were print with the logos of the sponsors, who were charged amounts representing a mark-up over CCAN's related costs.

C Miller J found that s. 135 deemed CCAN not to make a supply to each sponsor as "the sponsor's sole use was to publicize its business" (para. 10).

Administrative Policy

20 February 2019 Ruling 196070

sponsorship revenues for an event were not subject to GST/HST after applying single-supply doctrine

In order to recoup some of the expense of organizing an “Event” at the “Centre”,
a public sector body (“PSB”) will seek to raise money through 5 different sponsorship packages. Sponsorship packages A, B, and C include logo visibility, branding opportunities, acknowledgement during the Event, and use of an exhibition booth. Sponsorship package E includes only the use of an exhibition booth.

In finding that all but package E were deemed not to be a supply, CRA stated:

Based on the information provided, [the PSB] does not intend to carry out any services of advertising by the means described in section 135. All the sponsorship benefits described are either promotional services (logo visibility) or the right to use the Official Marks of [the Event] (the name and logo), which would fall under paragraph 135(a) and 135(b) respectively. The only exception is the booth in the designated area, which is the right to use real property.

[Sponsorship package E] sponsors only receive the use of a booth. …

On the other hand, for [sponsorship packages A, B, and C], although the sponsors receive the use of real property, they also receive a multitude of promotional services as part of the sponsorship package. These packages are all considered a single supply of promotional services, because, amongst other things, it is not possible for a sponsor to choose which benefit it wants and to only pay that price. Therefore, the entire package would be deemed not to be a supply because of section 135 … .

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Recipient receipt of sponsorship revenues directly by licensor of the PSB did not change the recipient status of the PSB 116
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Supply supply of real estate (exhibition booth) assimilated to single non-supply of sponsorship 152

Excise and GST/HST News - No. 93 16 October 2014

Example 2

A municipality is constructing a recreational facility. ABC Co. contributes $1 million and in exchange the facility will be named "ABC Co. Centre" for the next five years. The $1 million is consideration for a supply of naming rights by the municipality, which is a supply of intangible personal property that does not fall under section 135. Therefore, the $1 million is subject to GST/HST.

25 January 2013 Ruling Case No. 140259

After ruling that the promotional service made by a non-profit organization to its principal corporate sponsor was deemed not to be a supply under s. 135, CRA turned to sponsorship money paid to the Association by other corporate sponsors whose logos were placed on its website and who might submit requests for advertising in its newsletter. CRA stated:

The term "sponsor" is not defined in the ETA and so the CRA accepts the general meaning of the term, which usually indicates either a person who supports or accepts responsibility for another, or more commonly in the commercial sense, one who agrees to provide financial support with respect to another's activities or events while, or by, acquiring advertising or certain promotional rights.

The CRA may find a distinction between a "sponsorship" and a purchase of advertising. A payment made in exchange for the listing of a business's name or logo on a web page may be consideration for a supply of advertising rather than a "sponsorship" where it is a commercial transaction at fair market value. In another case, such a payment may be viewed as a sponsorship, where the sponsor supports the event or activity of an organization while, or by, acquiring some promotional rights. Therefore, where the [other corporate sponsors] are merely purchasing advertising on the [Association's] website section 135 will not apply and [the Association] will be required to charge GST/HST.

Information for Non-Profit Organizations under "Collecting the GST" - "Sponsorships"