The Canada Revenue Agency has released a draft of this revised bulletin that provides guidance to registrants in determining which GST/HST rate applies on a sale of a good or service (i.e., supply) to customers once it has already been determined that the supply is made in Canada, unless it is exempt or zero-rated. There are no significant changes to the place of supply rules from the previous version of the bulletin, published in June 2010, for most goods and services, but clarification has been made on a few items and, references to the Excise Tax Act and the Regulations were added, where applicable. At 137 pages, this document is significantly longer than the previous version, due mainly to the inclusion of 167 examples, with diagrams, and the addition of four appendices. Especially useful are appendices C and D, which provide flowcharts to help determine the place of supply related to intangible personal property and services.
Noticeable changes to the document include discussions of the following:
- issues to consider when applying these rules, such as single, multiple and, incidental supplies, the characterization of supplies, and the tax status of supplies;
- the new place of supply for specified motor vehicles (see also GST/HST Info Sheet GI-119, “Harmonized Sales Tax – new Place of Supply Rule for Sales of Specified Motor Vehicles” for more information);
- determining the place of supply of railway rolling stock, intangible personal property (“IPP”) and personal services; and
- determining the permanent establishment(s) of individuals and corporations.
Note that there have been no changes made to the place of supply rules for the sale of tangible personal property (i.e., goods) – commonly misinterpreted by taxpayers. However, this document does provide additional guidance on determining whether a supplier has retained a common carrier or consignee (collectively referred to as “carrier”) and therefore, is considered to have delivered the goods to the customer. Essentially, where a supplier transfers possession of a good to a carrier retained on behalf of the customer pursuant to terms negotiated, and instructions provided by the supplier, the supplier is considered to have delivered the good to its destination for that customer. A supplier that merely contacts a carrier to indicate that the good is ready to be transported pursuant to an arrangement that has already been established by the recipient with the carrier, or that is merely made aware of such an arrangement, is not considered to have retained the carrier on behalf of the recipient, and therefore, is not considered to have delivered the good to the customer (i.e., the carrier’s destination).
With regards to IPP, in order to determine whether there are limitations to its use in Canada, reference can be made to the terms of the agreement for the supply of the IPP. However, the use of the IPP may still be limited, even in situations where such a restriction is not explicitly stated in the agreement if, as a matter of fact, the IPP could only ever be used from a single location in a single province. Interestingly, there are a number of examples that include British Columbia as a participating province, despite the fact that the province will no longer be a participating province due to its return to PST effective, April 1, 2013.
CRA B-103 revised (draft)