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).
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Commercial Activity | 219 |
Administrative Policy
10 August 2020 GST/HST Ruling 210848 - […][Event] Sponsorship
To ensure the success of an Event, a public sector body (the “Organization”) enlisted the participation of sponsors (Sponsor #1, #2 and #3). The agreement with Sponsor #3 provided for consideration payable by that Sponsor and for sponsorship rights, which included: acknowledgement as official sponsor of the Event and exclusive product of the event; logo visibility on Event signage (giant screens, billboards, banners, etc.), on a website, in newspapers, and in social media; verbal mentions of the sponsor during the Event; sponsor’s name on a stage; a licence to use real property to promote its brand by offering samples; VIP invitations to attend the Event; and right to use intangible personal property of the Organization. The agreements with the other two Sponsors were similar. In finding that s. 135 applied to the Organization’s supply of the sponsorship rights, CRA stated:
The supplies in each of the agreements are a single supply of promotional services. Although the supply includes advertising and other elements, including use of intangible personal property belonging to [the Organization], the dominant element is the promotional services that the sponsor acquired. The supplies in the agreements are not primarily for a service of advertising by means of radio or television or in a newspaper, magazine or other publication published periodically.
12 August 2019 GST/HST Interpretation 200527 - Parrainages de […] [l’Organisme]
The Organization has created a new Web platform to produce and distribute videos and, in this regard, will enter into partnering agreements with other public sector organizations (“partners”) for the purpose of providing visibility to them on such website, in exchange for local visibility provided by them for the Organization’s benefit on the sites for events of the partner organizations.
CRA summarized three such sponsorship arrangements, the third of which is summarized below. Under a partnering agreement and broadcast licence:
- the partner committed to grant the status of major partner of the event to the Organization, authorize partner representatives to be on the premises, provide a non-exclusive and irrevocable licence to reproduce and distribute listed videos on the Organization's digital platforms, disclose the partnering with the Organization and display the Organization's logo on its website, social networks and event posters and programs, etc.; and
- the Organization undertook to produce one or more vignettes on the partner's event or activities to be broadcast on the Web site, provide bargain-basement space on television for a commercial produced by the partner, disclose the partnering on Facebook, Twitter, etc., pay the partner stipulated amounts based on the visibility given and award a prize.
In its preliminary comments, CRA referred to the ordinary commercial meaning of “sponsor” as being one “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,” and, regarding the exclusion for the specified types of advertising, stated:
[T]he presence of an advertising department is not determinative … . For example, we had a file where the sponsorship agreement included inter alia television advertising. Even though, in monetary terms, the advertising represented a substantial part of the sponsorship, we considered that the reason a sponsor would want to sign an agreement and pay the funds was for the recognition of being a partner in the [...] [events] and being able to use the logos associated with them. […].
Regarding Example 3, CRA stated:
We consider the partner's commitment described above to be a one-time supply of promotional services. Assuming that …[the Organization] sponsors the partner's event (we believe that it does in a general sense), the services offered by the partner would be deemed not to be a supply under section 135.
We consider that [the Organization's] undertaking includes a one-time supply of promotional services and monetary contributions. The consideration paid by the partner for the services offered by [the Organization] could be considered to be for "primarily a television advertising service". If the value of the television advertising is greater than the other elements of [the Organization's] commitment, section 135 would not apply.
We are more comfortable saying that Example 3 would be a sponsorship (i.e., the sponsoring partner [the Organization]) rather than Example 1 and that the consideration paid by the partner to [the Organization] is not primarily for a television advertising service. In our view, the advertising service is only one element of the overall supply of promotional services. The television advertising service is not the main reason why a partner would want to sign the agreement.
20 February 2019 Ruling 196070
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 | 124 |
| Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Supply | supply of real estate (exhibition booth) assimilated to single non-supply of sponsorship | 158 |
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.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 141.01 - Subsection 141.01(7) | 61 |
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.