Canadian Activity
Administrative Policy
Bulletin B-095 June 2011 "The Self-assessment Provisions of Section 218.01 and Subsection 218.1(1.2) for Financial Institutions (Import Rules)"
The term Canadian activity means an activity of the person carried on, engaged in or conducted in Canada. It would include but is not limited to a business (as defined in subsection 123(1)) carried on. The phrase "carried on, engaged in or conducted in Canada" is intended to give the term "Canadian activity" a broad meaning.
Imported Taxable Supply
See Also
Reluxicorp Inc. v. The Queen, [2011] GSTC 138, 2011 TCC 336
The registrant was a hotel company that paid franchise fees to a hotel franchise ("Marriott") in the United States. Marriott's fees were based on gross room revenues. Lamarre J. found that, because 30% of the registrant's revenue was from exempt stays (i.e. exceeding one month), 30% of the franchise fees were not incurred in respect of a "commercial activity" as defined in s. 123(1). Accordingly, she affirmed the Minister's assessment, which was made on the basis that the provision by Marriott of franchise rights was an "imported taxable supply" under s. 217, for which the registrant was liable to pay GST on the consideration paid on the basis that 30% of the franchise fees was not eligible for an input tax credit. The registrant was unable to demonstrate that the franchise fees pertained only to the short-term stays. Lamarre J also stated:
Parliament used the expression "all or substantially all," which means, in my view, thatthe figure must be closer to the totality than half-way between the majority and the totality.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Exclusive | 75% was not substantially all | 261 |
| Tax Topics - Excise Tax Act - Section 169 - Subsection 169(1) | allocation based on relative exempt and taxable revenues | 136 |
| Tax Topics - Excise Tax Act - Section 298 - Subsection 298(4) - Paragraph 298(4)(a) | 116 |
Administrative Policy
CBAO National Commodity Tax, Customs and Trade Section – 2013 GST/HST Questions for Revenue Canada, Q. 34
As s. 186(1) only applies for ITC purposes, it does not affect the determination of whether there is an imported taxable supply. However, where a registrant failed to account for HST on an imported taxable supply which should have been self-assessed and has not claimed an ITC for those amounts, administrative tolerance generally will be exercised so that no interest is assessed.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 186 - Subsection 186(1) | failure to self-assess under s. 218 where satisfy s. 186(1) | 63 |
| Tax Topics - Excise Tax Act - Section 281.1 - Subsection 281.1(1) | failure to self-assess under s. 218 where satisfy s. 186(1) | 63 |
Paragraph (a)
See Also
SLFI Group - Invesco Canada Ltd. v. The Queen, 2017 TCC 78, rev'd in part 2019 FCA 217
A non-resident bank ("Citibank") agreed to fund the payment of the upfront brokerage commissions that were payable on the issuance of units in the Invesco/Trimark funds (the “Funds”) in consideration for receiving an assignment of X% of the management fees that otherwise would have been earned by the Invesco manager (the “Manager”). More precisely, the Manager agreed to relinquish its receipt of that X% of its fees, and the Funds agreed to pay the same percentage amounts to a special purpose non-resident Citibank-formed vehicle (“Funding Corp”) in consideration for Funding Corp paying the brokerage commissions. Funding Corp then immediately sold its fee-amount entitlements to Citibank.
The Funds argued that they were receiving an exempt financial service from Funding Corp – so that this arrangement in effect eliminated the GST or HST on the portion of the management fees that was assigned to Funding Corp. This turned principally on whether this consideration paid by the Funds to Funding Corp was tainted under para. (q) of the financial service definition on the basis that Funding Corp provided any management or administrative service to the Funds.
V.A. Miller J indicated that taking care of the brokerage commissions was part and parcel of the management duties of the Manager, and delegating that duty to Funding Corp did not detract from its performance being a management function. Therefore, the consideration paid by the Funds to Funding Corp was tainted as Funding Corp was providing a management service - so that the fee amounts assigned by the Funds to Funding Corp. were consideration for a taxable imported supply.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Financial Service - Paragraph (q) | SPV funding MFT brokerage commissions was providing a GST-taxable management service | 381 |
| Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Supply | dominant element of service provided by financing SPV was financing | 180 |
Administrative Policy
7 April 2022 CBA Roundtable, Q.15
Where a non-resident makes a taxable supply of, say, a service to a Canadian registrant and mistakenly fails to charge GST/HST due, for instance, on the mistaken belief that it was not carrying on business in Canada, the Canadian recipient would typically self-assess itself for GST/HST under ss. 218 and 218.1 if it did not acquire the service exclusively in the course of its commercial activities. If CRA subsequently assessed the non-resident for failure to charge GST/HST on the basis that the place of the supply was in Canada, would CRA accept evidence that the recipient self-assessed itself for the GST/HST as satisfying the obligation to remit GST/HST on the supply?
CRA responded:
A recipient of a taxable supply made in Canada by a registrant is not required to self-assess Division IV tax under section 218 or 218.1. If the recipient self-assesses the tax, it has done so in error.
Where a recipient has self-assessed Division IV tax in error, the recipient may be eligible to claim a rebate of the tax, pursuant to section 261, provided the amount was not assessed under section 296. A section 261 rebate for tax paid/remitted in error can be claimed within two years after the day the amount was paid/remitted. Where a rebate under section 261 is restricted or is outside the two year period, the recipient may request a (re)assessment of the applicable return for the particular period.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 296 - Subsection 296(1) - Paragraph 296(1)(b) | a recipient which has self-assessed itself for s. 218 tax due to the non-resident’s mistaken belief the supply was made outside Canada may ask CRA to assess the return | 200 |
Paragraph (b)
Administrative Policy
GST/HST Memorandum 3.3.1 "Drop Shipments" June 2008
Requirement to self-assess if consignee did not accquire exclusively in commercial activity
31. Deeming the consignee to be a recipient of an imported taxable supply of the drop-shipped goods in this case ensures that tax is paid on the goods where they are not acquired by the consignee exclusively for consumption, use or supply in the course of commercial activities and the consignee has issued a drop-shipment certificate that relieved the registrant of the obligation to collect tax on its supply of the goods to the non-resident.
32. It is important to note that a consignee may be a recipient of an imported taxable supply of drop-shipped goods even if the unregistered non-resident who supplied the goods to the consignee is not the same non-resident who purchased the goods from the registrant to whom the consignee issued a drop-shipment certificate. Therefore, a drop-shipment certificate can be issued in certain circumstances where multiple unregistered non-residents are involved with a drop-shipment of goods.
Reproting under ss. 218, 218.1(1)
33. Where the consignee is a recipient of an imported taxable supply of the drop-shipped goods, the consignee must self-assess tax on the value of the consideration for the supply of the goods made by the unregistered non-resident to the consignee. The consignee is required to self-assess GST on the value of the consideration for the imported taxable supply or, HST on the value of the consideration for the imported taxable supply where physical possession of the drop-shipped goods is transferred to the registrant in a participating province
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 179 - Subsection 179(2) | 180 | |
| Tax Topics - Excise Tax Act - Section 179 - Subsection 179(1) - Paragraph 179(1)(d) | 188 |
Paragraph (c)
Subparagraph (c)(ii)
Subparagraph (c)(iii)
Commentary
Para. (c) of the “imported taxable supply” definition includes a taxable supply (other than a zero-rated supply) made outside Canada to a person who is resident in Canada.
One of the exclusions from para. (c) is in subpara. (c)(iii), which excludes a supply of property that relates to real property, situated outside Canada, to a service to be performed wholly outside Canada or to tangible personal property (“TPP”) situated outside Canada. A number of comparisons suggest that the TPP exclusion has a broad scope, having regard to the possibility that a supply which otherwise would be included under para. (c) but for the exclusion in subpara. (c)(iii) may be considered to be related both to TPP situated outside and inside Canada. First, unlike the services branch of subpara. (c)(iii), the TPP branch is not stated to be available only where the supply relates “wholly” to TPP situated outside Canada – which, of course, suggests that the exclusion may be available where the supply relates to TPP both inside and outside Canada. Second, there is none of the bipolar confusion evident in s. 142, which
- in s. 142(1)(c)(ii) includes (subject to s. 143), in a supply made in Canada, a supply of intangible personal property (“IPP”) that “relates … to tangible personal property ordinarily situated in Canada”
- in s. 142(2)(c)(ii) includes, in a supply made outside Canada, a supply of intangible personal property (“IPP”) that “relates … to tangible personal property ordinarily situated outside Canada”
There clearly is a contradiction between the two provisions where there is a supply of IPP that relates both to tangible personal property (TPP) ordinarily situated in Canada and TPP ordinarily situated outside Canada. At the 23 March 2017 CBA Commodity Taxes Roundtable, Q.22, CRA indicated that in such a situation it would regard the supply to be made in Canada, but without providing any principled explanation (perhaps none was possible).
As there is no analogous competing provision to subpara. (c)(iii) of the imported taxable supply definition, in the situation where a supply of TPP otherwise included under para. (c) thereof relates both the TPP situated inside and outside Canada, the plain text of subpara. (c)(iii) would indicate that it comes within that exclusion. This is reinforced by the broad meaning of “relates to” (Slattery).
Third, s. 10 of te New Harmonized Value-added Tax System Regulations (and the related examples in B-103) clearly contemplate that IPP can relate to TPP that is ordinarily located both outside and inside Canada.
A further consideration arises under s. 133, which deems a supply (including of IPP) to be made at the time the agreement for its supply was entered into. S. 136.1(1), which constitutes an exception to s. 133, provides that a supply by way of licence of IPP for consideration that is attributable to monthly intervals (e.g., a licence under which monthly royalty payments are payable) will be deemed to be made on a monthly basis.
S. 133 likely is only a timing rule, so that it likely would not be sufficient to rely on the only relevant TPP being situate outside Canada at the deemed time of supply under s. 133, and, conversely it likely would not be problematic if at the time of the deemed supply, the relevant related TPP had not yet come into existence.
Example
A non-registrant and non-resident corporation (“Licensor”) previously had developed a pharmaceutical drug and as the patent holder licensed the use of the drug to an unregistered non-resident drug company for stipulated percentages of the worldwide sales. A Canadian-resident registered investor (“Investor”) purchases the entitlement to such revenues from Licensor for a cash lump sum.
Since there is no stipulated minimum royalty level, the purchase rights likely would not in the CRA’s view qualify as the exempt purchase of a debt security (162056). Since the acquired royalty rights can arise from sales made in Canada, in that sense they might be considered to be used in Canada, so that the exclusion in subpara. (c)(ii) of the imported taxable supply definition would not be available, although as discussed above, this characterization appears unlikely that the actual rights in question would be contractual rights which typically could only be exercised outside Canada. Investor likely does not have a commercial activity outside Canada in the course of which this investment is made, so that the exclusion in subpara. (c)(i) likely is unavailable.
However, if it is accepted that there is no exclusion based on potential use in Canada of the rights, by the same token that use (being sales of the pharmaceutical drugs viewed as TPP) relate in substantial part to sales made outside Canada. Accordingly, if the exclusion in subpara. (c)(ii) is unavailable, the exclusion in subpara. (c)(iii) should be available given the broad meaning of “related to.”
As adverted to above, the provision would operate in a capricious manner if, having regard to the s. 133 rule, the subpara. (c)(iii) exclusion was regarded as being ousted because no sales of the TPP happened to be being made at the precise time of entering into the purchase agreement.
Loading
Administrative Policy
GST/HST Notice 287 "CRA Administrative Positions on the Application of the Import Rules for Financial Institutions to Reinsurance Contracts" January 2015.
Loading restricted to the administrative component [and not amounts that are fundamentally financial]
Subject to the position concerning service level agreements that meet the criteria described below, the amount representing that part of the reinsurance premium that may reasonably be allocated to administrative expenses, i.e., loading, including any error or profit margin specific to those expenses, is subject to tax under the import rules.
Amounts paid to reinsurer over and above the best estimate of losses (to reflect the transfer of risk) are excluded
In the case of the amount that the insurance industry refers to as the "margin for risk transfer" portion of the reinsurance premium, the industry has stated that this amount exclusively represents the compensation paid by the primary insurer to the reinsurer over and above the "best estimate of losses" to reflect the transfer of risk to the reinsurer for potential future insurance claims under the insurance/reinsurance policy/contract, and that some or all of this amount could become profit of the reinsurer. … The amount in the reinsurance premium described above as the margin for risk transfer is not considered to be included in loading as defined in section 217. As a result, the amount is not excluded from paragraph (k) of the definition of permitted deduction in section 217 and is not subject to tax.
Ceding commissions and expense allowances for Canadian services are excluded
The ceding commission or expense allowance that compensates the primary insurer for certain property or services acquired or performed by the primary insurer exclusively in Canada is not subject to tax under the import rules.
Safe harbour (treating all of reinsurance premiums as exempt) where there is arm's length pricing for separate properly-scoped service level agreement
[T]he import rules are not intended to impose GST/HST on the reinsurance premium charged by a reinsurer to a primary insurer in respect of a reinsurance policy or contract between the primary insurer and the reinsurer where:
- the reinsurance policy… is recognized as an insurance contract…;
- the primary insurer pays to the reinsurer and/or affiliates amounts, each…a "fee".. under an SLA that is allowed as a deduction… under the Income Tax Act;
- …[T]hese fees…[are] exclusively, or almost exclusively… for imported property and services provided by the reinsurer and/or affiliates, which includes the administration of the reinsurance policy or contract, other than amounts attributable to best estimate of losses, ceding commissions/expense allowances and compensation paid by the primary insurer to the reinsurer over and above the "best estimate of losses" to reflect the transfer of risk to the reinsurer for potential future insurance claims;
- each fee charged…by the reinsurer or an affiliate is commensurate with arm's length pricing…; and
- the primary insurer is charged, or self-assesses, GST/HST on each of these fees.
Example where there is not an SLA
Example 2
InsurerCan, a Canadian licensed property and casualty insurer, had a 50% quota share treaty (property insurance) in place with ReinsurerUS, a related foreign reinsurer. For 2013, ReinsurerUS was paid a $10 million reinsurance premium (50% of $20 million policy premiums) priced and based on the arm's length principle. A 25% ceding commission of $2.5 million was payable by ReinsurerUS to InsurerCan to compensate for certain property and services acquired or performed by InsurerCan exclusively in Canada in 2013. Documentary evidence indicated that a reasonable allocation of the administrative expenses incurred by ReinsurerUS for the reinsurance policy with InsurerCan was $500,000.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 217 - Specified Non-Arm's Length Supply | 318 |
Bulletin B-095 June 2011 "The Self-assessment Provisions of Section 218.01 and Subsection 218.1(1.2) for Financial Institutions (Import Rules)"
For example, a qualifying taxpayer that is a non‑resident FI has a head office in the United States and a branch in Canada. The qualifying taxpayer acquires insurance from a related corporation outside Canada. Part of the insurance premium it pays is allocated to the Canadian branch and therefore is an outlay made or expense incurred outside Canada under subsection 217.1(2). The amount is also deducted by the qualifying taxpayer under the ITA. The amount is therefore required to be included in Part A of the formula.
The insurance premium is paid to a related corporation, and as such the premium is consideration for a specified non‑arm's length supply and is a permitted deduction under paragraph (k) of the definition of permitted deduction. However, paragraph (k) states that the consideration for the supply does not include an amount that is loading. Therefore, any portion of the insurance premium covering the related corporation's expenses of doing business, profit margins and any of the other items listed in the definition of loading above are not included in the amount for the permitted deduction. But any portion of the insurance premium covering the net premium of the insurance policy is excluded from the amount determined to be loading because of the exclusion in the definition of loading, and therefore would be part of the consideration for the specified non‑arm's length supply that is a permitted deduction.
Qualifying Consideration
Articles
Michael Firth, Eric Reolon, "A Seven-Year (Retroactive) Plague on Cross-Border Reinsurance", Canadian GST Monitor, No. 283, April 2012, p.1: "Early experience has been that CRA will examine reinsurance [between a non-resident re-insurer and its Canadian affiliate] on a contract-by-contract basis, and identify loading content as anywhere between a third of the premium and its entire value."
Element A
Paragraph A(b)
Administrative Policy
B-107 "Investment Plans (Including Segregated Funds of an Insurer) and the HST" April 2013
Deemed residence of non-residents in non-participating province unless s. 225 election (Part 13)
As described in section 225.4 of the Act, unless an SLFI investment plan elects to exclude non-resident unit holders from the calculation of its provincial attribution percentage for a participating province, the following rules apply:
When an SLFI investment plan calculates its provincial attribution percentage for a participating province and it knows that certain units are held by non-residents of Canada, these units are deemed to be held by unit holders resident in Canada but not resident in a participating province (as described in paragraph 225.4(3)(a) for a stratified investment plan, paragraph 225.4(4)(a) for a non-stratified investment plan, paragraph 225.4(5)(a) for a private investment plan or a pension entity of a pension plan).
Deemed Canadian activities re units held by non-residents that are deemed under s. 225.4 to be held by Cdn residents (Part 13)
In general, if the investment plan qualifies as a qualifying taxpayer under section 217.1 of the Act, any outlay made, or expense incurred, in respect of the units of the investment plan that are held by non-residents and that are deemed to be held by Canadian residents under section 225.4, will be in respect of Canadian activities of the investment plan. As a result, any outlay made, or expense incurred, by the investment plan in respect of these units will relate to the investment plan's Canadian activity for the purposes of calculating the amount of an external charge or qualifying consideration as defined in section 217 of the Act (under paragraphs 225.4(3)(c) for stratified investment plan, 225.4(4)(c) for non-stratified investment plans and 225.4(5)(c) for a private investment plan or pension entity of a pension plan). Therefore, in accordance with section 218.01 of the Act, the investment plan will be required to self-assess the GST or the federal part of the HST under Division IV of the Act for taxable amounts that are imports (i.e., the amount of an external charge or qualifying consideration) that relate to the units deemed to be held by residents of Canada (but not resident in any participating province) under section 225.4
Bulletin B-095 June 2011 "The Self-assessment Provisions of Section 218.01 and Subsection 218.1(1.2) for Financial Institutions (Import Rules)"
Generally, the effect of Part A of the formula is that any expense or outlay made outside Canada that would be allowed as a deduction under the ITA, and is reasonably regarded as being applicable to a Canadian activity of the qualifying taxpayer, is included and forms the base for qualifying consideration. ...
Examples - Qualifying consideration - Part A
Example 1
A non-resident FI has its head office outside Canada and a branch in Canada. Certain head office expenses (e.g., software consulting services) incurred outside Canada are outlays made or expenses incurred outside Canada under subsection 217.1(2) and are with respect to the non-resident FI's Canadian activity. The expenses are deductible under the ITA. Therefore the amount is included in Part A of qualifying consideration. ...
Example 4
A non-resident qualifying taxpayer with a head office outside Canada and a branch in Canada purchases a computer outside Canada to be used in its Canadian activity. The amount is an outlay made or expense incurred outside Canada under subsection 217.1(2). Any amount in respect of capital cost allowance that is permitted as a deduction for purposes of the ITA and that is with respect to a Canadian activity is included in Part A of qualifying consideration
Specified Derivative Supply
Administrative Policy
CBAO National Commodity Tax, Customs and Trade Section – 2014 GST/HST Questions for Revenue Canada, Q. 17
S. 217(b)(i) of the definition of "specified derivative supply" states that the "all or substantially all of the value of the consideration is attributable to any error or profit margin, or employee compensation or benefits, reasonably attributable to the supply" and s. 217(b)(ii) of the definition states that the amounts are not loading. However, under the "loading" definition, "any error or profit margin, or employee compensation or benefits" is "loading". On the text, s. 217(b) of the definition can be interpreted such that no amount would come within s. 217(b)(i) because the amount is loading. This renders s. 217(b) meaningless. Will the CRA read out from the definition of "loading" the amounts referred to in s. 217(b)(i)? CRA responded:
Paragraphs (b)(i) and (ii) of the definition of specified derivative supply could be interpreted as mutually exclusive amounts. Paragraph (b) is the total of the amounts specified in subparagraph (b)(i) and amounts in subparagraph (b)(ii).
Specified Arm's Length Supply
Administrative Policy
Bulletin B-095 June 2011 "The Self-assessment Provisions of Section 218.01 and Subsection 218.1(1.2) for Financial Institutions (Import Rules)"
Example of specified non-arm’s length supply
Qualifying consideration - Permitted deduction …
For example, a qualifying taxpayer that is a non-resident FI incurred an expense for an insurance premium for property outside Canada used in part in respect of its Canadian branch. Part of the insurance premium is allocated to the Canadian branch. The insurance policy was acquired from a party that was dealing with the FI at arm's length. The amount of the premium allocated to the branch is an outlay made or expense incurred outside Canada under subsection 217.1(2). It is with respect to the qualifying taxpayer's Canadian activities and is deductible under the ITA. Therefore, the amount is included in Part A of qualifying consideration, but since the supply of the insurance policy was made by an unrelated third party it would also be deducted under Part B, and so there would not be an amount subject to self-assessment.
Specified Non-Arm's Length Supply
Administrative Policy
GST/HST Notice 287 "CRA Administrative Positions on the Application of the Import Rules for Financial Institutions to Reinsurance Contracts" January 2015.
Intent of the qualifying consideration rules is to impose tax on administrative-services component of related-party supplies and not on financial services that are fundamentally financial in nature
Finance policy intent regarding administrative expenses
It is the policy intent of the import rules that financial institutions be required to self-assess tax on the portion of a related-party supply of a financial service that is largely administrative in nature subject to the Finance policy intent concerning service level agreements that meet the criteria described below.
CRA administrative position
Subject to the position concerning service level agreements that meet the criteria described below, the amount representing that part of the reinsurance premium that may reasonably be allocated to administrative expenses, i.e., loading, including any error or profit margin specific to those expenses, is subject to tax under the import rules.
Finance policy intent regarding the margin for risk transfer
It is not the policy intent of the import rules that financial institutions be required to self-assess tax on the portion of a related-party supply of a financial service that is clearly and fundamentally financial in nature.
In the case of the amount that the insurance industry refers to as the “margin for risk transfer” portion of the reinsurance premium, the industry has stated that this amount exclusively represents the compensation paid by the primary insurer to the reinsurer over and above the “best estimate of losses” to reflect the transfer of risk to the reinsurer for potential future insurance claims under the insurance/reinsurance policy/contract, and that some or all of this amount could become profit of the reinsurer. If the margin for risk transfer is as described by the insurance industry, it is not intended to be taxed as part of “loading”.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 217 - Loading | 612 |
Commentary
Para. (c) of the “imported taxable supply” definition includes a taxable supply (other than a zero-rated supply) made outside Canada to a person who is resident in Canada.
The exclusion in subpara. (c)(ii) applies where the property supplied to the Canadian resident “may not be used in Canada.” There likely is a relevant distinction between the mere holding of property and the use of a property (see Glaxo Wellcome). Thus, if the Canadian resident acquires a right from X to receive a percentage of the monthly or annual revenues generated from sales of specified products by Y (a "royalty"), it is questionable at best that the mere right to receive such payments and their subsequent deposit to a Canadian bank account amounts to “use” of that right in Canada. This would especially be the case if X was a non-resident and the contract pursuant to which the Canadian resident acquired the royalty was governed by foreign law and the parties attorned to the jurisdiction of a foreign court insofar as the enforcment or determination of rights under the contract were concerned. Thus, the only use of such contract which would be contemplated would be the potential exercise of such rights outside Canada, so that it would be apt to consider that such property (the contract giving rise to the royalty), could not be used in Canada. Accordingly, the fact that the foreign situs contract might calculate its royalty partly by reference to sales occurring in Canada would not entail a use of that contract in Canada. There thus is a contrast between the wording of (c)(ii), which only references the situs of use of the IPP (e.g., a royalty contract) that has been supplied to the Canadian resident, and provisions such as ITA s. 212(1)(d)(v) which effectively deem a royalty under a contract to have a relevant connection to Canada where the royalty is computed by reference to the use of someone else's property in Canada (e.g., sales or production in Canada).
Furthermore, once the quantum of each monthly or annual royalty payment became calculable, that amount, if viewed as a separate property, would have become a “debt security” and thus an exempt financial instrument. It would be incongruous for the mere right to collect liquidated amounts to be considered to be such a use as would cause the preceding acquisition of the underlying royalty interest to become an imported taxable supply.