Section 177

Subsection 177(1) - Supply on Behalf of Person Not Required to Collect Tax

Administrative Policy

GST/HST Info Sheet GI-012, Agents, November 2005

Election under s. 177(1)

[A] principal may elect to charge and account for the tax, instead of the agent, when the principal would otherwise not have to charge the tax. This election can be made where the principal last used or acquired the goods for consumption or use in a business or an adventure or concern in the nature of trade.

Essential qualities of agency

The three essential qualities are:

  • consent of both the principal and the agent;
  • authority of the agent to affect the principal's legal position; and
  • the principal's control of the agent's actions. …

Authority of agent to bind principal

When a person is acting as agent in making a transaction on behalf of a principal, the principal will generally authorize the agent to do something on the principal's behalf. …

When a person is acting as agent in making a transaction on behalf of a principal, the agent will have the ability to affect the principal's legal position. The most common example of this is where the agent is authorized to enter into contracts with third parties on the principal's behalf. …

[G]iving authority to a person to bind another person in a contract could indicate that a person is acting as agent in making a transaction on behalf of a principal. If the authority to bind another person is not mentioned, this authority may be implied from the presence of the two other essential qualities.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Agency 177

25 February 2005 Ruling Case No. 51031

Ruling that a company was acting as agent for the non-registrant estates in making estate sales, so that it was required to collect GST on the goods sold.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Agency 28

GST/HST Info Sheet GI-009 November 2004

Application of GST on general principles or under s. 177(1) whenever there is a consignment sale

A consignment is an arrangement in which an owner delivers their goods to another person (the "consignee") on the understanding that the consignee will sell the goods. ...

There are two common types of consignment arrangements:

  • a sale by agent arrangement where title to the goods is transferred directly from the owner to the purchaser through the consignee as agent; or
  • a purchase and resale arrangement where title to the goods passes from the original owner to the consignee and then to the final purchaser.

Regardless of the type of consignment arrangement, the final purchaser must pay the GST/HST when buying taxable goods sold on a consignment basis.

Example of application of s. 177(1)(e)

Mr. and Mrs. Patel, who are non-registrants, are owners of a boat that they used for recreational purposes. They deliver the boat to the Marina By the Sea in order to have the marina sell it and agree to pay the marina a 10% commission for carrying out the sale. The marina is a registrant and acts as agent in making the sale on behalf of the Mr. and Mrs. Patel.

In this case, the marina must charge and account for the GST/HST on the sale of the boat to the purchaser because Mr. and Mrs. Patel are not required to collect the tax (they are not registrants and the boat was not used in commercial activities). In turn, the marina does not charge or account for the GST/HST on the commission charged to Mr. and Mrs. Patel for carrying out the sale.

Words and Phrases

GST M 300-7 "Value of Supply" under "Supply by Agents"

General synopsis.

Subsection 177(1.1)

Administrative Policy

21 September 2018 Interpretation 167678

election made by headlessor in concurrent lease structure re rents collected from sublessees

CRA commented on the use of a prepaid concurrent lease structure to finance equipment leases. The Lessor leases equipment to consumers. The Trust, which has raised money from third parties, is then leased the Lessor’s reversion, so that the Trust is interposed as lessee and sublessor between the Lessor and the consumers. The Trust uses its financing to prepay most of the rent (plus HST thereon) under the concurrent lease between it and the Lessor. An ETA s. 177(1.1) election also is made for the Lessor to collect the HST on the rents from the consumers owing under what now are subleases, as agent for the Trust.

CRA gave interpretations that it would respect the ETA s. 177(1.1) election and the efficacy of the concurrent lease, so that it considers there to be a supply of the equipment by the Lessor to the Trust pursuant to ETA s. 136(1).

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 136 - Subsection 136(1) prepaid concurrent lease structure respected 375

CBAO National Commodity Tax, Customs and Trade Section – 2014 GST/HST Questions for Revenue Canada, Q. 2

cannot be a billing agent with respect to one's own purchases
available with membership password at

BCo purchases tangible personal property from ACo. They enter into a billing agent election under s. 177(1.1) such that BCo issues the invoice, and collects and remits GST/HST on behalf of ACo in respect of the transaction, i.e., BCo would "collect" payment from itself (as agent for ACo) and report the tax on its own GST/HST return, so that it can claim an offsetting ITC on the same GST/HST return. Does this work?

In responding negatively, CRA stated:

[I]t is unclear how BCo could be considered to have charged and collected the consideration and tax payable from itself in respect of a supply made by ACo as required under subsection 177(1.11). As such, the conditions required for a billing agent election to be made under subsection 177(1.1) do not appear to be met.

GST/HST Notice 284 "Bare Trusts, Nominee Corporations and Joint Ventures" February 2014

agent not entitled to ITCs

After noting that "where a nominee corporation is a...registrant that makes taxable supplies as agent on behalf of the participants in a joint venture, the nominee corporation and the participants may jointly elect under subsection 177(1.1)," CRA stated:

[T]he election under subsection 177(1.1) does not result in the agent assuming any rights with respect to input tax credits to which the principal may be entitled to claim. Consequently, even where a nominee corporation acts as agent in acquiring supplies on behalf of the participants in a joint venture, the nominee corporation is not entitled to claim any input tax credits that the participants may be eligible to claim with respect to such supplies.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 240 - Subsection 240(3) - Paragraph 240(3)(a) taxable supply of nominee services 63
Tax Topics - Excise Tax Act - Section 273 - Subsection 273(1) administrative tolerance for nominee operators 197
Tax Topics - General Concepts - Agency acquisitions of agent those of principal 116

16 March 2009 Interpretation 110027

nominee can make the election

Under a written agreement between a nominee corporation that is an agent of the beneficial owners ("Nominee" and “Beneficial Owners,” respectively), the Nominee, at the direction of the Beneficial Owner, enters into arrangements to maintain, develop, improve, lease, manage, or sell each particular real estate “Project” or any part thereof. The Nominee would further maintain all relevant corporate and accounting records in connection with such activities. After finding that the arrangement is one of bare trust, CRA stated:

[I]f the parties make an election under section 177(1.1), the Nominee would account for the tax collectible for supplies of trust property but would be precluded from claiming any ITCs accruing to the Beneficial Owner.


GST506 "Election and Revocation of an Election Between Agent and Principal"

A registrant billing agent acting as an agent for a supplier in charging and collecting the amount due for a supply is considered to be acting as an agent in making the supply but only for the purposes of this election. This means that a supplier (principal) and a billing agent can jointly elect for the billing agent to account for the GST/HST charged or collected on the supply instead of the principal. ...

The parties decide on the effective date of a revocation. The effective date can be earlier or later than the current date. ...

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Subsection 177(1.11)