Section 142.1

Subsection 142.1(1)

Paragraph 142.1(2)(b)

See Also

Tele-Mobile Company v. The Queen, 2015 TCC 197

cellphone connection to a US telephone network, and transmission of call to Canada, were part of a seamless single supply to Canadian customer

The appellant ("Telus") operated a wireless carrier business which entailed providing roaming airtime ("RAT") services to customers, with Canadian billing addresses, who while in the U.S. made long-distance call to Canada. These calls essentially involved two steps, which were separately identified in the Telus billings:

  • The customer's phone connected with a local cellular site, and then to a mobile telephone switching office ("MTSO").
  • The MTSO connected the call to the Canadian recipient.

C Miller J found that Telus was required to charge GST on the fees it collected for both steps (rather than only the second step). As both steps constituted a single supply, that supply was deemed by s. 142.1(2)(b)(ii) to be made in Canada as that telecommunication service was received in Canada. After discussing Gestion Alger, BC Ferry and Jema, and after noting (at para. 27) that although "the RAT can be used independently of long distance charges, and therefore has a commercial efficacy as a standalone supply…that is only in the context of locally made calls" in the U.S. rather than calls from the U.S. to Canada, he stated (at paras. 35-36):

[The] integration approach, I believe, remains the essence of the single versus multiple supply. …Viewing the telecommunication service offered by Telus as a service of communication for customers to talk to another person, how that service is delivered is more akin to the delivery of pizza than provision of a separate stateroom service or vaccination service. The customer is simply paying to be able to make a call from his cell phone to Canada. The RAT and long distance service are fully and seamlessly integrated into making that happen.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Supply cellphone connection to a US telephone network, and transmission of call to Canada, were part of a seamless single supply to Canadian customer 278

Administrative Policy

CBAO National Commodity Tax, Customs and Trade Section – 2014 GST/HST Questions for Revenue Canada, Q. 27

telecommunication service not within s. 142.1 is not made in Canada
available with membership password at http://www.cba.org/CBA/sections_NSCTS/main/GST_HST.aspx

Is a supply of telecommunication services that is not deemed to be made in Canada, deemed to be made outside Canada? For example, a telephone call between persons in Canada and the U.S. is deemed to be supplied in Canada if the "two out of three" rule in s. 142.1 is met (i.e. two of the following are in Canada: place where the call is emitted; where it is received; and the billing location). If under this rule the supply is not deemed to be made in Canada, is it nonetheless deemed to be made in Canada under s. 142(1)(g) if the service is partly performed in Canada? CRA stated:

A supply of a telecommunication service as defined in subsection 123(1) that is not deemed to be made in Canada under section 142.1 is considered to be made outside Canada. Therefore, in the example given, the supply of the telecommunication service that is not deemed to be made in Canada under the relevant two-out-of-three place of supply rule in paragraph 142.1(2)(b) is considered to be made outside Canada. The supply will not be considered to be made in Canada under paragraph 142(1)(g) if the service is partly performed in Canada

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 142 - Subsection 142(1) - Paragraph 142(1)(g) telecommunication service not within s. 142.1 is not made in Canada 86