Application to public service body re service imported into Ontario for exempt use
Example 3 – Imported supply of a service
During a claim period, a non-registrant PSB resident in Ontario is the recipient of a taxable supply of consulting services made outside Canada by a non-registrant supplier resident in the United States for $10,000. The consideration for the services becomes payable during that period. The consulting services are supplied to the PSB for use by the PSB exclusively in exempt activities in Ontario.
The PSB is required to self-assess tax at the rate of 5% on the value of the consideration for the supply of the consulting services. The PSB self-assesses the amount of $500 ($10,000 × 5%) on Form GST59, GST/HST Return for Imported Taxable Supplies, Qualifying Consideration, and Internal and External Charges. This amount is included in subparagraph 259(1)(a)(i) when calculating the federal non-creditable HST charged in respect of the consulting services for the claim period.
The PSB is also required to self-assess tax at the rate of 8% on the value of the consideration for the consulting services (8% being the provincial part of the HST in Ontario). The PSB self-assesses the amount of $800 ($10,000 × 8%) on form GST59, GST/HST Return for Imported Taxable Supplies and Qualifying Consideration. This amount is included in subparagraph 259(1)(a)(i) when calculating the provincial non-creditable HST charged in respect of the consulting services for the claim period.
GST M 300-9 "Imported Services and Intangible Property"
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64. Where the registrant who acquires the continuous transmission commodity from the first buyer is not acquiring the commodity for consumption, use, or supply exclusively in the course of commercial activities of the registrant, the supply is an imported taxable supply and the registrant is liable for tax under sections 218 and 218.1, calculated on the value of the consideration for the supply of the commodity.
67. In addition, every recipient of an imported taxable supply of continuous transmission commodity, that is delivered or made available to the recipient in a particular participating province where the recipient is either a resident or is a registrant, must self-assess an amount of the provincial part of the HST under subparagraph 218.1(1)(b)(ii), equal to the tax rate for the particular participating province multiplied by the value of the consideration for the supply.
Bulletin B-095 June 2011 "The Self-assessment Provisions of Section 218.01 and Subsection 218.1(1.2) for Financial Institutions (Import Rules)"
Test of whether the expense (re qualifying consideration) was used in a participating-province activity
The provincial part of the HST is determined by a formula that in general terms is the qualifying consideration multiplied by the extent (expressed as a percentage) to which the expense that corresponds to the qualifying consideration was used in carrying on an activity of the qualifying taxpayer in the particular province. However, for a specified year that ends before July 1, 2010, tax is determined based on the extent of activity in each participating province in which the qualifying taxpayer is resident at any time in the specified year.
Exclusion for SLFIs
Selected listed financial institutions (SLFIs) that fall within section 225.2 are generally not required to self-assess the provincial part of the HST imposed under subsection 218.1(1.2). These FIs continue to use the special attribution rules under section 225.2… .