Amounts styled as "investment administration fees" received by a life insurance company in respect of segregated funds managed by it (i.e., the portion of premium revenues that were not retained in the segregated funds) were found not to be consideration for a taxable supply given that the fact that it managed the segregated funds did not necessarily imply that the segregated funds must be treated as paying consideration for those management services.

Paragraph 141.1(2)(a)

Section 132 Subsection 132(1) - Person Resident in Canada

Administrative Policy

RC4027 "Doing Business in Canada - GST/HST Information for Non-Residents" Rev. 13

A corporation that is not incorporated in Canada may still be considered to be resident in Canada under general legal principles. It is also considered to be a resident of the place where its central management and control mechanisms are located. Factors that determine whether an organization is centrally managed or controlled include the place where:

its directors live and hold their meetings;

its shareholders live and hold their meetings;

its managers live and hold their meetings; and

the organization performs its principal business and operations, and keeps its books and records.

Generally, a trust is resident in the country where the trustee who has management and control of the trust lives. If more than one trustee has management and control, the trust is resident in the country where the majority of the trustees live.

GST M 300-5 "Place of Supply"

The factors considered for income tax purposes in determining the residency of an individual provide some guidelines for determining whether he is resident for GST purposes.

Subsection 132(3) - Permanent Establishment of Resident

Administrative Policy

GST M 300-5 "Place of Supply"

A Canadian architect who has an office in the United States is not liable for GST in respect of services wholly performed in the United States in the course of activities carried on through that permanent establishment.

Subsection 132.1(2)

Administrative Policy

12 March 2013 Ruling Case No. 133588

Ruling that a charity is resident in two Provinces as it has "fixed places of activity" there, being locations that can be identified with the Charity, over which the Charity exercises control and at which the Charity carries out its on-going charitable activities on a regular and recurring basis.

Section 133 - Agreement as Supply

Cases

Fedak v. R., [1999] GSTC 65

The Appellant bought a boat for $23,000, traded in a used boat for $6,000, but was charged GST on the full $23,000.

As the agreement to buy the new boat and trade in the old boat was entered into in March 1996, the new trade-in rules (in s. 153(4)), which applied to supplies "made" on or before April 24, 1996, did not apply, with the result that the Appellant was not entitled to claim a rebate with respect to the GST charged to him on the $6,000 of the purchase price.

Attorney General of Canada v. Metropolitan Toronto Hockey League, [1995] GSTC 31 (FCA)

Stone J.A., in disagreeing with a conclusion of the trial judge that the effect of s. 133 was to deem the provision of property under an agreement to be part of one supply and not separate supplies for purposes of paragraph 25(f) of Schedule V, Part VI as it had read, found that the "and" appearing at the end of s. 133(a) signified that (a) and (b) were to be read together. As so read, the section simply indicated that where in the circumstances described in s.(a) GST must be paid, the transaction will not be subject to GST at the time the property or service is actually provided.

Administrative Policy

Excise and GST/HST News – No. 96 under "University and public college meal plans" June 2015

assimilation of supply to agreement

Sched. V, Part III, s. 13 exempts the supply, under a meal plan that is for at least one month, by universities to their students of the right to receive at least 10 meals weekly throughout the meal plan period for a single consideration. CRA considers that these requirements are not breached if there are "top-ups," i.e., the addition of funds to the plan, and that:

The tax status of a supply… is to be determined at the time the student initially enters into the agreement with the supplier and will not be affected if, at the end of the plan period, unused funds are refunded or carried over for use in the future…[or] the plan is cancelled… and unused funds are refunded.

CBAO National Commodity Tax, Customs and Trade Section – 2013 GST/HST Questions for Revenue Canada, Q. 15. ("Carrying on Business")

available with membership password at http://www.cba.org/CBA/sections_NSCTS/main/GST_HST.aspx

An unregistered non-resident enters into an agreement to supply and install a power generation facility inside Canada with the installation to take about eight months. Subsequently, it assigns the "in Canada" services portion of the contract to its Canadian subsidiary, and the parties and the Canadian subsidiary enter into a restated contract under which these respective roles are set out. In determining whether the non-resident "carries on business" in Canada, will the CRA look to the time of signing of the contract, or to its conclusion; and does the restated agreement represent a "novation" resulting in the cancellation of the original supply in favour of two new supplies by the resident and the non-resident? CRA essentially did not answer the 2^nd question, and respecting the 1^st stated:

The determination of whether a non-resident is carrying on business in Canada is generally made based on a complete set of facts at the time the non-resident enters into an agreement to make taxable supplies in Canada and those supplies are deemed to be made.

Section 135 - Sponsorship of Public Sector Bodies

Administrative Policy

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.

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.

Information for Non-Profit Organizations under "Collecting the GST" - "Sponsorships"

Section 136 Subsection 136(1) - Lease Etc. Of Property

Administrative Policy

5 December 2003 Interpretation 44874

concurrent lease qualified as lease

Lessor enters into equipment leases (the "Asset Leases") with users of the equipment (the "Asset Lessees"), who also have options to purchase the equipment. The Lessor then assigns each Asset Lease to a securitization trust (the "Lessee"), giving rise to a "Concurrent Lease" that commences on the lease date set out in the Asset Lease and ends XX months after the termination of the Asset Lease. The Lessee appoints the Lessor as the servicer. The Concurrent Lease also gives the Lessee the option to prepay rent under the Concurrent Lease for XX% of the net present value of the Asset Lease. The Concurrent Lessee is registered for GST and satisfies its obligations relating to GST on Prepaid Rent and Deferred Rent by providing the Lessor with a promissory note.

In connection with an interpretation that the Concurrent Leases would constitute an arrangement similar to a lease for purposes of s. 136(1) and the definition of "debt security" in s. 123(1), CRA stated "the form of the lease agreement should be respected where the Lessor has title to the underlying property," and that "the option to purchase granted by the Lessor does not necessarily result in a change in the characterization of the Concurrent Lease."

Subsection 136(2) - Combined Supply of Real Property

Administrative Policy

31 March 2009 Ruling 103912 [sublease of portion of nursing home to shop]

sublease of portion of nursing home to shop

OPCO constructed long-term care facilities comprising nursing homes and assisted-living facilities (collectively, the "Facilities") and sold them to LESSOR, which completed construction, and leased them back to OPCO.

CRA noted that the lease by LESSOR to OPCO of any part of a Facility which was subleased to a third party, e.g., a barber shop or hair saloon, would not form part of the residential complex and such lease would not be exempt under s. 6.1 or 6.11 of Part I of Sched. V.

Subsection 136.1(1.1)

Administrative Policy

June 2012 Draft GST/HST Technical Information Bulletin B-103

For GST/HST purposes, a recipient of a supply by way of lease, licence or similar arrangement of tangible personal property that exercises an option to purchase the property under the arrangement is, for greater certainty, deemed to take delivery of the property supplied by way of sale at the place and time at which the recipient ceases to have possession of the property as a lessee and begins to have possession of the property as a purchaser. Therefore, the place of supply rules for the sale of the tangible personal property are based on the place at which the recipient begins to have possession of the property as a purchaser rather than the place where the recipient first obtained possession of the property as a lessee.

Section 138 - Incidental Supplies

Cases

9056-2059 Quebec Inc. v. The Queen, [2011] GSTC 143, 2011 FCA 296

must have small relative value

In finding that the sale of zero-rated honey (which represented about half of the appellant's sales) was separate from, and not incidental to, the sale of access to winter skating trails and summer hiking trails, Trudel JA stated (at para. 34):

...section 138 refers to a secondary element in the sense of minor or non-essential....[I]t is not enough for the supply or service to be secondary; this supply or service must also be of small value in relation to the principal activity.

Camp Mini-Yo-We Inc v. The Queen, 2006 FCA 413

no application where already a single supply

The program at a Christian camp interwove religion with all aspects of daily life at the camp. The religious, and recreational and athletic services supplied by the camp were a single supply, so that section 138 had no application.

Administrative Policy

December 2003 Memorandum Case No. 41678

Given that the seller of mortgages on a fully-serviced basis was reporting separate servicing fee income, it was appropriate to consider that the sales were not being made for a single consideration, so that ss.138 and 139 did not apply.

7 September 2000 Ruling 11830-1B (Case 26962)

A supply of booth space together with chairs and tables to exhibitors by a registered charity hosting a conference relating to its objects was deemed in light of s. 138 to be a single supply of real estate which was exempt, given "that the provision of the tables and chairs does not materially affect the amount of consideration charged." CRA stated:

we consider a supply to be incidental to a particular supply if the supplier's primary objective is to provide the particular supply, and if the consideration would be the same or only marginally different if only the particular supply were made.

P-160 "Meaning of the Phrase 'where a particular property is supplied together with any other property or service'" (draft).

"Meaning of the Phrase 'reasonably regarded as incidental'" (draft).

Guide for Providers of Financial Services under "Mixed Supplies of Property and Services"

Section 138 does not apply if a separately identifiable charge is made for the incidental supply. "An incidental supply of a property or service refers to a supply that may be made casually, occasionally, pertaining to or subordinate to another principal supply of property or services".

31 July 2002 Headquarter Letter 37094

Amounts collected by a securitization trust from purchased mortgages were first allocated to cover certain expenses, then allocated to payment of the purchase price from the vendor and then any amounts left over were paid to the vendor. Since the amounts left over were not in respect of the consideration for the purchase, they were viewed as being in respect of a separate consideration for the supply of administration services. Accordingly, ss.138 and 139 were not applicable as the single consideration criterion contained in those sections had not been satisfied.

Articles

Brent F. Murray, "Multiple Supplies and Incidental Supply Rules", Canadian GST Monitor, No. 281, February 2012, p. 1

Notes that the 9056-2059 decision did not reference the discussion of "incidental in Canadian National Railway v. Harris, [1946] S.C.R. 352.

S. Aylward, D. Gresdal, "GST Treatment of Adjustments on Real Estate Closings", GST & Commodity Tax, Vol. XII, No. 8, October 1998, p. 59.

Tetreault, "Canadian Tax Aspects of Asset Securitization", 1992 Conference Report, p.23:31.

Section 139 - Financial Services in Mixed Supply

Administrative Policy

8 February 2002 Headquarters Letter 37008 (See also 9 January 2002 Headquarters Letter 37015)

"As a result of an extensive review of the industry, it is our finding that most of the securitization agreements contemplate a separate fee for servicing which is clearly distinguishable from the purchase price of sold mortgages. Therefore, where there is a consideration for the sale of a mortgage and a separate consideration for mortgage servicing, sections 138 and 139 of the ETA are not available to characterize the tax status of any servicing fee."

14 May 1999 Headquarters Letter HQR 0001500

Fees received for distributed mutual fund units were consideration for a single supply notwithstanding that customer services also were provided.

Guide for Providers of Financial Services under "Mixed Supplies of Property and Services"

Where the value of each property or service is not identified separately on an invoice for a mixed or bundled supply, the registrant will be required to determine the principal nature of the supply. When a financial service constitutes less than 50% of the bundled supply, the consideration should be apportioned reasonably.

Articles

J. Spencer, "GST and PST Implications of Outsourcing Corporate Services", Sales and Use Tax, Vol. IV, No. 1, 1998, p. 182.

Section 140 - Supply of Membership With Security

Articles

McLachlin, "Membership Fees Paid by Security", Canadian Current Tax, February 1995, Vol. 5, No. 5, p. 43.

Section 141 Subsection 141(1) - Use in Commercial Activities

Administrative Policy

Guide for Providers of Financial Services under "Input Tax Credits" - "Calculation Rules"

Substantially all is interpreted to mean 90% or more.

Subsection 141(3) - Use in Other Activities

Articles

J. Spencer, "Backdating Registration: Can It Be Done?", Sales and Use Tax, Vol. III, No. 2, 1997, p. 146.

Subsection 141.1(1)

Paragraph 141.1(3)(a)

Administrative Policy

CBAO National Commodity Tax, Customs and Trade Section – 2013 GST/HST Questions for Revenue Canada, Q. 23 ("Pre-incorporation Contract")

available with membership password at http://www.cba.org/CBA/sections_NSCTS/main/GST_HST.aspx

In response to a question on pre-incorporation contracts, CRA stated:

To the extent that the adoption of a pre-incorporation contract is in connection with acquiring or establishing the commercial activities of a newly formed corporation, paragraph 141.1(3)(a) of the ETA will deem the adoption of that contract to be done in the course of the corporation's commercial activities.

15 November 2011 Headquarters Letter Case No. 135608

Where a "capital pool company" raises capital pursuant to a prospectus on a blind pool basis in order to invest in a company or make an asset acquisition, it will not be considered to be engaged in commercial activity (and, therefore, will not be entitled to register) until it has identified a particular asset acquisition. However, once it has identified an acquisition of assets that will be used in a commercial activity, anything done by the CPC (other than the making of a supply) in connection with the acquisition or establishment of that commercial activity shall be deemed to have been done in the course of the commercial activities of the CPC. Where the targeted acquisition instead is of a corporation, an input tax credit generally only will be available to the extent that the requirements of s. 186(2) are satisfied.

Paragraph 141.1(3)(b)

Subsection 141.01(1.1)

Subsection 141.01(2)

Cases

London Life Insurance Co. v. The Queen, [2000] GSTC 111, Docket: A-581-98 (FCA)

leasehold construction services were acquired for supply of leasehold improvements to landlord

The appellant, whose principal business was the provision of financial services, received tenant inducement allowances from its landlords, which were earmarked to fund the cost to it of making leasehold improvements. The appellant charged GST on the allowances and claimed input tax credits on the costs of the related leasehold improvement work.

Before concluding that full ITCs were available under s. 169(1)(c) because the appellant was supplying the leasehold improvements to the landlords for the leasehold improvement allowances, which was a commercial activity, Rothstein JA stated (at para. 25):

[S]ubsection 141.01(2) assist London Life. ... The endeavour here is the supplying of leasehold improvements to the landlords, i.e. the making of a supply of real property. London Life acquired the construction inputs for the purpose of providing taxable supplies, i.e. leasehold improvements to its landlords for consideration, i.e. the tenant improvement allowances. London Life is therefore deemed to have acquired the construction inputs for the leasehold improvements for use in the course of a commercial activity.

Administrative Policy

1 May 2015 Ruling 164658 [non-creditable legal services in obtaining compensation for lost business income]

non-creditable legal services in obtaining compensation for lost business income

The registrant, who operated a taxi business, ceased to earn income from that business for two years as a result of an accident sustained while operating the taxi. Is the registrant entitled to ITCs for the HST on the account of a law firm who acted on his action and were successful in obtaining a settlement? In ruling that no ITC was available, CRA stated:

[S]ubsection 141.01(2) provides that a person is deemed to have acquired property or a service for consumption or use in commercial activities only to the extent that the property or service is acquired for the purpose of making taxable supplies for consideration (e.g., fees or charges) in the course of an endeavour (e.g., a business) of the person. …

The settlement amount paid to you was compensatory. As the Law Firm's services were acquired by you for consumption or use otherwise than in making taxable supplies for consideration, the conditions of subsection 169(1) are not met.

Memorandum 8-1 "General Eligibility Rules" 10 May 2005

27. Where property or a service is consumed or used partly in the course of a person's commercial activities and partly in its non-commercial activities (less than 90%, but more than 10% in its commercial activities), the person must apportion the GST/HST for the property or service between these two activities. Specifically, the person may be eligible to claim an ITC for the portion of the GST/HST paid or payable for the property or service that relates to its consumption or use in its commercial activities as long as all the other ITC criteria are satisfied. As noted below, this apportionment is based on the extent to which the property or service is used to make taxable supplies for consideration (which in this context does not include nominal consideration). ...

34. The rule regarding the purpose of making taxable supplies in subsections 141.01(2) and 141.01(3) is identical except that the former applies to intended consumption and use and the latter applies to actual consumption and use. The rule in subsection 141.01(3) is pertinent to those provisions (e.g., change-in-use rules for capital property) that depend on whether, and to what extent, properties and services are, at any particular time, consumed or used in commercial activities.

9 July 2004 Interpretation 41811

full allocation of leasehold improvement costs to leasehold improvements allowance to the extent thereof

A tenant receives a leasehold improvements allowance from its landlord that is in excess of the leasehold allowance to be provided by the landlord. GST is charged on the leasehold allowance.

CRA found that the tenant was entitled to full input tax credits to the extent of the amount of its improvement costs equal to the allowance, and that the balance was to be allocated based on its commercial and exempt use of the premises.

26 March 2001 T.I. 32764

The provisions for determining extent of use in ss.141 and 141.01(2) and (3) apply only to inputs that are used or consumed or acquired to be used or consumed and not to inputs that are acquired for a supply (e.g., acquired for supply by way of sale).

13 December 2000 Ruling 20001213

Respecting the fee paid by a corporation to a financial advisor regarding strategic alternatives for the enhancement of shareholder value including a potential sale of its shares or assets, the CCRA indicated that the costs did not appear to be incurred for the purpose of making taxable supplies for consideration but, rather, for the purpose of enhancing shareholder value. As no separate fee was charged for providing a fairness opinion, no ITC was available for any portion of the amount paid.

14 July 1999 Memorandum HQR0001244

"Property or services acquired ... by a corporation in fulfilling obligations under a securities or corporations Act in producing circulars for shareholders concerning takeover bids, would generally be considered to have been incurred for the purpose of making supplies for consideration in the course of the corporation's endeavour ... . Please note ... it is widespread business practice to retain professional advice in the event of a take-over bid and this will generally be treated by the courts as a normal cost of doing business."

16 February 1994 Headquarters Letter 940216

A Canadian limited partnership which had raised capital to acquire units in a U.S. limited partnership and which sourced film rights to be purchased by the U.S. limited partnership was, in respect of that activity, engaged in a commercial activity. However, it would "have difficulty establishing a connection between the activity of seeking out and recommending films to invest in and the financial services provided to Canadian investors and the U.S. limited partnership with respect to the raising and investing of funds".

It was further noted that section 141.01 "does not say anything about what it constitutes a commercial activity but merely reinforces the requirement to allocate inputs between taxable and exempt supplies".

Subsection 141.01(3)

Subsection 141.01(5)

Cases

CIBC World Markets Inc. v. The Queen, 2011 FCA 270

The registrant used one methodology for computing its input tax credit claims in its 1998 and 1999 GST returns for those years, then in its 2000 GST return claimed additional input tax credits in respect of costs incurred in 1999 and 1998 based on a revised methodology (which was also acknowledged by the Minister to be fair and reasonable).

In finding that the additional ITC claims of the registrant were permitted, and rejecting the Minister's submission that selecting one methodology should preclude the registrant from later switching to another methodology in respect of the same taxation year, Stratas J.A. stated (at para. 42):

When an election is to be made and when it is irrevocable, Parliament's practice is to use express words in the GST provisions of the Act. There are no express words of irrevocable election concerning the taxpayer's choice of method.

Moreover, s. 225(3) contemplated "that more than one claim for a taxation year may be made at different times as long as the same amount is not claimed twice" (para. 33).

Royal Canadian Legion, Vincent Massey Branch No. 164 v. The Queen, [1996] GSTC 98 (TCC)

A hall included in the registrant's premises was used partly for making taxable supplies (rentals) and partly for making exempt supplies (bingo sessions and meetings of the members or its executives). The registrant's method of claiming input tax credits and overhead costs effectively assumed that the premises were used in commercial activity except when they are actually used for the exempt activities. Beaubier TCJ. found that this method of allocation was unreasonable, and accepted the Minister's method of allocation which was based on the registrant's history of purchases of supplies for exempt and non-exempt purposes.

Administrative Policy

Memorandum (New Series) 8-3 "Calculating Input Tax Credits" August 2014

46. … If a particular method accurately reflects the purpose for which the property or service was acquired, the method would be fair and reasonable.

Example 1

A public institution has a mandate to provide exempt supplies. The public institution's revenues are as follows:

95% government funding (that is not consideration for a supply) to assist in its mandate;

0.5% consideration charged to persons who receive exempt supplies; and

4.5% consideration for taxable supplies which are made to provide additional funding to support its mandate.

The public institution used a revenue-based ITC allocation method (i.e., an output-based method) which did not include the amount of government funding in the calculation and claimed ITCs equal to 90% (4.5%/5%) of the GST/HST paid or payable on taxable inputs.

If the public institution claimed ITCs based on the purpose for which it acquired its inputs it would claim ITCs equivalent to 2.18% (2% + 0.18%) of the tax paid or payable on all taxable inputs based on:

2% of taxable inputs are for use exclusively for the purpose of making taxable supplies for consideration;

88% of taxable inputs are for use exclusively for the purpose of making exempt supplies; and

10% of taxable inputs are for use both for the purpose of making taxable supplies for consideration and for either the purpose of making exempt supplies or for a purpose other than making supplies:

85% of the mixed-use inputs are for use less than 10% in commercial activities and are not eligible for ITCs;

15% of the mixed-use inputs are for use 12% for the purpose of making taxable supplies for consideration and 88% for the purpose of making exempt supplies and for purposes other than making supplies.

...If a revenue-based ITC allocation method is appropriate in the circumstances, excluding the government funding revenue from the denominator in the calculation would not be fair and reasonable because government funding may be the greatest source of revenue for the public institution and that revenue is used to purchase inputs, including taxable inputs that are used in making exempt supplies. In this example, as 88% of taxable inputs are used exclusively for the purpose of making exempt supplies, a method that results in the public institution claiming 90% of the GST/HST paid or payable on those inputs as ITCs is not a fair and reasonable allocation method for those inputs.

Subsection 141.01(7)

Administrative Policy

Excise and GST/HST News - No. 93 16 October 2014

Although a public sector body that is a GST/HST registrant is not required to collect tax on sponsorship funds that meet the above conditions for section 135 to apply, this does not affect the public sector body's eligibility to claim an ITC on related expenses.

Subsection 141.02(1)

Direct Input

Subsection 141.02(12)

Section 142 Subsection 142(1) - General Rule — in Canada

Administrative Policy

P-193R "Supplies of Tangible Personal Property Otherwise than by Way of Sale"

P-078R "Meaning of the Phrase 'Delivered or Made Available in (or Outside) Canada to the Recipient

P-200R "Place of Supply of Intangible Personal Property and Real Property"

GST M 300-5 "Place of Supply"

General discussion.

Paragraph 142(1)(a)

Administrative Policy

13 June 2011 Headquarters Letter Case No. 133042

Incoterm delivery terms

In finding that a supply of goods shipped by a non-resident supplier to a GST/HST registrant at an address in a participating province was a supply made in Canada and in that province , CRA stated:

...the phrase "delivered or made available" has the same meaning as that assigned to the concept of "delivery" under the general law of the sale of goods. It is not based on the place where title to the goods transfers....If an Incoterm is used...the place where legal delivery of the goods occurs can be determined by reference to the place where delivery is considered to occur under that Incoterm.

16 February 2005 Ruling Case No. 46992

A non-registrant who designed book covers and arranged for books, with the designed covers, to be printed by a printer and shipped directly to clients, was found to have the books made available to him or her when the books were delivered to a carrier for the purpose of transmission to the clients. Accordingly, there was a supply of such books in Canada.

GST/HST Memorandum 3.3 "Place of Supply" April 2000

Meaning of the phrase "delivered or made available"..

7. For purposes of paragraphs 142(1)(a) and 142(2)(a) which deem supplies of tangible personal property by way of sale to be made in Canada or outside Canada, the phrase "delivered or made available" has the same meaning as that assigned to the concept of "delivery" under the law of the sale of goods, as follows:

"Delivered" refers to those situations where delivery of the tangible personal property under the applicable law of the sale of goods is effected by actual delivery.

"Made available" refers to those situations where delivery of the tangible personal property under the applicable law of the sale of goods is effected by constructive delivery (i.e., actual physical possession of the tangible personal property is not transferred to the recipient of the supply yet is recognized as having been intended by the parties and as sufficient in law). For example, situations arise where a person sells tangible personal property to another person and agrees to hold the property as bailee for the buyer.

Contract governed by the Convention

11. In those cases where the contract between the parties is governed by the United Nations Convention on Contracts for the International Sale of Goods (Convention), the place where the tangible personal property is delivered or made available will have to be determined in accordance with the rules relating to delivery contained in the Convention rather than in accordance with the domestic law of any province.

Articles

Brent F. Murray, "Incoterms 2010 Rules and Place of Delivery", Canadian GST Monitor, No. 274, July 2011, p.1.

Common law meaning of delivery

Under common law, delivery occurs when and where the goods are placed under the dominion and control of the

person receiving the goods. ...[I]n the absence of evidence to the contrary, delivering goods to a carrier for purposes of shipping the goods to the buyer will constitute delivery to the buyer, since the carrier is presumed to be the bailee or agent of the buyer, irrespective of who contracts with the carrier.

List of Incoterms

[T]here are 11 specific Incoterms rules, as follows:

Group E: EXW (Ex Works).

Group F: FCA (Free Carrier), FAS (Free Alongside Ship), FOB (Free on Board).
Group C: CFR (Cost and Freight), CIF (Cost, Insurance and Freight), CPT (Carriage paid To), CIP (Carriage and Insurance Paid To).

Group D: DAT (delivered at terminal), DAP (delivered at place) and DDP (delivered duty paid).

C Incoterms

The C-terms may present some difficulties, since only the point of destination is mentioned after the respective term: for example, in contract of sale concluded between a buyer in New York and a seller in London, only New York is likely to be mentioned after the C-term, with nothing usually being said about shipment from London. Obviously, this can give rise to the false impression that the goods are to be delivered in New York and that the seller has not fulfilled his obligation until they have in fact been delivered there.

Incoterms not necessarily binding on CRA

As indicated by the CRA in GST Ruling No. 103662, dated November 26, 2008, the use of a particular Incoterms rule will generally dictate the location where delivery occurs:

When an Incoterm has been used in an agreement/purchase order/contract (not necessarily contained within a specific "delivery" clause) in accordance with its intended circumstances (such as set out under Incoterms 2000), that Incoterm will generally, subject to any evidence to the contrary, be used to dictate where the TPP is delivered or made available for the purposes of section 142 of the Act.
However, in the event that the Incoterms rule referenced in the contractual documents does not correspond with the parties' intentions, then the parties may be placing undue reliance on a particular Incoterms rule to determine such things as the place of supply and which party is responsible for paying import duties. In this situation, as explained in Question No. 18 from the February 24, 2000 GST Roundtable Meeting with the Canadian Bar Association (Sales & Commodity Tax Section), the CRA may determine that the place of delivery occurs in a different place, as follows:

In the scenario described above, the terms are that delivery is FOB the non-resident's place of business. The term F.O.B. a designated point generally means that the buyer is responsible for the shipment of the goods from that point onward. While the seller may arrange for the carriage of goods, it is the buyer that settles the carrier's account in such cases. Delivery to a carrier is considered to be delivery to the buyer in such a case, if the seller in fact gives possession of the goods to the buyer through the buyer's intermediary (the carrier). Consequently, where the contract calls for delivery on an F.O.B. basis and this is in fact what occurs, the place of delivery will be the place specified in the contract.
In the example at hand, while the terms are F.O.B. the non-resident's place of business, the non-resident not only arranges for the shipping, but also pays to have the goods shipped to the recipient in Canada, indicating that actual delivery is in Canada. [emphasis added]

Incoterms 2000

Term	Delivery meaning
EXW (Ex Works)	The seller delivers when he places the goods at the disposal of the buyer at the seller's premises or another named place (i.e. works, factory, warehouse, etc.) not cleared for export and not loaded on any collecting vehicle.
FCA (Free Carrier)	The seller delivers the goods, cleared for export, to the carrier nominated by the buyer at the named place.
FAS (Free Alongside Ship)	The seller delivers when the goods are placed alongside the vessel at the named port of shipment.
FOB (Free On Board)	The seller delivers when the goods pass the ship's rail at the named port of shipment.
CFR (Cost and Freight)	The seller delivers when the goods pass the ship's rail in the port of shipment.
CIF (Cost Insurance and Freight)	The seller delivers when the goods pass the ship's rail in the port of shipment.
CPT (Carriage Paid To)	The seller delivers the goods to the carrier nominated by him but the seller must in addition pay the cost of carriage necessary to bring the goods to the named destination.
CIP (Carriage and Insurance Paid To)	The seller delivers the goods to the carrier nominated by him, but the seller must in addition pay the cost of carriage necessary to bring the goods to the named destination.
DAF (Delivered At Frontier)	The seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport not unloaded, cleared for export, but not cleared for import at the named point and place at the frontier, but before the customs border of the adjoining country.
DES (Delivered Ex Ship)	The seller delivers when the goods are placed at the disposal of the buyer on board the ship not cleared for import at the named port of destination.
DEQ (Delivered Ex Quay)	The seller delivers when the goods are placed at the disposal of the buyer not cleared for import on the quay (wharf) at the named port of destination.
DDU (Delivered Duty Unpaid)	The seller delivers the goods to the buyer, not cleared for import, and not unloaded from any arriving means of transport at the named place of destination.
DDP (Delivered Duty Paid)	The seller delivers the goods to the buyer, cleared for import, and not unloaded from any arriving means of transport at the named place of destination.

Paragraph 142(1)(b)

Administrative Policy

GST/HST Memorandum 3.3 "Place of Supply" April 2000

Terms of the agreement

16. The place where possession or use of the tangible personal property is given or made available can be determined based on the location of the property at the time the supply is made (i.e., at the time the agreement is entered into). Generally, the location can be determined by reference to the terms of the agreement (e.g., lease or rental agreement). In those instances where there is no agreement or the terms of the agreement are not conclusive, it is necessary to look to the actions of the parties.

Lease etc. of property ss 136.1(1)

17. Where property is supplied by way of lease, licence or similar arrangement, and consideration is paid on a periodic basis (lease interval), a separate supply is deemed to occur in respect of each lease interval. The CCRA's position is that, for purposes of paragraphs 142(1)(b) and 142(2)(b), possession or use of the tangible personal property is given or made available only once under the lease agreement. This point in time is at the beginning of the lease.

19. The ... test of whether a supply of property by way of lease, licence or similar arrangement is made in or outside Canada continues to be a once-and-for-all test that is irrespective of the separate-supply rule [in s. 136.1(1)]. In the case of tangible personal property, the determination would generally be based on where legal delivery of the property was made to the recipient under the terms of the arrangement ... . This determination would govern whether all the deemed supplies made under the arrangement was considered to be made in or outside Canada, irrespective of whether the property was situated in Canada during some lease intervals and outside Canada during others.

Paragraph 142(1)(c)

Administrative Policy

18 May 2011 Headquarters Letter Case No. 123947

a resort developer supplies memberships that entitle a member to use certain real property at one or more resort locations located in Canada and outside Canada, namely, the right to use a villa or condominium at one of the resorts. The resort developer also may supply a number of points to be redeemed each year for the use of a unit.

CRA declined to comment on whether the supply of memberships or points was a supply of intangible personal property or real property in the absence of being provided with the relevant agreements other than to say that if the supply of points gave the recipient only the right to use real property, the supply would be considered as a supply of real property for GST/HST purposes.

4 February 2012 Ruling Case No. 99181

A resident supplier agrees to supply an unregistered non-resident recipient with the non-exclusive use rights to information belonging to the supplier for an up front payment as well as and contingent payments for a number of the succeeding years.

As the Agreement contains no terms or conditions with respect to the location of the use of the rights, the supply is deemed by s. 142(1)(c) to be made in Canada. However, it is zero-rated under Sched. VI, Pt. V, s. 10.1.

15 October 2004 Ruling RITS 52698

In connection with rulings on the consequences of the seizure by creditors and resale by them of resort points, the Directorate noted that the portion of sold resort points that was considered to be supplied in Canada was determined by prorating the consideration payable by a recipient of resort points based on the extent to which the resort points represented a right to use real property situated in Canada. The parties made this determination by calculating, at the time of sale, the ratio of Canadian points (namely, resort points issued by the Club in respect of real property in Canada) available for sale, to the total number of World points available for sale.

15 October 2004 Headquarter Letter RITS 52554

Where there is a supply of resort points (a form of intangible personal property) relating to real property situated in and outside Canada, it is the position of CRA that GST will apply (including on a sale by a U.S. or other non-resident entity) only to the extent that the intangible personal property relates to real property in Canada at the time consideration for the intangible personal property becomes due. In determining what is a reasonable allocation:

"One method that is fair and reasonable is to determine the total resort points remaining available for sale by X and the U.S. entities (as issued by the Club) in respect of property situated in Canada (Canadian points) and the total resort points that were issued by the Club remaining available for sale by X and the U.S. entities in respect of all properties throughout the world (World points) at the time points are sold."

19 December 2003 Headquarters Letter Case No. 45870

Charges for electrical capacity, if regarded as consideration for a supply separate from a supply of electricity, would represent consideration for intangible personal property (rather than tangible personal property as would be the case for a supply of electricity) and, therefore, would not be eligible for zero-rating, and would be governed by s. 142(1)(c) rather than (a).

30 March 2001 T.I. 13555

The supply to Canadian clients by a non-resident registrant of the right to access and use existing information or data stored in a website would generally be considered to be a supply of IPP that may be used in whole or in part in Canada, with the result that the supply would be made in Canada.

Paragraph 142(1)(g)

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

S. 142.1 provides a "two out of three" rule for deeming a telecommunication service to be made in Canada - for example, in the case of a telephone call, if two of the following are in Canada: place where the call is emitted; where it is received; and the billing location. CRA considers a telecommunication service, that is not deemed to be made in Canada under this rule, to be made outside Canada, even if that service is partly performed in Canada. See summary under s. 142.1(2)(b).

8 October 2004 Headquarter Letter RITS 53429

The supply of advertising space sold in the Canadian edition of a magazine would be considered to be a supply made in Canada as the magazines were circulated in part to newsstands and subscribers in Canada. However, zero-rating under section 8 or section 7 of Part V of Schedule VI potentially would be available where there was a non-resident advertiser.

31 October 2003 Interpretation Case No. 46235

A non-resident registrant ("ForCo") is engaged in the publication and sale of various magazine which are sold both by subscription and on newsstands in all provinces in Canada, with the Canadian circulation representing between 1% and 10% of the total circulation, depending on the title. "Although ForCo is not involved in the creation or design of the advertising message, its provision of advertising space in magazines is considered to be a service of communicating the message and therefore a supply of an advertising service. As these magazines are circulated in part to newsstands and subscribers in Canada, the advertising service supplied by ForCo is made in Canada."

31 October 2003 Interpretation Case No. 41478

Advertising messages provided by a non-resident appeared in a magazine that was distributed in part in Canada. Accordingly, the advertising service was considered to be performed in part in Canada with the result that it was deemed under s. 142(1)(g) to be a supply made in Canada.

Technical Information Bulletin B-090 "GST/HST and Electronic Commerce" July 2002

Although traditionally, the place of performance has referred to where the person who is performing the service is physically present, where electronic commerce allows a service to be performed remotely (e.g., by remotely accessing a customer's computer located in Canada), it also is necessary to take into account the location of the customer's property.

Subsection 142.1(1)

Paragraph 142.1(2)(b)

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

Section 143 Subsection 143(1) - Supply by Non-Resident

Administrative Policy

"GST/HST In Electronic Commerce", CCRA Discussion Paper, November 2001.

GST M 300-5 "Place of Supply" under "Supply Made by a Non-Resident"

A non-resident person who gives seminars in Canada and charges a fee directly to each participant is required to collect an account for GST.

GST M 200-1-1 "Carrying on Business in Canada"

Policy Statement P-051R2 "Carrying on Business in Canada" 29 April 2005

In leasing transactions, the most important factors generally are where the lessor acquires the property and it is delivered to the lessee.

Example 2: equipment is leased and delivered outside Canada and then imported by the lessee, who is responsible for maintaining the equipment and makes payments to the lessor in Canada who has a Canadian bank account but otherwise not much Canadian presence - lessor is not carrying on business in Canada.
Example 3: the lease agreement is concluded in Canada and equipment delivered to lessee at its Canadian facility. Payments are made in Canada to the lessor who has a Canadian bank account but otherwise does not have much presence in Canada - lessor is carrying on business in Canada.
Example 6: lessor is carrying on business in Canada by virtue of a net lease of Canadian real estate.

In services contracts, the the location of performance of the services is important. Isolated transactions in Canada may not result in carrying on business in Canada (e.g., Example 18 - one employee week in Canada).

Subsection 143(2)

Administrative Policy

GST M 300-5 "Place of Supply" under "Supply Made by a Non-Resident"

The combined effect of ss.143(2) and 240(4) is to ensure that imports are placed on an equal footing with domestic goods. For example, foreign publishers are required to account for GST on their subscription sales in Canada on the same basis as domestic publishers.

Section 144 - Supply Before Release

Administrative Policy

CBAO National Commodity Tax, Customs and Trade Section – 2014 GST/HST Questions for Revenue Canada, Q. 33

s. 144 applies only if importation before agreement

available with membership password at http://www.cba.org/CBA/sections_NSCTS/main/GST_HST.aspx

Respecting the situation where goods are delivered or made available, in accordance with Incoterms, after the goods are imported but before Customs release, CRA stated:

Section 144 will not deem the supply of goods to be made outside Canada if the agreement for the supply has been entered into before the goods are imported. This includes where the goods are delivered or made available in Canada to the recipient in accordance with an Incoterm after the goods are imported and before their release.

....[T]he relevance of the timing of when a supply is made under section 133...to the application of section 144 is reflected in the wording of the definition of a "specified supply" [in s. 178.8(1) WHICH ] distinguishes between a supply of goods that are imported after the supply is made, and a supply of goods that have been imported in circumstances in which section 144 [applies]... .

CBAO National Commodity Tax, Customs and Trade Section – 2014 GST/HST Questions for Revenue Canada, Q. 32

non-application where sales agreement before importation

available with membership password at http://www.cba.org/CBA/sections_NSCTS/main/GST_HST.aspx

Under the "PARS" program, the goods are "reviewed" in transit but the goods cannot be released until their arrival as the CBSA has to decide whether to inspect the goods or release them without inspection. For example, for transport by truck, where delivery is stated to occur when the goods enter Canada at the "frontier" but the goods are not yet released, is the supply outside Canada? Alternatively, where goods arrive by vessel subject to the Incoterm "DEQ" and the goods have not yet been released when the goods are at the dock, is the supply made outside Canada? CRA stated:

[I]n order for section 144 to apply…[t]he goods must not only be delivered or made available to the recipient in Canada before their release…[but] the goods must also have been imported in compliance with the Customs Act or any other Act of Parliament that prohibits, controls, or regulates the importation of goods before the supply is made. Under section 133, the supply of the goods is deemed to be made when the agreement for the supply of the goods is entered into. Therefore, section 144 will not apply if the goods have not been imported before the agreement for the supply is entered into.

Articles

Brent F. Murray, "Drop Shipments and Imports: Potential Pitfalls", Canadian GST Monitor, No. 287, August 2012, p. 1

"CRA is of the view that section 144 applies only if goods have been imported before there is an agreement to supply the goods." States (p. 5) that this "interpretation is questionable."

Section 144.01

Cases

Tenaska Marketing Canada v. R., [2006] GSTC 66 (FCTD)

The Canada Board of Services Agency assessed the registrant GST with respect to shipments of natural gas made by the registrant to customers in eastern Canada via the Great Lakes Pipeline, which crossed from Manitoba into Minnesota and back into Canada at Sault Ste. Marie or St. Clair, Ontario. The matter was referred back to the CBSA for reconsideration in light of s. 144.01, because the CBSA had not considered this provision in its determination to assess GST with respect to the natural gas coming into Ontario.

Subsection 145(1)

Articles

McLachlin, "Partners in Commercial Activity", Canadian Current Tax, Vol. 6., No. 5, February 1996, p. 46.

Subsection 145(2)

Articles

McLachlin, "Corporate Partners - The Financial Instrument Dilemma", Canadian Current Tax, Vol. 5, No. 12, September 1995, p. 120.

Section 149 - Financial Institutions

Subsection 149(1) - Financial Institutions

Paragraph 149(1)(a)

Administrative Policy

Memorandum 17-6 "Definition of ‘Listed Financial Institution'" July 2014

Dealer/broker examples

8. Subparagraph 149(1)(a)(iii)…generally includes a person whose principal business is that of an investment dealer, stock and bond broker, securities trader, or an insurance agent or broker.

Meaning of "principal"

11. … CRA considers that "principal" refers to the person's chief or main business activity.

"Credit union"

15. The term "credit union" includes a caisse populaire. [See 17.8]

Non-licensed "insurer"

17. A person who is not an insurer as defined… but whose principal business is providing insurance under insurance policies is also a listed financial institution…[f]or example, a person whose principal business is issuing…accident and sickness insurance… .

Money-lender examples/Fincos

21. Generally…a finance company, acceptance company, factor, venture capitalist, or a loan, mortgage, or investment company is…[included] in subparagraph 149(1)(a)(viii)…[as is a] person whose principal business is lending money to related corporations or purchasing debt securities from related corporations…[as s.] 149(4) does not apply for purposes of determining whether the person is a listed financial institution… .

Guide for Providers of Financial Services under "Listed Financial Institutions"

General synopsis of definition of listed financial institution.

Paragraph 149(1)(b)

Administrative Policy

Memorandum (New Series) 17.7 De Minimis Financial Institutions February 2013

Meaning of separate charge

13. A separate fee or charge for a financial service refers to an amount separate from the financial service. …[I]f for example,… a manufacturing company charged a fee for providing a loan to its customers, such a fee would be considered to be a separate fee or charge for a financial service

Partnerships included

15. …[A]mounts used to calculate a partnership's income under section 96 of the Income Tax Act for a particular taxation year should also be used to calculate the partnership's revenue amounts for purposes of the de minimis threshold tests.

Zero-rated precious metal sales included

25. If a refiner's revenue from zero‑rated supplies of precious metals were included in its financial revenue, the ratio of the refiner's financial revenue to total revenue could be relatively high, which could result in the refiner meeting the first de minimis threshold test. …

GST M 700-4 "De Minimis Financial Institutions"

Guide for Providers of Financial Services under "Listed Financial Institutions"

Whether income from interest and dividends is income from a business or property is a question of fact which depends on all the relevant facts and circumstances.

Paragraph 149(1)(c)

Administrative Policy

Memorandum (New Series) 17.7 De Minimis Financial Institutions February 2013

Secondary bond purchases generate good interest

35. However, if a person purchases bonds on the secondary market (that is, from a person other than the issuer of the bonds or an agent thereof), the person is not considered to have lent money to the bond issuer.

Cash generates bad interest

Example 3

. … [I]nterest earned from [for example, a manufacturer's] bank accounts and Guaranteed Investment Certificates is considered to be interest with respect to making advances, lending money or granting credit and is included in the calculation of the de minimis threshold test under paragraph 149(1)(c).

Articles

Brent F. Murray, "De Minimis Financial Institutions", Canadian GST Monitor, No. 280, January 2012, p. 1:interest earned on bonds purchased from a previous holder is not included.

Subsection 149(2) - Amalgamations

Administrative Policy

Guide for Providers of Financial Services under "Listed Financial Institutions"

General synopsis of ss.149(2) and (3).

Subsection 149(3) - Acquisition of Business

Administrative Policy

Memorandum 17-6 "Definition of ‘Listed Financial Institution'" July 2014

FI v. listed FI

30. …[W]here a person acquires a business as a going concern from a person who, immediately before that time was a financial institution, the person acquiring the business is considered to be a financial institution for the remainder of the taxation year if the acquired business is continued as the purchaser's principal business immediately after the purchase. However, the person acquiring the business would be considered to be a listed financial institution only if it is a person referred to paragraph 149(1)(a).

Subsection 149(4) - Exclusion of Interest and Dividend

Administrative Policy

Memorandum (New Series) 17.7 De Minimis Financial Institutions February 2013

Meaning of separate charge

13. A separate fee or charge for a financial service refers to an amount separate from the financial service. …[I]f for example,… a manufacturing company charged a fee for providing a loan to its customers, such a fee would be considered to be a separate fee or charge for a financial service

Partnerships included

15. …[A]mounts used to calculate a partnership's income under section 96 of the Income Tax Act for a particular taxation year should also be used to calculate the partnership's revenue amounts for purposes of the de minimis threshold tests.

Partnership interest revenues not excluded

22. Since the exclusion in subsection 149(4) applies only to interest or dividends received from a corporation related to the person, interest that a person receives from a partnership must, therefore, be included in calculating financial revenue.

Interest revenue from partner excluded

23. However, under subsection 126(3), a member of a partnership is deemed to be related to the partnership. Therefore, interest paid by a corporate partner to the partnership would be excluded from the calculation of a partnership's financial revenue, for the purposes of either de minimis threshold test.

Zero-rated precious metal sales included

25. If a refiner's revenue from zero‑rated supplies of precious metals were included in its financial revenue, the ratio of the refiner's financial revenue to total revenue could be relatively high, which could result in the refiner meeting the first de minimis threshold test. …

Secondary bond purchases generate good interest

35. However, if a person purchases bonds on the secondary market (that is, from a person other than the issuer of the bonds or an agent thereof), the person is not considered to have lent money to the bond issuer.

Cash generates bad interest

Example 3

… [I]nterest earned from [for example, a manufacturer's] bank accounts and Guaranteed Investment Certificates is considered to be interest with respect to making advances, lending money or granting credit and is included in the calculation of the de minimis threshold test under paragraph 149(1)(c).

Section 150 Subsection 150(1) - Election for Exempt Supplies

Administrative Policy

6 July 2012 Headquarters Letter Case No. 142921

A taxpayer which absent a s. 150 election would not have been a small supplier and had made such election on a valid basis with two financial institutions who were closely related then had its registration inadvertently cancelled. At that time, the "closely related" related definition required that it be a "registrant."

Ruling that such cancellation "did not cancel the Election under section 150 since the Taxpayer would have been required to be registered, i.e., was a registrant, throughout the period in question."

GST Memorandum (New Series) 17.14 "Election for Exempt Supplies" January 2001

GST M 300-4-7 "Exempt Supplies - Financial Services"

Guide for Providers of Financial Services under "GST Registration and Reporting of Tax"

The election under s. 150 is available to a listed financial institution resident in Canada has registered even if it is not involved in the commercial activity.

Guide for Providers of Financial Services under "Special Provisions" - "Election for Exempt Treatment of Supplies"

General synopsis.

Articles

Allan Gelkopf, Zvi Halpern-Shavim, "Five Arbitrary Differences between Corporations and Partnerships for GST/HST Purposes", Sales and Use Tax, Federated Press, Volume XIII, No. 2, 2015, p. 674.

Election only available for corps (p. 675)

. . . for some reason, only corporations can benefit from the section 150 election. The election does not apply to partnerships that are listed financial institutions, or to partnerships that are closely related (e.g., wholly-owned) to listed financial institutions.

Michael Firth, Brent Murray, "Section 150 Elections and the GST Rate Cut: Do the Benefits Continue to Outweigh the Costs?", Canadian GST Monitor, July 2008, No. 238, p. 1.

Subsection 150(6) - Credit Unions Deemed to Have Elected

Administrative Policy

Guide for Providers of Financial Services under "Special Provisions" - "Supplies between Credit Unions"

This provision permits credit unions to exchange taxable supplies with each other on a GST-exempt basis without having to file an election with the Department.

Section 152 - Consideration

Subsection 152(1) - When Consideration Due

Cases

Garage Gilles Roy (2007) Inc. v. The Queen, 2014 TCC 269

claim subject to real risk of rejection not an invoice

The appellant, which was a registrant and operated a garage, would in those instances where its repair work appeared to be covered by warranty, email the manufacturer specifying the work done (including the time spent and the cost of replacement parts), after the repair work was completed. If the manufacturer then approved the work, the appellant would receive payment (in accordance with a pre-established scale of the manufacturer), generally by set-off against the cost of parts purchased by it from the manufacturer. ARC assessed on the basis that the claims emailed to the manufacturers were invoices that triggered an obligation to collect GST.

Favreau J noted (at para. 23, TaxInterpretations translation) that "no ‘invoice'…was issued to the manufacturer…if the claim transmitted to the manufacturer was refused in whole or in part" and noted testimony (at para. 30) that approximately 20% to 30% of claims were partially rejected, and around 5% totally rejected (e.g., because of abnormal wear). He concluded (at para. 38) that "the system of submission of claims does not constitute an ‘invoice'…[and] the moment when the consideration for the taxable supply becomes due is the moment when the manufacturer approves the claim."

Lacroix v. R., 2011 GSTC 62, 2011 FCA 128

The registrant completed 55% of the construction work on a golf course, for which it was not paid. A key sponsor of the project had died, and the work was interrupted. The registrant registered a legal hypothec on the land for $1.2 million, which it later withdrew on a settlement with the successor to its client. The Court affirmed the Minister's finding that the registrant owed GST on $1.2 million. In order to be entitled to register a hypothec, a claimant must have already demanded payment . It followed under s. 152(1) that payment was due to the registrant by the time the hypothec was registered.

The Court also noted in the alternative that the trial judge erred in finding that, because the work was only 55% completed, there was no undue delay in issuing an invoice. The trial judge had essentially applied the test in s. 168(3)(c) that consideration is not due until work is "substantially completed." Although s. 168(3)(c) only applies where there is an agreement in writing, she found that it was was reasonable to apply the same test in these circumstances. Before concluding that, in these circumstances, an invoice should have been issued for the partially completed work, Noël J. stated (at paras. 32-33):

The difficulty this reasoning raises is that according to the very terms of paragraph 152(1)(b), the issuing of an invoice may be unduly delayed even if the work has only been partially completed, since the provision speaks of an invoice "in respect of the supply for that consideration or part."

... [The trial judge] had to question whether, according to the evidence, an invoice had to be issued for the purpose of paragraph 152(1)(b) for the part of the work that had been carried out.

Words and Phrases

undue delay

Administrative Policy

CBAO National Commodity Tax, Customs and Trade Section – 2013 GST/HST Questions for Revenue Canada, Q. 10. ("Time Tax Becomes Payable When Consideration Is Comprised Of A Forgivable Loan")

available with membership password at http://www.cba.org/CBA/sections_NSCTS/main/GST_HST.aspx

Respecting the situation where the consideration that is payable for a taxable management service is comprised of a forgivable loan which has a 5 year term (20% of principal amount being forgiven each year), CRA stated:

Consistent with subsection 152(1) of the ETA, this consideration would be considered to become due according to the relevant written agreement between the management service provider and the client and when any invoices are issued. In the absence of any particular conditions on the loan advance or forgiveness of amounts under the loan and assuming that the entire amount of the loan advance is required to be advanced at the outset under the agreement, the consideration would generally be considered to be paid and to become due, and the tax would therefore generally be payable, at the time the loan advance is made, not at the time the loan is forgiven.

21 October 2011 Interpretation Case No. 135932r

CRA responds to a confusing (and likely inaccurate) description of a P3 hospital project in which Project Co contructs the hospital with title remaining at all times with the hospital authority, starts issuing invoices to the hospital authority on completion of the construction and thereafter receives monthly amounts which are described by the correspondent as being in respect of the "lease/finance" portion of the project (although CRA notes that the information submitted indicates that the monthly billings are also in respect of facility management services provided by Project Co).

In commenting on the undue delay test, CRA states:

With respect to whether there was an undue delay in Project Co's issuing an invoice in respect of the supply, we would normally consider the normal business practice of Project Co in the circumstances in determining if there was an undue delay. If Project Co's normal practise is not to issue an invoice until construction of the real property is substantially complete, then tax will become payable on [mm/dd/yyyy], i.e., the date the First Invoice was issued. If Project Co's normal business practise in the circumstances is to issue invoices for some of the consideration payable as construction progresses, then tax will have become payable on the date any such invoices would have been issued. And if any part of the consideration that is reasonably attributable to the construction of the [facility] has not been paid or become payable by [mm/dd/yyyy], tax on such consideration will become payable on that date.

GST M 300-6-13 "Construction Contracts"

The Contractor's application for payment will not be regarded as an invoice, because the application is, in effect, merely a request that a certificate for payment be issued pursuant to the contract, and not a document creating an obligation to pay.

Subsection 152(3) - Payment

Administrative Policy

CBAO National Commodity Tax, Customs and Trade Section – 2013 GST/HST Questions for Revenue Canada, Q. 22. ("Assumption of ‘Under Water' Contract")

available with membership password at http://www.cba.org/CBA/sections_NSCTS/main/GST_HST.aspx

A GST-registered Vendor sells resource properties to a GST-registered Purchaser, and Purchaser agrees to assume long-term contracts ("Assumed Contracts") for the processing of the properties' production at prices greater than the current market rates. The negative value of the Assumed Contracts is netted against the purchase price payable by Purchaser. CRA stated:

The definition of "service" in [s.] 123(1)… is broad, and… encompasses the assumption of the obligations of another party in return for consideration from the other party. … In this case, the Purchaser has supplied a service to the vendor and GST/HST is collectible on the consideration payable for the supply of the service.

Section 153 Subsection 153(1) - Value of Consideration

Cases

Global Cash Access (Canada) Inc. v. Canada, 2013 FCA 269

"consideration" under law of contract

In the course of finding that the appellant was receiving a financial supply from the casinos it contracted with, Sharlow JA stated (at para. 15):

In the context of this appeal, the word "consideration" should be understood to mean anything that would be consideration under the law of contract, and "taxable supply" should be understood to include anything supplied in the course of a commercial activity except a "financial service" as defined in subsection 123(1) of the Excise Tax Act. It is undisputed that the business of the Casinos is a commercial activity, and the acts of Casinos pursuant to its contract with Global are acts in the course of that commercial activity.

Administrative Policy

Taxable Supplies - Special Cases [CRA website]

Commercial leases

…Property taxes paid by a tenant are to be treated as part of the payment to the landlord for the rental of the real property, even if the tenant pays the taxes directly to the municipality. Therefore, the amount of property taxes payable by a tenant is considered to be part of the rent and is subject to GST/HST in the same way as the amount of rent payable by the tenant. This will be the case whether or not the rental agreement states that the payment of property taxes by the tenant is to be considered as "rent" or "additional rent."

However, if a tenant is directly liable to the municipality for the payment of property taxes, this amount is not subject to GST/HST. ...

Early-payment discounts and late-payment surcharges

If you offer an early-payment discount on credit sales, you have to charge GST/HST on the full invoice amount even if your customer takes the discount. …

Tips and gratuities

…A tip or gratuity that is freely given by a customer, for example, cash not recorded on a bill, is not subject to the GST/HST.

23 December 2013 Memorandum 2013-0514701I7 - Bitcoins

sale for Bitcoins

When asked to address the HST/GST consequences of buying and selling goods in exchange for Bitcoins, CRA stated:

[W]here a taxable supply… is made and the consideration for that supply is Bitcoins, the consideration for the supply is deemed to be equal to the fair market value of the Bitcoins at the time the supply is made… .For example, if a GST/HST registrant sells a good for 10 Bitcoins and the sale is subject to GST/HST, the registrant will be required to collect the GST/HST calculated on the fair market value of the 10 Bitcoins at the time of the sale.

31 July 2012 Interpretation Case No. 103548

development levy

A developer who applies for a development permit or subdivision approval may be required by the municipality to pay a levy, or to construct, or pay for the construction of, municipal improvements (which potentially may be in excess of those required to support the particular contemplated development), with such improvements becoming municipal property. In the excess capacity situation, fees collected from subsequent developers generally are used by the municipality to reimburse this developer's costs.

The development levy will be considered to be consideration for an exempt supply of a permit or similar right under Sched. V, Part VI, s. 20(c). Although the supply of the construction services by the developer will be considered to be a taxable supply, no GST or HST will be payable by the municipality if this supply is made for no consideration. Fees collected by the municipality from subsequent developers would generally become consideration for a taxable supply when the fees are used to reimburse the developer.

29 July 2011 Headquarters Letter 95868

card loyalty program credits

A credit card loyalty program is proposed in which participating organizations (Organizations C) assist in the marketing of credit cards of a particular credit card company (FinanceCo). By using the credit card, members of Organizations C accumulate various member rewards which they may apply to purchase rewards from Organizations C. Amounts paid by FinanceCo to Organizations C fund the cost of these rewards.

CRA rules that Organizations C's supplies to members using their credits are made for consideration equal to the purchase price charged for the supplied items before deduction of the amount of the applied credits; i.e., the credits are part of the consideration for the supply to the members.

15 August 2006 Ruling Case No. 56497 [bonus property with more than nominal value]

bonus property with more than nominal value

A charity which sold goods thoroughout the year in a gift shop also engaged in a special fund-raising campaign in which those who made donations over a specified amount received a T-shirt which had been purchased by the charity and was not available for sale in its shop. As the T-shirts had a value of over 10% of the contributions, it issued charitable receipts for only the amount of the contributions minus such T-shirt value (see ITTN, No. 26). In finding that the supplies of T-shirts by the charity to the donors were not exempt, with HST or GST applying on the value of $X for each supply of a T-shirt, CRA stated:

...where the charity provides the person making the contribution with property or a service of more than nominal value that served as an inducement to make the contribution, then for ETA purposes, the amount of the contribution is not regarded as a gift but as consideration for the supply of the property or service given in return by the charity.

23 December 2002 Technical Interpretation RITS 38588

tenant property taxes part of consideration

"Where a separate amount is paid by a lessee on account of property taxes, this amount is part of the consideration for the rental of the property, even if the lessee pays the amount directly to the municipality ... While the Tenant may be responsible under the agreement to pay property taxes to the municipality, the ultimate liability to pay the property taxes rests with the Landlord."

27 February 2001 Interpretation 33200

calculation of lese consideration where lease assigned

A car lease agreement is assigned to another lessee of the lessor ("Leaseco") pursuant to an Assignment and Assumption Agreement. Will "the benefit of calculating GST on the portion of the lease payment less the lien portion continue, or will GST need to be calculated on the entire amount?" CRA responded:

An assignment of a lease does not normally affect the obligations placed upon either party within the framework of the original lease agreement. Where the transfer is an assignment, the assignee assumes the primary liability to perform the obligations of the lessee under the original lease. Therefore the manner in which GST is calculated will continue to be the same as prior to the assignment of the lease. However, if the transfer of the lease creates a novation (i.e., the legal effect is that a new contract is substituted for the existing lease), we will consider the transfer to be a new supply and therefore GST will be calculated on the entire amount.

2 January 1996 Ruling Case No. 11950

Ruling that where land was donated to the local County, the value of the consideration was equal to the value of the right granted by the County to avoid a legal liability to clean up the land.

RC4082 "GST/HST Information for Charities", p. 17 (under "Donations and Gifts")

GST/HST does not apply to donations and gifts. A donation or a gift is a voluntary transfer of money or property for which the donor does not receive any benefit in return. If the donor receives property having nominal value, such as a key ring, a pin, or an envelope seal, in exchange for the donation, the donation will still not be subject to the GST/HST. However, if the donor receives property or service having more than nominal value in exchange for the donation, the payment will be subject to GST/HST, unless the property or service is an exempt or zero‑rated supply.

GST M 300-7 "Value of Supply" under "Monetary and Non-monetary Consideration"

Where the consideration for a supply consists of money and a trade-in, the consideration for the supply will be the total of the fair market value of the trade-in plus the monetary consideration. A barter transaction will be considered to occur at fair market value unless s. 153(3) applies.

GST M 300-7 "Value of Supply" under "Nil Consideration"

Where there is no consideration for an arm's length supply, the customer who receives the goods or services for free pays no GST.

Articles

Hynes, "VAT and Leases: Surrenders, Re-Grants and Rent-Free Periods", British Tax Review, 1993, No. 6, p. 479.

Subsection 153(2) - Combined Consideration

Administrative Policy

GST M 300-7 "Value of Supply" under "Combined Consideration"

S.153(2) may apply where there is a single amount on an invoice or separate amounts on an invoice. The attribution under that provision may be based on a ratio established by the respective fair market values of the supplies and matters.

Subsection 153(3) - Barters Between Registrants

Administrative Policy

5 February 2013 Ruling Case No. 141852

Company A (a Canadian-resident registrant) sells crude oil for its market value to Company B (its U.S.-resident affiliate and also a registrant), with title and delivery occurring when it is injected into the pipeline, and with Company B being the importer of record into the U.S. Where Company B does not require the crude oil which it purchased, it will sell the crude back to Company A at the current market price, with payment generally made on a set-off basis.

In finding that s. 232(2) did not apply to the supply of crude made by Company A to Company B, CRA stated:

The reduction in consideration must relate to the original supply and may be made for any reason but must not depend on any action undertaken by the recipient or any supply made by the recipient. Furthermore, a reduction in consideration is not considered to have occurred if the goods are sold back to the original supplier. To be considered a reduction of consideration, it must be evident that the goods are being returned to the supplier rather than being sold to the supplier.

94 CPTJ - Q. 1

An exchange of methane for ethane will not qualify.

Subsection 153(4) - Used Tangible Personal Property Trade-Ins

Administrative Policy

Taxable Supplies - Special Cases [CRA website]

Trade-ins

If you accept used goods in trade for full or partial payment for goods you sell or lease in the course of your business, special rules apply, depending on whether or not the person from whom you are accepting the trade-in has to charge tax on the trade-in.

When the vendor has to charge tax

If the person from whom you accept used goods in trade has to charge GST/HST (for example, if the trade-in is an asset of a registrant's business), two separate transactions occur:

you purchase the trade-in from your customer; and

you make a sale or a lease to the same customer.

You have to pay GST/HST on the value of the trade-in, and you have to collect GST/HST on the full price charged for the goods you sell or lease. …

When the vendor does not have to charge tax

A different rule applies for used goods you accept as a trade-in from a person who is not required to charge GST/HST (usually a person who is not required to register for GST/HST). A person may also trade-in a leasehold interest in used goods.

In this case, you generally charge GST/HST on the net amount of the sale or lease, that is, the price of the goods you sell or lease minus the amount you allow for the trade-in. … [S]ee GST/HST Technical Information Bulletin B-084, Treatment of Used Goods.

TIB-084, 29 July 1997 "Treatment of Used Goods".

Articles

Steven K. D'Arcy, "Commercial Practices and the GST", Canadian GST Monitor, No. 107, 26 August 1997, p. 1: Discussion of trade-in allowance issues including treatment of liens.

Subsection 153(6) - Exchange of Natural Gas Liquids for Make-Up Gas

Administrative Policy

GST/HST Memorandum 4.5.2 "Exports – Tangible Personal Property" August 2014

58. When natural gas liquids are recovered from natural gas at a straddle plant, a certain amount of make-up gas is often added to the residue gas to make up for the loss of energy content due to the recovery. This sometimes involves transactions whereby the person holding the rights to the natural gas liquids exchanges the liquids or the rights to them for the make-up gas supplied by the other party to the transaction. …

59. The exchange of natural gas liquids and make-up gas is normally between the owner of the gas and the straddle plant operator, but there may be intermediary transactions as well involving such an exchange. A third party might acquire the rights to the natural gas liquids from the owner of the gas before it is processed and promise to supply the necessary make-up gas after the processing. In this case, there could be more than one exchange to which subsection 153(6) applies: an exchange between the owner of the gas and the third party; and another exchange between the third party and the straddle plant operator who supplies the make-up gas to the third party for supply to the owner.

60. The value of the consideration or part for any supply of the natural gas liquids (or the right to recover the liquids) recovered at a straddle plant is deemed to be nil if the consideration or a part of the consideration is make-up gas... [or]if the consideration is the natural gas liquids recovered at a straddle plant or the right to recover the liquids. If there is any monetary consideration for either supply, tax is calculated in the normal manner.

Section 154 Subsection 154(1)

Administrative Policy

GST M 300-7 "Value of Supply" under "Other Taxes"

Custom duties, excise duties and air transportation tax and excise taxes will be included in the value of the consideration for a supply.

Section 155

Administrative Policy

GST M 300-7 "Value of Supply" under "Non-Arm's Length Supplies"

General synopsis.

Section 156 Subsection 156(1) - Definitions

Qualifying Group

Administrative Policy

19 June 2015 Interpretation 167422

limitations on stacking

In a wholly-owned group, there are two stacks of four corporations beneath a common Holdco. The two bottom (Canadian) corporations will not be able to elect with each other as they are two remote from the Holdco to be closely related to each other under s. 128(2). See summary under s. 128(2).

4 February 2014 Interpretation 159039

non-resident partnership breaks chain

Holdco and its wholly-owned sub (US2) are the two partners of US1. US2 and US1 wholly-own US4 and US5, respectively, which in turn wholly-own C1 and C2, respectively, which wholly own C3 and C4 respectively. C1 to C4 are Canadian resident and the other entities are U.S.-resident. In finding that C1 or C2 would not be eligible to make the s. 156 election with C2 or C4, CRA stated:

It can be established that corporations consisting of Hold Co, US2, US3, US5, C2 and C4 are closely related under section 128 and members of the same qualifying group. However, neither C1 nor C3 are closely related to members of that group under section 128 and, therefore, are not part of the same qualifying group as US1 intervenes in the ownership structure.

GST/HST Memorandum 14.5 "Election for Nil Consideration" September 2012

Example 1

Where OpCo (a registrant substantially all of whose preoperty was acquired for use or supply exclusively in commercial activities) establishes NewCo, which performs activities in connection with the establishment of the commercial activity which it plans to carry out "and therefore becomes a registrant." The s. 156 election is available for a transfer of electronic equipment from OpCo to NewCo.

Various charted examples are given of closely related Canadian partnerships (Examples 2 to 5) and closely related Canadian partnerships and corporations (Examples 7 to 9).

Example 10

In the structure below, U and V are closely related to each other because they both are closely related to T:

Example 11

Notes that the s. 156 election does not apply to butterflied real estate (s. 156(2.1)(a).

30. The election has no effect on the ability of the electing specified members to claim ...ITCs...in accordance with the general rules found in sections 169 and 141.01. In this regard, subsection 141.01(7) ensures that any provision deeming a supply to be made for no consideration does not apply for the purposes of determining the extent to which inputs used in making the supply are acquired, imported, used or consumed by the person for the purpose of making taxable supplies for consideration in the course of an endeavour of the person.

Guide for Providers of Financial Services under "Special Provisions" - "Election for Nil Consideration for Closely Related Corporations"

General discussion.

Qualifying Member

Administrative Policy

14 January 2015 Interpretation 165076

application of "reasonable to expect" test

In commenting on the "it is reasonable to expect" test in (c)(iii), CRA stated:

The CRA would generally review available documentation such as business plans or input tax credit claims and the activities undertaken by the registrant to make taxable supplies, such as research and marketing that support the expectation that the registrant will be making taxable supplies throughout the twelve months.

Whether an election made under those circumstances would remain in effect where taxable supplies have not been made depends on the particular circumstances, for example, whether the registrant has since acquired property other than financial instruments or property having other than nominal value. Where a registrant meeting the conditions of subparagraph (c)(iii) of the definition of "qualifying member" makes an election and subsequently acquires certain property for consumption, use or supply exclusively in its commercial activities, the registrant may now meet the conditions of subparagraph (c)(i). Provided the registrant had not ceased to be a qualifying member prior to the acquisition of the property, the election would remain in effect. … [W]here subparagraphs (c)(i) and (c)(ii) do not apply, a registrant would cease to be a specified member of the qualifying group where the registrant would no longer have a reasonable expectation of making taxable supplies.

10 February 2014 Interpretation 154536

"substantially" (90%) determination may use book value

FinanceCo, which was a de minimis financial institution, held both equipment used in leasing and loans. In the course of a general discussion, CRA stated:

A registrant may determine that all or substantially all (90% or more) of its property (other than financial instruments) was last manufactured, produced, acquired or imported for consumption, use or supply exclusively in the course of its commercial activities by dividing the value (e.g., book value) of property (other than financial instruments) for use in commercial activity by the value of all property (other than financial instruments) held by the registrant. Any such determination must take into account all the relevant facts and circumstances… .

Subsection 156(2) - Election for Nil Consideration

Administrative Policy

Excise and GST/HST News - No. 95 under "

//www.cra-arc.gc.ca/E/pbg/gf/rc4616/README.html">Form RC4616 – Simplified filing procedures concerning existing elections for nil consideration" 8 April 2015

Specified members of a qualifying group that have existing elections, each with a different effective date that is before January 1, 2015, have the following two options for filing Form RC4616:

Under simplified procedures developed by the CRA, specified members of a qualifying group that have existing elections, each with a different effective date that is before January 1, 2015, now only need to file one Form RC4616 indicating December 31, 2014 as the effective date (covering all members instead of each filing separately). Each Form GST25 that was completed when each election was made should be kept with the electing members' books and records and reflect the original effective date of the election. The common effective date of December 31, 2014, specified on Form RC4616, will be recorded in the CRA's systems and will not invalidate the application of the election for supplies made before that date.

Alternatively, specified members of a qualifying group that have existing elections, each with a different effective date that is before January 1, 2015, could file a separate Form RC4616 for each (original) effective date. In this case, the different effective dates will be recorded in the CRA's systems.

In either case, Form RC4616 must be completed and filed with the CRA before January 1, 2016.

Excise and GST/HST News - No. 94 14 January 2015

Effective January 1, 2015, an election (or revocation of an election) must be made jointly by a particular specified member of a qualifying group and another specified member of the same group by completing and filing Form RC4616...which is replacing Form GST25. ...

...Parties to a new election must complete Form RC4616 and file it by the earliest day on which the electing members are required to file a GST/HST return for the reporting period that includes the effective date of the election specified on the form.

Parties to an existing election in effect before January 1, 2015, which is still in effect on that date, will also be required to complete Form RC4616 and file it with the CRA after 2014 and before January 1, 2016. In this case, the election remains the original election and, as a result, the effective date specified on the form should be the original effective date of the election.

While an election is between two members, Form RC4616 permits multiple combinations. Every combination of eligible corporations or eligible Canadian partnerships whose names appear in Part A of the form (and on any attached page) is considered to have made the election. Form RC4616 will permit the first specified member to file the election on behalf of the specified members identified in Part A (and on any attached page). Only the signature of the first specified member is required.

Excise and GST/HST News – No. 91 under "GST/HST election for closely related persons" May 2014

filing and refiling deadlines

[E]ffective January 1, 2015, parties to a new election or revocation will be required to file Form RC4616, (replacing Form GST25…) with the CRA. Generally, the election or revocation will have to be filed by the earliest date on which any of the parties is required to file a return for the period that includes the day on which the election or revocation becomes effective.

Parties to an existing election with an effective date before January 1, 2015 that is still in effect on January 1, 2015, will also be required to file Form RC4616 to treat certain supplies made between them after 2014 as having been deemed to be made for nil consideration. Form RC4616 will be required to be filed after 2014 and before January 1, 2016.

...Example 3:

Corporation A and Corporation B are specified members of the same qualifying group and they have an existing election under subsection 156(2) in effect before 2015. Even though Corporation A and Corporation B have an existing election still in effect on January 1, 2015, they will, nevertheless, be required to file a new election form for supplies made after 2014; the new election form will have to be filed after 2014 and before January 1, 2016.

91 CPTJ - Q.10

The election under s. 156 is not intended to apply to butterfly transactions. Because a newly-created corporation will usually only make exempt supplies and is unlikely to make any taxable supplies, it cannot qualify as a "specified member."

Subsection 156(3) - Cessation

Administrative Policy

29 January 2015 Interpretation 167061

disqualification does not affect non-paired members/avoiding inadvertent revocation

In the course of a general discussion on completion, filing and revocation of form RC4616, CRA stated:

[Effect of disqualification]

[I]n the event that a particular specified member of a qualifying group no longer meets the qualifications of the election, an election made with that particular member is no longer in effect. Any elections made between other specified members listed on that form (i.e., not made with the particular member) would not be affected. There is no requirement to advise the CRA or modify a previously filed Form RC4616 where a person no longer qualifies… .

[Avoiding inadvertent revocation]

In the event that a particular specified member of a qualifying group wishes to revoke an existing election...care must be taken in filing the revocation to ensure that the elections between the other specified members remain in effect. Every pair combination of members whose names appear in Part A of the Form RC4616 (and on any attached page) would be considered to have revoked their election. Consider the following example[:] ...

[U]sing MyBA or the paper Form RC4616:...an election is made between Parent Co and Subco 1; ...between Parent Co and Subco 2; and...between Subco 1 and Subco 2. Parent Co wishes to revoke both (i) the election made with Subco 1 and (ii) the election it made with Subco 2; however, Subco 1 and Subco 2 do not wish to revoke the election made between them. Since every pair combination of members whose names appear on the form (and on any attached page) would be considered to have revoked their election, two separate Forms RC4616 should be filed either electronically or on paper: (i) a revocation of the election between Parent Co and Subco 1; and (ii) a revocation of the election between Parent Co and Subco 2.

Subsection 156(4) - Form of Election and Revocation

Administrative Policy

29 January 2015 Interpretation 167061

one signing member/MyBA filing

In the course of a general discussion on completion and filing of form RC4616, CRA stated:

[Filing by one specified member]

[T]he first specified member identified in Part A on the paper Form RC4616 may file the form on behalf of all specified members wanting to make or to revoke an election. That is, where there are more than two specified members of a qualifying group making an election or revocation of an election, only one Form RC4616 is required where all of the pair combinations of specified members whose names are listed in Part A (and on any attached page) are making the election or revocation.

[Quebec form]

...If the same members of the qualifying group also want similar relief from the...QST...they would be required to elect...by filing with Revenu Québec (provided they are not selected listed financial institutions) the Form FP-4616... .

[MyBA filing/viewing/amendment]

...[E]lectronic filing of the election or revocation...is expected to be available through My Business Account (MyBA) in mid April 2015. Once electronic filing is available, registrants will be able to view, through MyBA, section 156 elections that they have filed, either electronically or by using the paper Form RC4616, as well as those filed by another specified member on their behalf.

...[Once] a section 156 election has been filed either electronically or on paper, the election can be modified through MyBA. In the case of a particular specified member of a qualifying group wishing to elect with another specified member (or members) of that group after 2014, the response provided to question 1.e applies whether the election was filed electronically using MyBA or the paper Form RC4616.

28 August 2000 Headquarters Letter Case 30915

"If the parties have conducted themselves as if an election were in place (and if the conditions for making the election are met at all relevant times), then it is possible that a valid election may be made which would apply to a transaction which has already occurred, if the election form specifies an effective date that is prior to the date of the transaction."

GST25 "Closely Related Corporations and Canadian Partnerships - Election or Revocation of the Election to Treat Certain Taxable Supplies as Having Been Made for Nil Consideration"

All or substantially all generally means 90% or more. ... You do not have to file this form with the Canada Revenue Agency.

Forms

RC4616 "Election or Revocation of an Election for Closely Related Corporations and/or Canadian Partnerships to Treat Certain Taxable Supplies as Having Been Made for Nil Consideration for GST/HST Purposes" 9 April 2015

Every combination of eligible corporations and eligible Canadian partnerships whose names appear in Part A of this form (and on any attached page) is considered to have made an election. For example, a form having three electing members numbered as 1, 2, and 3, would have the following combinations: •1 and 2; • 1 and 3; and • 2 and 3

...Parties to an existing election with an effective date before January 1, 2015, that is still in effect on January 1, 2015, will also be required to file the election form. However, they will be required to file the election form after 2014 and before January 1, 2016.

FP-4616-V [Quebec] "Election or revocation of an election to have certain taxable supplies made between specified members deemed made for no consideration" April 2015

Subsection 156(2.01)

Articles

John Bassindale, Robert G. Kreklewetz, "Budget 2014: Changes for Section 156 and Closely Related Persons", Sales and Use Tax, Federated Press, Volume XII, No. 4, 2014, p. 659

Brief refiling deadline (pp. 659-660)

[E]xisting section 156 elections [must] be filed during the calendar year 2015 - a relatively brief one-year window, which could easily be missed by inattentive taxpayers….[S]ubsection 156(2.01) deems any section 156 election filed before January 1, 2015 "never to have been filed."

Policy reasons for filing (p. 660)

The policy reasons for this brief filing period are not entirely clear, particularly in light of the potential negative repercussions if the deadline is missed, nor does one fully understand why prior elections were deemed never to have been filed.

One suspects that these provisions relate to the fact that the last time that section 156 elections were required to be filed was for a brief period in 1991-1992; our theory is that the CRA has likely lost track of the section 156 elections that were filed in those years, and that Finance believes that the section 156 election system needs a complete "reboot" in order to protect its integrity.

Section 157 Subsection 157(2) - Election for Nil Consideration

Administrative Policy

GST M 300-7 "Value of Supply" under "Gift Certificates"

General synopsis.

Section 158 - Tax Refund Discounts

Administrative Policy

GST M 300-7 "Value of Supply" under "Income Tax Discounting Services"

General synopsis.

Section 159 - Value in Canadian Currency

Administrative Policy

P-222 - "Acceptable Exchange Rate Sources for Converting the Value of Consideration Expressed in Foreign Currency to a Value in Canadian Currency for Purposes of Section 159 of the Excise Tax Act (the "ETA")", 10 December 1998

To convert from foreign currency into Canadian currency for purposes of Part IX of the Excise Tax Act, a person may only use the rate of exchange from:

the source used for an actual conversion (i.e. foreign currency is exchanged for Canadian dollars);

the source the person typically uses for actual conversions;

a Canadian chartered bank;

the Bank of Canada; or

the rate provided by the Customs Branch of the Department for purposes of converting the value for duty of imported goods.

When a source other than the source used for an actual transaction is selected, that source must be used consistently and for a reasonable period of time (such as one year).

If a person must pay a premium to obtain foreign currency from a particular source for a particular foreign currency denominated transaction, any additional costs incurred associated with obtaining that rate must be included when translating the foreign currency into Canadian currency.

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131-159

Table of Contents

Section 131

Cases

The Queen v. Maritime Life Assurance Co., 2000 DTC 6402, Docket: A-67-99 (FCA)

Paragraph 141.1(2)(a)

See Also

Aviva Canada Inc. v. the Queen, 2006 TCC 57

Section 132

Subsection 132(1) - Person Resident in Canada

Administrative Policy

RC4027 "Doing Business in Canada - GST/HST Information for Non-Residents" Rev. 13

GST M 300-5 "Place of Supply"

Subsection 132(3) - Permanent Establishment of Resident

Administrative Policy

GST M 300-5 "Place of Supply"

Subsection 132.1(2)

Administrative Policy

12 March 2013 Ruling Case No. 133588

Section 133 - Agreement as Supply

Cases

Fedak v. R., [1999] GSTC 65

Attorney General of Canada v. Metropolitan Toronto Hockey League, [1995] GSTC 31 (FCA)

See Also

Commissioner of Taxation v MBI Properties Pty Ltd, [2014] HCA 49,

Administrative Policy

Excise and GST/HST News – No. 96 under "University and public college meal plans" June 2015

CBAO National Commodity Tax, Customs and Trade Section – 2013 GST/HST Questions for Revenue Canada, Q. 15. ("Carrying on Business")

Section 135 - Sponsorship of Public Sector Bodies

See Also

The Children's Clean Air Network Society v. The Queen, 2013 TCC 352

Administrative Policy

Excise and GST/HST News - No. 93 16 October 2014

Example 2

25 January 2013 Ruling Case No. 140259

Information for Non-Profit Organizations under "Collecting the GST" - "Sponsorships"

Section 136

Subsection 136(1) - Lease Etc. Of Property

Administrative Policy

5 December 2003 Interpretation 44874

Subsection 136(2) - Combined Supply of Real Property

Administrative Policy

31 March 2009 Ruling 103912 [sublease of portion of nursing home to shop]

Subsection 136.1(1.1)

Administrative Policy

June 2012 Draft GST/HST Technical Information Bulletin B-103

Section 138 - Incidental Supplies

Cases

9056-2059 Quebec Inc. v. The Queen, [2011] GSTC 143, 2011 FCA 296

Camp Mini-Yo-We Inc v. The Queen, 2006 FCA 413

See Also

Cartier House Care Centre Ltd. v. The Queen, 2015 TCC 278,

Global Cash Access (Canada) Inc. v. The Queen, 2012 TCC 173, rev'd in part 2013 FCA 269

Canada Trustco Mortgage Co. v. The Queen, 2004 TCC 792

State Farm Mutual Auto Insurance Co. v. The Queen, [2003] GSTC 35, docket 2001-2224 (GST) G (TCC)

Interior Mediquip Ltd. v. The Queen, [1994] G.S.T.C 86 (TCC)

Customs and Excise Commissioners v. United Biscuits (UK) Ltd., [1992] BTC 5045 (Ct. Ses. (Inner House))

British Airways plc v. Customs and Excise Commissioners, [1990] BTC 5124 (C.A.),

Administrative Policy

December 2003 Memorandum Case No. 41678

7 September 2000 Ruling 11830-1B (Case 26962)

P-160 "Meaning of the Phrase 'where a particular property is supplied together with any other property or service'" (draft).

"Meaning of the Phrase 'reasonably regarded as incidental'" (draft).

Guide for Providers of Financial Services under "Mixed Supplies of Property and Services"

31 July 2002 Headquarter Letter 37094

Articles

Brent F. Murray, "Multiple Supplies and Incidental Supply Rules", Canadian GST Monitor, No. 281, February 2012, p. 1

S. Aylward, D. Gresdal, "GST Treatment of Adjustments on Real Estate Closings", GST & Commodity Tax, Vol. XII, No. 8, October 1998, p. 59.

Tetreault, "Canadian Tax Aspects of Asset Securitization", 1992 Conference Report, p.23:31.

Section 139 - Financial Services in Mixed Supply

Administrative Policy

8 February 2002 Headquarters Letter 37008 (See also 9 January 2002 Headquarters Letter 37015)

14 May 1999 Headquarters Letter HQR 0001500

Guide for Providers of Financial Services under "Mixed Supplies of Property and Services"

Articles

J. Spencer, "GST and PST Implications of Outsourcing Corporate Services", Sales and Use Tax, Vol. IV, No. 1, 1998, p. 182.

Section 140 - Supply of Membership With Security