23 February 2012 CBA Roundtable

This provides summaries of questions posed to CRA at the February 23, 2012 CBA Commodity Tax Roundtable together with the full text of the CRA responses. (The full text of the questions is available with a membership password at http://www.cba.org/Sections/Commodity-Tax,-Customs-and-Trade/Resources.)

CRA disclaimer: These comments do not replace the law found in the Excise Tax Act (the Act) and its Regulations. The comments are provided for your reference. As they may not completely address your particular operation, you may wish to refer to the Act or appropriate regulation, or contact any CRA GST/HST Rulings Centre for additional information. ... A ruling should be requested for certainty in respect of any particular GST/HST matter. ... All statutory references are to the Excise Tax Act (the "ETA") Unless otherwise stated.

Q.1. Voluntary disclosures – wash transactions and GST Memorandum 16.3.1 question

Summary of Question

GST Memorandum 16.3.1 (April 2010), para. 21, states:

21. Where a disclosure involving a wash transaction has been made, even though there may be no penalty applicable, if it otherwise would be accepted by the CRA as a valid disclosure in accordance with IC00-1R2, Voluntary Disclosures Program, the interest will be reduced to 0% of the amount of the transaction identified as a wash transaction when it is reported through the Voluntary Disclosures Program.

However, Excise and GST/HST News No. 76 (Spring 2010) states:

The change to the current policy applies when a registrant voluntarily reports to the CRA an omission or error that meets the definition of a wash transaction. The CRA will consider reducing the interest payable with respect to the transaction down to 0% of the transaction amount in reporting periods with net tax due after March 31, 2007.

Is 16.3.1 correct? Would the reduction to 0% will be automatic on a valid voluntary disclosure of a wash transaction?

CRA Comments

GST Memorandum 16.3.1 (April 2010) is correct. When the CRA accepts a disclosure of a wash transaction as valid pursuant to IC 00-1R2, the interest relief will be automatic.

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Q.2. Voluntary disclosures – wash transactions and section 236.1

Summary of Question

Where HST in Ontario or B.C. was not charged to a large business on goods subject to the "recaptured ITC" (RITC) rules in s. 236.01, is wash transaction treatment allowed?

Summary of Analysis

The business can claim full ITCs, thereby meeting the CRA wash transaction definition, but it is not truly a "wash" economically because of the RITC.

CRA Comments

The recapture of input tax credits for the provincial part of the HST (RITCs) under section 236.01 of the Excise Tax Act (the ETA) would not impact the wash transaction policy. As long as the recipient is entitled to a full input tax credit (ITC) for the GST/HST not charged on the taxable supply, and all the other requirements as outlined in GST/HST Memorandum 16.3.1, Reduction of Penalty and Interest in Wash Transactions, are met, the transaction would be considered a wash transaction. This is consistent with our view that a transaction would still be considered a wash transaction even though the recipient may be required to recapture a portion of the ITC under another provision of the ETA, such as section 235, dealing with passenger vehicle lease payments, or section 236, dealing with food, beverages, and entertainment expenses.

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Q.3. Voluntary disclosures – wash transactions and penalties

Summary of Question 1

Some registrants receiving wash-transaction treatment have had interest/penalty under s. 280(1) reduced to 4%, yet been subject to instalment interest under s. 280(2) and the failure-to-file penalty under s. 280.1. Will CRA waive ALL interest and penalty down to 4% of the uncollected GST/HST, or only the s. 280(1) interest (and pre-April 2007 s. 280(1) penalty), so that instalment interest and the failure-to-file penalty still apply on top of the 4%?

CRA Comments

If, through an audit, the CRA discovers that there is a wash transaction that meets the conditions listed in either paragraphs 12 or 22 of the GST/HST Memorandum 16.3.1, Reduction of Penalty and Interest in Wash Transaction Situations, the CRA will consider waiving or cancelling the portion of the interest (and for amounts payable or remittable before April 1, 2007, the 6% penalty imposed under subsection 280(1) of the Excise Tax Act (the ETA)) payable at the time of assessment that is in excess of 4% of the tax not properly collected or the input tax credits not properly accounted for by the supplier.

The wash transaction policy applies only to cancel or waive the interest and or penalty applicable to the supply in question. It does not apply to relieve interest or penalties imposed under other sections of theETA, such as instalment interest imposed under section 280, or the failure to file penalty imposed under section 280.1. Similarly, any amount of the assessment (including the interest not waived or cancelled) that is unpaid on the date of assessment will be subject to interest at the prescribed rate under section 280 from the date of the assessment until the date the outstanding amount is paid.

For assessments relating to amounts due before April 2007, any amount of the assessment, including the 4% wash penalty that is unpaid on the date of assessment would be subject to normal penalty and interest under section 280 from the date of assessment until the earlier of the date the outstanding amount is paid, or March 31, 2007. Any amount outstanding on or after April 1, 2007, would be subject to interest at the prescribed rate until paid.

Summary of Question 2

Will the CRA consider allowing GST/HST voluntary disclosures for periods prior to April 1, 2007 even though a penalty may not be applicable (as it does for wash transactions)? Alternatively, will the CRA automatically accept that a penalty under s. 284 or s. 284.01 might apply so that the disclosure be allowed?

CRA Comments

Currently, one of the conditions for a valid disclosure is that a penalty could apply. As you are aware this condition was removed in the case of WASH transactions, following the implementation of the legislative changes effective April 1, 2007. The CRA will continue to accept disclosures pre and post April 2007, where a penalty could apply.

The CRA recognizes the impact of the April 2007 changes, had in relation to the penalty structure. Accordingly, we are exploring options to clarify our policy in relation to GST/HST disclosures. E.g. creating a separate bulletin/communiqué in relation to GST/HST Voluntary Disclosures.

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Q.4. Voluntary disclosure - no-name disclosures

Summary of Question 1

With respect to no-names voluntary disclosures, paragraph 27 IC00-1R2 explains that where there is a discrepancy between the information provided and what is verified, the preliminary advice may be invalidated. Is it correct that voluntary disclosure officers are not allowed to comment on whether a no-names disclosure is disqualified from being treated as “voluntary” based on information provided in a no-names disclosure, for example, where there is specific enforcement action involving another tax?

CRA Comments

This is correct, we have not changed our policy. Where a disclosure submitted on a no- name basis, our officers cannot confirm if the “voluntary” condition has been met, until the name of the taxpayer is provided. The name is required to confirm, the nature of any compliance actions and their impact on the disclosure.

Summary of Question 2

When does the 90-day period for a no-name disclosure start?

CRA Comments

The CRA has clarified its 90-day no-name policy internally to its officers working the program. The clarification means that the start of the 90 day period for a no-name disclosure will start the day that theCRA begins to discuss the disclosure information with the representative/taxpayer. Extensions to the 90 day period will only be considered in cases where the CRA is not in a position to address the disclosure.

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Q.5. Voluntary disclosure – tax services offices

Summary of Facts / Background

All voluntary disclosures now appear to be routed through a central intake centre, and may be handled by a remote TSO.

Summary of Question

1. Can a particular TSO be requested?
2. Under what circumstances?
3. What if a particular TSO has special knowledge or expertise making it the best to handle the voluntary disclosure?

CRA Comments

The CRA has made some changes to its structure and program delivery points, i.e. creation of intake centres to enhance the processing of the disclosures. Upon receipt of a disclosure, we decide where the disclosure can be addressed, If special knowledge or experience is required, our officers will contact subject matter experts as required.

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Q.6. Voluntary disclosures – 10 YEAR RULE

Summary of Question

Uncertainty respecting penalties or prosecution for the period beyond 10 years is often an obstacle to compliance, for example where HST was collected and not remitted, or HST was not collected in non-wash transactions extending beyond 10 years.

Will the CRA always/never undertake enforcement action where the disclosure is accepted for the most recent 10 years? Are there statistics by type of tax respecting how many voluntary disclosures considered “valid” for the 10 most recent years resulted in penalties or prosecution for the period beyond 10 years?

CRA Comments

In accordance with current legislation, penalty relief is limited under Section 281 of ETA for the most recent 10 years. Therefore in cases, where a registrant has not filed their returns for the last 12 years, the late filing penalty, which is mandatory, will apply for years 11 and 12. All other penalties will be waived if they submit a valid disclosure.

The CRA will not apply discretionary penalties such as the gross negligence penalty and the file will not be referred for prosecution with respect to any year within an accepted disclosure.

There is no limit for the number of which may be reviewed as included in a voluntary disclosure. We will review the complete scenario, analyze amounts and determine which years will be (re)-assessed.

We have assessed taxpayer/registrants in several cases for 10 plus years. For GST/HST they have mostly pertained to late filers for GST omissions, and for Income Tax they have related to non-filers of Income Tax returns and Information returns, i.e. Foreign Asset reporting forms.

The CRA is also currently reviewing how to implement the recent Bozzer decision as it relates to interest relief for cases where the original debt was established more than 10 years ago.

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Q.7. Access to unpublished field rulings and publishing of rulings

Summary of Question

On some areas where no rulings or interpretations have been issued, “field letters” on point have been issued by local or regional CRA offices.

1. Will field letters be made available to the public? If not, would an Access to Information Request make them available?
2. Does the CRA plan to publish regional, local or headquarters level rulings on its website?

CRA Comments

1. Field letters are generally based on information that is available to the public in our publications and on our website. In developing rulings and interpretations, the field is encouraged to refer to our HQ rulings and interpretations as part of their research. Where there is no precedent, these are referred to HQ specialists for response. In turn, as policy is developed, it becomes synthesized into relevant publications to generate a “one-to-many: effect” which we believe to be a more efficient use of our resources.Like all information, field letters may be accessed under an Access to Information Request. The confidentiality provision of the Excise Tax Act, section 295, and the provisions of the Access to Information Act and the Privacy Act will apply to any access to information request.

   There is no plan to have severed field letters made available to the public. It is the CRA’s objective to concentrate resources on providing information to the public in the most effective and efficient manner. We do not have the resources required to sever the thousands of letters issued by our field offices, (to date this fiscal 3,400 rulings and interpretations were completed by the field), particularly in this time of fiscal restraint. It would be cost prohibitive.

2. At this time, the CRA does not intend to publish any severed GST/HST rulings or interpretations on its website. In order to do this, these letters would need to be translated to fulfil the requirements of the Official Languages Act. The translation and severing costs for the thousands of letters we issue each year would be prohibitive in terms of resources, time (maintenance and categorization of published material) and money, particularly in this time of restraint. As indicated, the Directorate’s resource utilization strategy is to direct resources to generate a “one-to many” or “multiplier effect” and inform as many people as possible of the interpretative positions developed with respect to the legislation administered by the CRA.

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Q.8. Interpretation line hours

Summary of Question

Why is access to the GST/HST Interpretation line (1-800-959-8287) being restricted to all callers to 8:15 am to 5:00 pm local time (Monday to Friday), given that CRA is often providing service in other time zones outside of the local time restrictions?

CRA Comments

Our telephone technology is based on area code call routing which automatically routes calls to ourGST/HST Rulings centres based on callers’ area codes during the core business hours from 8:15 to 5:00 pm local time. This technology ensures national consistency in accessing our telephone service. The GST/HSTRulings program is a small, highly technical, specialized program which responds to approximately 120,000 calls per year. Given this volume, it is not cost effective to provide extended hours of service.

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Q.9. GST & QST registration

Summary of Question

When should a person request a GST registration from Revenu Québec versus CRA for periods prior and subsequent to January 1, 2013, and will that information be published?

CRA Comments

Currently, where a person is required to be registered for GST/HST purposes or registers voluntarily, the person would generally register with the Canada Revenue Agency (CRA). However, if the physical location of a person’s business is in Quebec, the person would generally contact Revenu Québec with respect to registration.

There is an exception where a group of selected listed financial institution (SLFI) investment plans is making a consolidated filing election or elected to join a consolidated filing election under section 57 of the proposed draft Selected Listed Financial Institutions Attribution Method (GST/HST) Regulations (draft SLFIRegulations) released on January 28, 2011, and under proposed subsection 240(1.3) the group is required to register or under proposed subsection 240(1.4) the SLFI investment plan is required to be added to the group registration. In these two cases, the investment plan manager would send both the election form and the related group registration form to the Summerside Tax Centre, whether or not any of the investment plans in the group have their physical location in Quebec. Please note that at this time the forms related to electing to join a consolidated filing election under subsection 57(2) of the draft SLFIRegulations and to be added to a group registration are currently being developed and the interim procedures outlined in Technical Information Bulletin B-107, Investment Plans (Including Segregated Funds of an Insurer) and the HST should be followed.

Where an SLFI investment plan that has a physical location in Quebec is making a reporting entity election under section 56 and/or a tax adjustment transfer election under section 58 of the draft SLFI Regulations and is therefore required to register under proposed subsection 240(1.2), although the election forms are sent to the Summerside Tax Centre, the plan would generally contact Revenu Québec with respect to registration. There is an exception where an SLFI investment plan makes a request to file a reporting entity election and/or a tax adjustment transfer election after the election’s effective date. In this case, the request to file the election(s) late and the related registration and elections forms would be sent to the Summerside Tax Centre for consideration. Once the effective date of these elections is determined, the registration would be processed by CRA effective the same date as these elections. The registration information would then be forwarded to Revenu Québec by CRA.

Assuming harmonization of the GST and the Quebec Sale Tax occurs as contemplated in the Memorandum of Agreement signed on September 30, 2011, CRA will consider publishing a notice, or other publication, to confirm registration procedures for periods subsequent to January 1, 2013.

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Q.10. Meaning of "claimed"

Summary of Question

Does the word "claimed" in Schedule V, Part I, section 2 of the ETA mean "claimed", or "claimed and allowed"? If a person who is not a builder claims an ITC in respect of a residential complex and the ITC is disallowed due to ineligibility, does the claim still taint the person's entitlement to sell the complex on an exempt basis under the above section?

CRA Comments

Section 2 of Part I of Schedule V to the Excise Tax Act (ETA) exempts the sale of a residential complex made by a particular person who is not a builder of the complex unless the exception in paragraph 2(a) or 2(b) applies. Pursuant to paragraph 2(a), if the person claimed an input tax credit (ITC) in respect of the person’s last acquisition of the complex or in respect of an improvement to the complex after it was last acquired by the person, the sale is excluded from exemption.

An ITC is the amount determined under subsection 169(1) of the ETA. This subsection provides the basic rules with respect to determining a person’s ITC eligibility for the GST/HST paid or payable on the acquisition of property and services. If there is no ITC eligibility under subsection 169(1), then the amount the person claimed as an ITC on their GST/HST return was not, in fact, an ITC.

Consequently, as the person has not claimed an ITC for purposes of paragraph 2(a) of Part I of Schedule V to the ETA, the exception to the exemption does not apply. If the supply is not excepted by paragraph 2(b) of Part I of Schedule V to the ETA, the supply of the residential complex is exempt.

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Q.11. Limitation period for cross-border supplies of services

Summary of Facts / Background

A Co, a Canadian resident financial institution, failed to self-assess GST on a taxable supply of services received from a non-resident supplier (not registered for GST purposes) going back more than four years. A Co has been filing GST/HST returns on a regular basis and is at arm’s length to the supplier.

Summary of Question

Will A Co be subject to the normal four-year limitation period set out in s. 298(1)(d)(ii) with respect to tax payable under s. 218 and s. 218.1, and not the seven-year period set out in s. 298(1)(d)(i) with respect to tax payable under s. 218.01 or s. 218.1(1.2)?

Summary of Analysis

A Co should be subject to the normal four-year limitation period because the supply of the services is a taxable imported supply as defined in s. 217. If any consideration and GST payable for the supply constitutes "qualifying consideration" for the purposes of s. 218.01 or s. 218.1(1.2), A Co should be entitled to an offsetting deduction pursuant to paragraphs (a) and (b) of the definition of "permitted deduction" in s. 217, as these paragraphs do not require the tax to have been paid by A Co in order for the permitted deduction to apply.

CRA Comments

Self-assessment under the imported taxable supply rules is distinct from self-assessment under the import rules and the ETA explicitly provides for two different assessment periods in regards to these two sets of rules. Both sets of rules apply to a financial institution that is a qualifying taxpayer. Therefore, both subparagraphs 298(1)(d)(i) and (ii) will apply to A Co.

With respect to tax required to be self-assessed under section 218 and subsection 218.1(1), the imported taxable supply rules, subparagraph 298(1)(d)(ii) applies and the assessment period limitation is four years.

With respect to tax required to be self-assessed under section 218.01 and subsection 218.1(1.2), the import rules, subparagraph 298(1)(d)(i) applies and the assessment period limitation is seven years.

Summary of Supplemental Question

If A Co is subject to both the four-year limitation period in s. 298(1)(d)(ii) and the seven-year limitation period in s. 298(1)(d)(i), please confirm that if assessed going back seven years pursuant to s. 298(1)(d)(i), A Co would be entitled to an offsetting deduction pursuant to paragraphs (a) and (b) of the definition of “permitted deduction” in s. 217 for all seven years, as tax was payable by A Co under the normal imported taxable supply rules for all of these years.

While both the 4 year and the 7 year limitation rule could apply, since the taxpayer should be able to claim an offsetting deduction under the definition of “permitted deduction” (since the amounts were “payable” even if not paid), then effectively the limitation period would be 4 years since the CRA would not be able to assess under s. 218.01.

CRA Comments

An imported taxable supply is subject to tax under section 218, and accordingly the 4 year limitation under subparagraph 298(1)(d)(ii) for assessments under section 218, regardless of whether the import rules and section 218.01 also apply to the qualifying taxpayer. Under the import rules tax is assessed on amounts that are qualifying consideration, or where the election under subsection 217.2(1) is in effect the total of internal and external charges. The formulas for these amounts take into account that tax on imported taxable supplies is subject to assessment under section 218 and not section 218.01.

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Q.12. Logistical services

Summary of Facts / Background

A Non-resident is arranging to have goods exported for repair/overhaul by a subcontractor resident in Canada. The goods will then be exported to its non-resident customer. Certain parts must be refurbished outside of Canada. The Non-resident refurbishes the parts removed from the goods to be repaired as part of the overhaul services and has a third party arrange for export and import of the parts and the logistics to ensure timely delivery of those parts to the manufacturing sub-contractor. Those third-party services include packing, shipping and receiving services on behalf of Non-resident.

The logistics provider is independent from the subcontractor, and the subcontractor exports the repaired goods.

Summary of Questions

1. Are the logistical services (arranging for the movement of the parts and associated paperwork) zero-rated?
2. Assuming the services are zero-rated under s. 7 of Part V, Schedule VI, (or alternatively under s. 4) would the answer change if the services also included warehousing?
3. Alternatively, can the non-resident voluntarily register based on providing the services (via its sub-contractor) in Canada and be entitled to ITCs?

Summary of suggested answer

S. 7 should be applicable as the services are not “in respect” of the parts and the only connection with Canada is doing the processing here. As they are purely logistical services, Robin Aerospace should not be applicable as there is no question of testing or designing parts or doing anything with respect to the parts. Warehousing services should not prevent the zero-rating of the logistics services because this would be temporary. Alternatively, if the services are in respect of the parts, s. 4 would be applicable as the services are in respect of the goods being repaired/overhauled which are then exported.

CRA Comments

Question 1

The conclusive determination of whether services such as the logistical services described in the question would be zero-rated under section 4 or 7 of Part V of Schedule VI to the Excise Tax Act would require consideration of all relevant facts. The information provided in the question is insufficient to make such a determination. For instance, additional information would be required to properly characterize the supply and to determine whether single or multiple supplies are being made.

Based on the limited information provided, it appears that the logistics services in the scenario provided would be considered to be services in respect of the parts and would consequently be excluded from zero-rating under section 7 of Part V of Schedule VI to the ETA. In particular, it appears that based on the application of GST/HST Policy Statement P-169R there would be a direct connection between the services and the parts. Furthermore, based on the limited information provided, we are unable to determine whether the supply of the services could be zero-rated under section 4 of Part V of Schedule VI to the ETA.

Additional information would also be required in order to determine whether any other provisions in theETA could apply to provide relief of the GST/HST in the scenario provided.

Question 2

Our response is the same as the response to question one above. Whether the warehousing services that are provided by the third party, in addition to the other logistical services, would change the characterization and tax status of the supply would depend on the facts of each case, including the terms of any agreements between the third party and the Non- resident.

Question 3

Where it is established that the Non-resident entered into an agreement to supply a service to be performed in Canada, the non-resident could voluntarily register for GST/HST purposes and would generally be entitled to an input tax credit for the tax paid on the logistical services that it acquires.

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Q.13. Non-resident's supply of goods by way of consignment sales in Canada

Summary of Facts / Background

1. A non-resident person supplies commodities by sale worldwide.
2. The non-resident person agrees to sell them to a Canadian corporation (“Canco”) on a consignment basis.
3. Canco agrees to purchase them as consignee and act as the importer of record.
4. Canco takes possession of them upon delivery at a Canadian port before customs clearance and pays GST as importer of record.
5. Canco transfers them to its storage facilities in Canada.
6. The non-resident supplier retains title to and incurs the cost of financing the inventory while in storage, until Canco finds a customer in Canada.
7. When Canco locates a customer, a “flash sale” from the non-resident supplier to Canco occurs, immediately followed by a resale to Canco’s Canadian customer.
8. Canco makes payment for the commodities outside Canada.
9. The non-resident supplier is not listed in Canadian directories, and does not have an office, place of business, bank account, employees or agents in Canada.

Summary of Question

Is the non-resident supplier carrying on business in Canada and must it register for GST/HST?

Summary of Discussion

The CRA has stated in interpretation HQR0001118 that not all non-residents who sell goods on consignment in Canada are required to register for GST/HST. In these circumstances, the Canadian consignee takes delivery before customs clearance; acts as importer of record; maintains physical possession until a customer is found in Canada; and solicits orders for itself. The non-resident supplier has no presence in Canada other than holding title to the consigned goods for purposes of financing the inventory and maintaining its security interest before resale to the consignee.

Would the non-resident supplier be regarded as carrying on business in Canada and be required to register for GST/HST?

CRA Comments

This issue was addressed in our response to Question 13 of our 2008 meeting and in Example 9 of GST/HSTPolicy Statement P-051R2 –Carrying on Business in Canada. Based on the limited information provided, the non-resident would appear to be carrying on business in Canada for GST/HST purposes based on the fact that there is an inventory of goods for sale in Canada, delivery of the goods that are eventually supplied by the non-resident occurs in Canada and the non-resident solicits orders in Canada.

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Q.14. Rebates for pension entities

Summary of Facts / Background

Pension entities are permitted a rebate amount under s. 261.01(2) ETA based on the “pension rebate amount” for a “claim period.”

Sometimes a pension entity’s eligible amount for that purpose will be the result of the deemed supply from the employer occurring several months prior to the end of the pension entity’s claim period. It appears that in some cases the CRA will refuse to consider or reject the related rebate application since it was filed before the end of the claim period.

Summary of Question

Can a pension rebate be paid for a claim period before the end of that claim period? If not, why?

CRA Comments

A rebate cannot be paid to a particular pension entity for a particular claim period unless the pension entity is a “qualifying pension entity” as defined.

Specifically, subsection 261.01(2) provides that the Minister shall pay a rebate to a pension entity for a claim period of the pension entity, provided the pension entity is, on the last day of the claim period, a “qualifying pension entity”. To pay the rebate other than on or after the last day of the claim period would not be in accordance with the intent of this subsection especially given that a qualifying pension entity may not make more than one application for a rebate for a particular claim period pursuant to subsection 261.01(4).

A “claim period” has the meaning assigned by subsection 259(1). A claim period is

• a reporting period if the pension entity is a registrant; or
• the first two or last two fiscal quarters of a fiscal year if the pension entity is not a registrant.

Finally, note that a qualifying pension entity must file the rebate application within the two-year time restriction described in subsection 261.01(3).

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Q.15. Deemed permanent establishments for "trust and loan corporations"

Summary of Facts / Background

A Co is a Canadian resident corporation whose principal business is the lending of money or the purchasing of debt securities or a combination thereof (e.g., automobile financing). It is a listed financial institution under s. 149(1)(a)(viii) ETA, has only one permanent establishment in Ontario as defined in s. 400(2) of ITA, and lends money to individuals across Canada.

Summary of Question

How does the CRA defines a "loan corporation" under s. 4(c) of the SLFI Regulations? Does the CRA look to a corporation's incorporation under the federal Trust and Loan Companies Act or registration under provincial statutes in determining whether a corporation is a "loan corporation"? Or does the CRA interpret it as having the meaning of s. 149(1)(a)(viii): "a person whose principal business is the lending of money or the purchasing of debt securities or a combination thereof"?

Summary of Analysis

S. 4(c) of the SLFI Regulations states that “if a financial institution is a trust and loan corporation, a trust corporation or a loan corporation....” it is deemed to have a permanent establishment in a province where a loan that was made by the financial institution is owing by a person resident in the province. The terms "trust and loan corporation", "trust corporation" and "loan corporation" are not defined. Assume A Co is not a "trust corporation". If A Co is a "loan corporation", it will be deemed to have permanent establishments across Canada (i.e., in every province where it has made a loan to an individual). If it is not a "loan corporation", A Co will not have deemed permanent establishments in each province. Rather, pursuant to subsection 1(1) of the SLFI Regulations, it would have only one permanent establishment as determined under s. 400(2) of the ITR, and would therefore not be an SLFI.

CRA Comments

Paragraph 4(c) of the draft Selected Listed Financial Institutions Attribution Method (GST/HST) Regulations (draft SLFI Regulations) released on January 28, 2011 provides, in part, that if a financial institution is a trust and loan corporation, a trust corporation or a loan corporation and, if at any time in a taxation year of the financial institution, the financial institution conducts business (other than business in respect of loans) in a province or a loan that was made by the financial institution is outstanding and is secured by land situated in a province or, if not secured by land, is owing by a person resident in a province, the financial institution is deemed to have a permanent establishment in the province throughout the taxation year.

A “loan corporation” is not defined in the draft SLFI Regulations or the Excise Tax Act. However, it is our position that a corporation whose principal business is the lending of money or the making of loan is a loan corporation. Paragraphs 9 through 12 of GST/HST Memoranda Series 17.6 Definition of “Listed Financial Institution” provides guidance on determining a person’s principal business. Some factors to be considered include: the relative profits realized by each segment of a person’s business; the total number of supplies made and the total value of the revenue received from supplies made in each business activity; the commercial practices of the person, including the time and attention and effort expended in each business activity; and the corporate objects of the corporation. Also, a corporation that is considered a loan corporation for purposes of federal or provincial statute, such as the federal Trust and Loan Companies Act, would be considered a “loan corporation” for purposes of the draft SLFI Regulations.

A corporation that is considered a loan corporation for purposes of the Income Tax Act would also be considered a “loan corporation” for purposes of the draft SLFI Regulations.

In the example provided, if A Co is a “loan corporation” it would be deemed to have a permanent establishment in a province where a loan made by A Co is outstanding and is secured by land situated in the province or, if the loan is not secured by land, is owing by a person resident in the province, pursuant to paragraph 4(c) of the draft SLFI Regulations.

However, if A Co is not a financial institution described in section 4, it will only be considered to have a permanent establishment in a province if it has a permanent establishment, as determined under subsection 400(2) of the Income Tax Regulations, in the province, as described above.

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Q.16. SLFI status of limited partnership engaged exclusively in investment activities

Summary of Facts / Background

A Canadian limited partnership (LP) that is engaged exclusively in investment in equity securities has two corporate members, each with a permanent establishment in a different particular province through which the business of the partnership is carried on. The LP would therefore be a "qualifying partnership" pursuant to s. 2 of the draft SLFI Regulations.

Summary of Question

Under what circumstances would the CRA consider the LP to be a SLFI?

Summary of Analysis

To be an SLFI, an entity must first be a listed financial institution under s. 149(1)(a) of the ETA. If the LP were an investment corporation or a mutual fund corporation, it would clearly be a listed financial institution by virtue of s. 149(1)(a)(ix) - "an investment plan". The only potentially applicable subparagraph for a LP would be s. 149(1)(a)(iii), "a person whose principal business is as a trader or dealer in, or as a broker or salesperson of, financial instruments or money". In paragraph 7 of GST Memorandum (New Series) 17.6, the CRA defines a person whose principal business is as a "trader" in financial instruments to include "any person...who buys and sells financial instruments as principal". This would appear to include the LP in question. The CRA further states in paragraph 12 that the determination of a person's "principal business" is a question of fact based on the following factors:

• the relative profits realized by each segment of a person's business;
• the total number of supplies made and the total value of the revenue received from supplies made in each business activity;
• the relative value of the assets employed in each business activity;
• the commercial practices of the person including the time, attention and efforts expended by the employees, managers or corporate officers in each business activity; and
• the terms of any partnership agreement if the person is a partnership, or the corporate objects in the case of a corporation.

It is a question of fact whether the primary business activity of the LP is trading in equity securities or holding equity securities. The determinative factor will be the profits realized as dividends issued by the equity securities (i.e., profits realized by holding securities) versus the capital gains from any sales of equity securities (i.e., profits realized by trading securities).

If the profits of the LP are principally comprised of dividends and not capital gains, is the LP not a listed financial institution and therefore not an SLFI? If the profits are principally comprised of capital gains on sales of equity securities, is the limited partnership a listed financial institution and therefore an SLFI?

CRA Comments

Proposed subsection 225.2(1) of the ETA provides that a financial institution is a selected listed financial institution (SLFI) throughout a reporting period in a fiscal year that ends in a particular taxation year of the financial institution if the financial institution is a listed financial institution described in any of subparagraphs 149(1)(a)(i) to (x)during the particular taxation year and a prescribed financial institution. Section 11 of the draft Selected Listed Financial Institutions Attribution Method (GST/HST) Regulations (draft SLFI Regulations) released on January 28, 2011 describes a prescribed financial institution.

A “qualifying partnership” would be considered a “prescribed person for purposes of proposed subsection 225.2(1) of the ETA. Section 2 of the draft SLFI Regulations defines the term “qualifying partnership” for purposes of these regulations. In general terms, a partnership is a “qualifying partnership” if the partnership has a member that has a permanent establishment in a particular participating province through which a business of the partnership is carried on or that is deemed under section 4 to be a permanent establishment of the member and a member (including the same member) that has, using the same criteria, a permanent establishment in any other province.

It is important to note that it is necessary that a business of the limited partnership be carried on through both permanent establishments mentioned above unless the member of the partnership is deemed to have a permanent establish under section 4. Where the Canadian limited partnership, described in the question, is considered to be a “qualifying partnership”, it is then necessary to determine if the Canadian limited partnership is described in any of subparagraphs 149(1)(a)(i) to (x) of the ETA.

A person would be a listed financial institution described in subparagraph 149(1)(a)(iii) if their principal business is as a trader or dealer in, or as a broker or salesperson of, financial instruments or money. This means that a person who principal business is buying and selling financial instruments as principal would be considered a listed financial institution described in subparagraph 149(1)(a)(iii).

It is a question of fact whether or not the principal business of a particular person, such as the Canadian limited partnership, is as a dealer of financial instruments.

As discussed above, GST/HST Memoranda Series 17.6 Definition of “Listed Financial Institution” provides guidance on determining a person’s principal business in paragraphs 9 through 12. Some factors to be considered include: the relative profits realized by each segment of a person’s business; the total number of supplies made and the total value of the revenue received from supplies made in each business activity; the commercial practices of the person, including the time and attention and effort expended in each business activity; and the terms of any partnership agreement if the person is a partnership.

Although we agree that an evaluation of the profits realized as dividends issued by the equity securities (i.e., profits realized by holding securities) versus the capital gains from any sales of equity securities (i.e., profits realized by trading securities) should be considered in determining the Canadian limited partnership’s principal business activity, we do not agree that it is the sole determinative factor.

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Q.17. Financial services : trailing commissions

Summary of Facts / Background

In example 4 of revised GST/HST Notice No. 250, June, 2010, the CRA provided this situation:

A commission is paid to the salesperson by the dealer at the time mutual fund units are purchased by the client. The dealer is paid a trailing commission by the mutual fund manager in respect of the value of the units of the funds that are held in the accounts. The dealer pays the salesperson a percentage of the dealer’s trailing commission on a monthly basis on each account that is serviced by the salesperson, based upon the value of all of the units held in the accounts serviced by the salesperson.

In the original version of Notice 250, in example 2, it seemed to suggest that all trailer commissions were taxable. However, in the revised Notice 250, the CRA states that:

It would be a question of fact as to whether the services provided in any particular case are considered to be a single supply that is made only in consideration of the commission on the purchase of the units or a combination of the commission on the purchase and the trailing commission. The facts and circumstances of each transaction would have to be considered on their own merits.

Summary of Question

Please provide some examples of fact situations where a particular trailing commission is not taxable.

CRA Comments

GST/HST Technical Information Bulletin B-105, Changes to the Definition of Financial Service (TIB B-105) issued February 2011, replaced, among other publications, GST/HST Notice No. 250 thereby making the Notice obsolete. Example 4 in TIB B-105 provides guidance on the application of the GST/HST to trailing commissions.

A trailing commission paid to a dealer may be consideration for an exempt supply of a financial service under paragraph (l) of the definition of financial service in subsection 123(1) depending on all the facts and circumstances. This may be the case where the original dealer (the person who facilitated the initial sale of shares or trust units) provides services that are predominantly services of arranging for the sale of financial instruments. In such a case, there must be a direct and clear connection between the trailing commission and the services performed by that dealer to facilitate the initial sale of the financial instruments.

However, if the dealer’s services performed after the initial sale of the financial instruments are predominantly to “service” the client’s account, the trailing commission received for the supply of such services would be consideration for a taxable supply.

To “service” a client’s account includes, but is not limited to:

• regularly contacting the client after the initial sale to review the status of the account and the appropriateness of the securities held in the account in light of the client’s financial needs and investment objectives (e.g., holding the client invested in those securities, performing research and analysis);
• offer advice by recommending any appropriate change in the account; and
• provide assistance to the client by answering any questions the client may have regarding the securities and on exercising any right or privilege connected to those securities or to the account.

In such circumstances, even if the dealer performed certain services that could be described under paragraph (l) of the definition of financial service, those services would be excluded from the definition by paragraphs (p), (q), (q.1) or (r.4). At our meeting, you asked that we provide an example where a trailing commission is not consideration for a financial service.

It is our understanding that a register dealer who is not the person who facilitated the initial purchase or sale of shares or units in a mutual fund corporation or trust to a client may receive a trailing commission in respect of those shares or units. In this situation, the dealer receives the trailing commission to service a client’s account which is not a supply of a financial service as defined in subsection 123(1) of the ETA.

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Q.18. Financial services update

Summary of Question

Request for update on new or developing issues on financial services.

CRA Comments

We continue to receive requests for rulings and interpretations with respect to the application of paragraph (l) in the definition of financial service in subsection 123(1) of the Excise Tax Act and whether particular services are supplies of financial services. In the past year several rulings and interpretations were issued that discuss diverse fact situations and issues related to the application of the GST/HST to services provided by various types of dealers, brokers, agents, and entities that provide intermediation services. The letters include rulings and interpretations on services provided by insurance brokers, processing and credit investigation services related to conditional sales contracts, web-based loan application services, third party administration services of employee benefit plans, and referral services for debt financing. Severed versions of these letters are either currently available or will be made available through third party publishers.

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Q.19. Precious metals

Summary of Facts / Background

The supply of a “precious metal” is either exempt from GST as a “financial service” or zero-rated when supplied by a refiner or person on whose behalf the precious metal was refined.

Where multiple owners of jewellery arrange for a refiner to process the jewellery into a precious metal (e.g. a gold bar of a purity level of at least 99.5% gold), would the sale of each owner’s interest in the precious metal constitute a supply of a financial service? Consider the following scenario:

1. Corporation X’s jewellery can be refined to create 2/3rd of a gold bar;
2. Corporation Y’s jewellery can be refined to create 1/3rd of a gold bar;
3. Each of Corporation X and Corporation Y have retained a Canadian Refiner to provide a service of processing the jewellery into a gold bar; and
4. Once the refining is complete and the gold bar is a “precious metal”, Corporation X and Corporation Y have the option of selling their interest in the gold bar to the Canadian Refiner.

Summary of Question

Would Corporation X’s sale of its interest in the gold bar be considered a supply of a precious metal?

CRA Comments

A precious metal is defined in subsection 123(1) of the Excise Tax Act (ETA) as a bar, ingot, coin or wafer that is composed of gold, silver or platinum and that is refined to a purity level of at least 99.5% in the case of gold and platinum, and 99.9% in the case of silver. In addition, to be considered a “precious metal”, a bar, ingot or wafer at the required purity levels must be generally recognized and accepted for trading on Canadian financial markets. Typically, these products will bear markings that indicate the purity level of the metal and have an identification mark of the issuing financial institution or refinery. Only gold, silver or platinum bars, ingots or wafers meeting these requirements would be considered precious metals forGST/HST purposes.

In the scenario provided, Corporation X is selling its 2/3rd interest in a gold bar. The definition of precious metal under subsection 123(1) of the ETA does not include an interest in the metal. Accordingly, the sale of an interest in a gold bar by Corporation X or Corporation Y would not be considered a supply of a precious metal.

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Q.20. Place of suppy rules - legal services

Summary of Facts / Background

A Canadian law firm registered for the GST/HST is performing legal services on behalf of a lender in a secured financing transaction where security for the loan is registered in multiple provinces against the borrower’s tangible personal property which is primarily located in Ontario and real property which is primarily located in Alberta. Assume that there is a single supply of legal services to the lender, the legal services are all in respect of good and/or real property in Canada, and the services cannot be split into separate supplies between (i) legal services in respect of goods, and (ii) legal services in respect of real property.

Summary of Question 1

Which provincial place of supply rule applies:

1. the rule in s. 14 of the New Harmonized Value - added Tax System Regulations respecting real property? OR
2. the rule in s. 15 or s. 16 of the New Harmonized Value-added Tax System Regulations respecting tangible personal property, depending on whether or not the goods move between provinces throughout the time that the services are performed?

Summary of Question 2

Respecting the example in #1 above, how is the lender’s legal counsel to know the location of the secured inventory throughout the time that the services are performed? The borrower might not know or track this information precisely. If the lender’s legal counsel cannot ascertain whether any secured inventory moved between provinces, should legal counsel default to the rule in s. 15 of the New Harmonized Value-added Tax System Regulations?

CRA Comments

Question 1

The question states that a single supply of a service is made consisting of services that relate to tangible personal property and real property. As indicated during our discussion of Question #4 for last year’s meeting, in cases where it is established based on a complete set of facts that a single supply of a service is made consisting of services that relate to both tangible personal property and real property, the place of supply of the service will be determined by the general place of supply rules for services in section 13 of Division 3 of Part 1 of the New Harmonized Value-Added Tax System Regulations.

Question 2

Based on the information provided, the issue would not arise in a scenario such as the one provided in Question #1 because, as previously indicated, the place of supply of the single supply of the service would be determined by the general place of supply rules for services in section 13 of Division 3 of Part 1 of the New Harmonized Value-Added Tax System Regulations.

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Q.21. Place of supply rules - business address of a trust

Summary of Facts / Background

A) A Canadian pension entity (a trust) is administered by three Trustees (the "Board"). Two Trustees are resident in Ontario and one in Quebec. The Board generally holds meetings at the Quebec-resident trustee's office in Montreal. A third party, A Co, provides services to the trust and is registered for GST/HST.

B) Fact as above, except that the Board generally holds meetings via conference call.

Summary of Question

The place of supply, and thus rate of GST/HST that A Co should charge, will depend on the business address provided by the trust to A Co. What business address should the Board provide to A Co?

Summary of Analysis

For income tax purposes, CRA has generally accepted that the residency of a trust is determined by the residency of its trustees (more than 50% of the trustees who exercise management and control over the trust are resident in that jurisdiction), but St. Michael Trust Corp. v. Her Majesty the Queen (2010 FCA 309) (Garron), has indicated that the test should be the place where the central management and control of the trust is actually exercised.

In scenario A) the majority of trustees are resident in Ontario, but central management and control of the trust is exercised in Montreal. In scenario B) the majority of trustees are resident in Ontario and there is no obvious location of central management and control.

What is the appropriate business address for the Board to provide in such circumstances? Is the residency of the trust a critical factor for GST/HST place of supply purposes? If so, please provide guidance on the residency of a trust for GST/HST purposes following Garron.

CRA Comments

Where none of the more specific place of supply rules for services apply, the place of supply of the taxable services supplied by A Co. to the trust and ultimately the applicable rate of tax that should be applied is determined by applying the general place of supply rules for services in section 13 of Division 3 of Part 1 of the New Harmonized Value-Added Tax System Regulations.

Therefore, as noted in the question, the place of supply will be determined based on the business address of the trust that is obtained by A Co. in the ordinary course of its business. The concept of the residency of the trust as described in the analysis is not a critical factor in the application of the place of supply rule.

As stated in Technical Information Bulletin B-103 a business address is generally considered to be an address at which a business is located and can include, among other things, the address of an office, a branch, a factory or a workshop of the recipient. In circumstances where A Co. acquires more than one business address of the trust in the ordinary course of its business, the business address of the trust from which A Co. is hired pursuant to the agreement for the supply (the “contracting address”) will generally be the address that is most closely connected with the supply. This address will therefore determine the province in which the supply of the service is made where it is in Canada and is obtained by the A Co. in the ordinary course of its business.

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Q.22. Assignment of lease and "one time" place of supply rules in section 136.1

Summary of Question

S. 136.1(1)(d) provides for a one-time place of supply rule for supplies of property made by lease such that if the original supply is deemed to be made outside of Canada then all supplies will be deemed to be made outside of Canada.

Where a lessor sells leased property and assigns the lease to a third party, will the “place of supply” continue to be determined by the location where the original lessor’s supply was made? Consider this situation:

1. Non resident lessor (“Original Lessor”) leases equipment to CanadaCo, who receives possession and use of the equipment in the US;
2. Original Lessor sells the leased equipment to a Canadian resident Corporation (the “New Lessor”), a GST registrant, and the Original Lessor assigns the lease to the New Lessor; and
3. The lease agreement is not novated (and the lessee may not be aware of the assignment).

Will the “New Lessor’s” supplies be considered to have been made outside of Canada?

CRA Comments

Based on the information provided and with the assumption that the original lease agreement is not novated, the supplies made by New Lessor for each lease interval subsequent to the assignment of the lease to New Lessor are deemed to be made outside Canada based on paragraphs 136.1(1)(d) and 142(2)(b) of the ETA because possession or use of the property was originally given or made available to the lessee outside Canada under the lease agreement.

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Q.23. Winding up of a partnership - ETA subsection 272.1(6)

Summary of facts/background

What is the scope of s. 272.1(6) ETA which deems a partnership to continue to exist until the GST/HST registration is cancelled, as follows:

Where a partnership would, but for this subsection, be regarded as having ceased to exist, the partnership is deemed for the purposes of this Part not to have ceased to exist until the registration of the partnership is cancelled.

A limited partnership (LP) held commercial real estate, was registered for GST/HST and accounted for/remitted GST/HST on rental payments respecting the commercial real estate.

The LP sold its commercial real estate and was wound up, and its certificate as a limited partnership cancelled, effective Dec. 31. The assets of the LP (cash) was distributed to the partners at the dissolution. None of the partners were registered for GST/HST.

The partnership had not applied for de-registration at the time of wind-up, because invoices had not been received from some service providers relating to the disposition of the real estate and the winding-up of the partnership.

The remaining invoices were addressed to the LP since they were determined to be in respect of the partnership’s business and management.

S. 141.1(3)(a) deems as follows:

to the extent that a person does anything (other than make a supply) in connection with the acquisition, establishment, disposition or termination of a commercial activity of the person, the person shall be deemed to have done that thing in the course of commercial activities of the person[;]

Summary of Questions

Can the partnership make these claims:

1. ITCs on the partnership’s return for a period dated after the dissolution date relating to invoices addressed to the partnership and issued before that date;
2. ITCs on the partnership’s return for a period dated after the dissolution date on invoices issued after that date for work performed before that date; and
3. ITCs on the partnership’s return for a period dated after the dissolution date on invoices issued after that date for work performed for the partnership after that date.

CRA Comments

We are unable to respond specifically with respect to the scenarios described above as it is not clear as to whether the partnership paid the GST/HST on the acquisition of the services in question since the partnership assets are distributed to the partners at the time of dissolution. Furthermore, it is not clear in scenario c. as to whether the services in question (work performed) are with respect to a supply made (or agreement entered into) prior to the dissolution of the partnership.

We are pleased to provide you with the following general comments with respect to the application of subsections 272.1(6) and 141.1(3) to partnerships. Under the provisions of subsection 272.1(6), where a partnership would but for that subsection cease to exist, the partnership is deemed not to have ceased to exist for the purposes of Part IX of the ETA until the registration of the partnership is cancelled. As a result, the partnership continues to be subject to the GST/HST rules until it is deregistered.

Generally, subsection 169(1) provides that where a GST/HST registrant partnership acquires a service, the partnership may claim an ITC for GST/HST paid on the acquisition of the service to the extent to which the partnership acquired the service for consumption, use or supply in the course of its commercial activities. Documentary requirements are set out at subsection 169(4) and the related Input Tax Credit Information (GST/HST) Regulations.

Subsection 141.1(3) in part clarifies that to the extent the partnership does anything (other than make a supply) in connection with the termination of its commercial activities, the partnership shall be deemed to have done that thing in the course of its commercial activities.

These subsections allow ITC’s to which a partnership may have become entitled, to be claimed in a return filed by the partnership after dissolution of the partnership. This will allow for the winding-up of the partnership’s commercial activity. Thus, even if a partnership has been dissolved, its GST/HST registration should remain open and not be cancelled until any ITCs to which the partnership is entitled have been claimed in a return filed for the partnership.

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Q.24. Partnerships and section 217.1

Summary of facts/background

In Year 1, a majority of the partners in a partnership, holding 60% of the partnership interest, are resident in Canada.

In Year 2, those partners hold only 40% of the partnership interest (i.e., at no time do the Canadian resident partners hold more than 40% of the partnership interest).

The partnership engages in an activity in Year 1 and Year 2.

Summary of questions

1. Is the partnership a “qualifying taxpayer” throughout Year 1 under s. 217.1(1)(b)(iii)?
2. Is the partnership a “qualifying taxpayer” throughout Year 2 under s. 217.1(1)(b)(iii)?

Summary of analysis

S. 217.1(1)(b)(iii) does not apply as the partnership is not a “qualifying taxpayer” throughout Year 1 or Year 2, as the partners do not have beneficial ownership of the partnership’s property in Canada.

CRA Comments

A partnership is considered to be a person for GST/HST purposes. Therefore, based on the facts provided, it appears that subparagraph 217.1(1)(b)(iii) would not apply to the partnership in the scenario presented. However, if the partnership is a financial institution it may still meet the definition of “qualifying taxpayer” if it meets the conditions set out in subparagraph 217.1(1)(b)(i) that the partnership is resident in Canada or subparagraph (ii) that the partnership has a qualifying establishment in Canada.

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Q.25. Builder disclosure requirements - retroactive laws

Summary of question

On November 18, 2009, B.C. and Ontario both released Information Notices #3 Residential Housing — New Housing Rebates and Transitional Rules for British Columbia and Ontario HST, respectively, which described the builder disclosure requirements:

If a written agreement of purchase and sale for a newly constructed or substantially renovated home is entered into after November 18, 2009 and before July 1, 2010, the builder would be required to disclose in the written agreement whether the provincial component of the HST would apply to the sale and, if so, whether the stated price in the agreement includes the applicable provincial component of the HST, net of the B.C. new housing rebate and the PST transitional new housing rebate, if applicable.

If the transaction would be subject to the provincial component of the HST and the builder did not make a disclosure as outlined above, the stated price in the written agreement would be deemed under the transitional rules to include the provincial component of the HST. In such a case, the purchaser would not be required to pay the provincial component of the HST in addition to the stated price in the agreement.

Similarly, GST/HST Notice 244, released December 2009, set out the builder disclosure requirements:

54. What would the disclosure requirements be for builders under the proposed transitional rules for sales of newly constructed or substantially renovated housing in Ontario?

If a written agreement of purchase and sale for a newly constructed or substantially renovated residential complex is entered into after June 18, 2009 and before July 1, 2010, the builder would be required to disclose in the written agreement whether the provincial part of the HST applies to the sale and, if so, whether the stated price in the agreement includes the provincial part of theHST, net of the Ontario new housing rebate and the RST transitional new housing rebate, if applicable.

If the transaction is subject to the HST and the builder did not make a disclosure as outlined above, the stated price in the written agreement would be deemed, under the transitional rules, to include the provincial part of the HST. In such a case, the purchaser would not be required to pay the provincial part of the HSTin addition to the stated price in the agreement.

The legislative requirements of the builder disclosure rules are in the New Value Added Regulations New Harmonized Value-added Tax System Regulations No. 2, filed June 17, 2010 and require both the total tax payable and the total of the rates of the tax payable be indicated in the agreement of purchase and sale. Specifically, s. 50(c) requires the agreement to indicate in writing:

(i) the total tax payable in respect of the supply in a manner that clearly indicates the amount of that total and whether or not that amount takes into account any amount to be paid or credited in accordance with subsection 254(4) or 256.21(3) of the Act,

(ii) the total of the rates at which tax is payable in respect of the supply.

Will disclosure statements that were consistent with B.C., Ontario and the CRA’s Notices (being the only publicly available information before the filing of the Regulations on June 17, 2010) be accepted by the CRA, even if those disclosure statements do not include both the total tax payable and the total of the rates payable?

CRA Comments

Section 50 of the New Harmonized Value-added Tax System Regulations, No. 2 (the regulations) provides certain rules where a builder fails to make certain written disclosures in an agreement of purchase and sale for a residential complex where the agreement was entered into:

after June 18, 2009 and before July 1, 2010 in the case of a complex situated in Ontario, and

after November 18, 2009 and before July 1, 2010 in the case of a complex in British Columbia.

Paragraph 50(c) of the Regulations provides that if the agreement does not indicate in writing:

(i) the total tax payable on the sale and whether that total tax takes into account the amount of tax paid or credited as a GST/HST new housing rebate and a provincial new housing rebate, and

(ii) the rate at which tax applies

then the rules set out in paragraph 50(e) will apply, assuming that the other pre-conditions in paragraphs 50(a), (b) and (d) are also met.

Under paragraph 50(c), the agreement must fail to indicate both conditions (i) and (ii) in order for paragraph (c) to be met. If the agreement includes one of the conditions, i.e., either (c)(i) or (c)(ii), then it is not the case that the agreement fails to indicate both conditions – the agreement still indicates one of the conditions.

As such, if an agreement of purchase and sale indicates in writing the total tax payable and whether that tax payable takes into account an amount paid or credited as a GST/HST new housing rebate and provincial new housing rebate, the provisions of paragraph 50(c) are not met and it is not the case that the builder has failed to properly disclose the tax. In the circumstances described in this case, there would be no need to exercise administrative tolerance as the disclosure requirements would be met.

More information on builder disclosure requirements in respect of the transition to the Harmonized Sales Tax in Ontario and B.C. is available in GST/HST Info Sheet GI-90, Harmonized Sales Tax: Builder Disclosure Requirements in Ontario and British Columbia.

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Q.26. Transactions with retroactive effects

Summary of Facts / Background

Please comment on GST application to the following transactions with retroactive effects:

Situation 1:

Registrant A and Registrant B signed a contract for A to manufacture equipment for delivery in 12 months in the US. Advance payments were made quarterly. One month before delivery, B requested that the delivery be in Canada.

Summary of Question

Is A delinquent because A did not collect and remit GST on the previous payments? Or will CRA accept that the GST was only collected and remitted once A was advised of the change of place of delivery?

CRA Comments on Question 1

The issue here is how will CRA treat a supply that was initially thought to be relieved of GST/HST but turns out to be subject to GST/HST; will CRA consider the registrant to be delinquent because tax was not charged/remitted on the first 3 payments or will CRA accept that tax only needed to be charged/remitted once it was known that the supply was taxable?

Section 225 of the Excise Tax Act (the ETA) requires that all amounts that became collectible in a particular period to be included in calculating net tax.

Subsection 168(1) of the ETA provides the general rule on when tax is payable. It states that tax under Division II in respect of a taxable supply is payable by the recipient on the earlier of the day the consideration for the supply is paid and the day the consideration for the supply becomes due.

Subsection 168(2) of the ETA deals with situations where partial payments for a supply are made or fall due on more than one day. Tax is payable separately on the value of each partial payment on the earlier of the day on which the partial payment is paid and the day on which the partial payment becomes due.

Pursuant to section 152 of the ETA, consideration is due on the earlier of the date an invoice is issued, or would have been issued but for delay, and the date that the recipient is required to pay the consideration.

Given the above, consideration was due on the date of each of the advance quarterly payments, and tax was payable on that consideration. As such, the tax on each of the three payments was required to be included in net tax in the particular reporting period in which it became collectible.

Generally, where the appropriate amount of tax was not included in net tax in the correct reporting period, interest applies. However, in this case, the CRA may exercise discretion, on a case-by-case basis, in determining whether to assess interest on a late remittance.

SUMMARY OF FOLLOW-UP QUESTION 1A

Does CRA agree that the value of the supply made in Canada was not ascertainable until the change to delivery in Canada, and under s. 168(6), tax is not payable until the consideration can be determined?

CRA Comments on Question 1A

A change in the place of delivery does not necessarily mean that consideration was not ascertainable.

Subsection 168(6) provides as follows:

168(6) Value not ascertainable — Where under subsection (3) or (5) tax is payable on a day and the value of the consideration, or any part thereof, for the taxable supply is not ascertainable on that day,

(a) tax calculated on the value of the consideration or part, as the case may be, that is ascertainable on that day is payable on that day; and

(b) tax calculated on the value of the consideration or part, as the case may be, that is not ascertainable on that day is payable on the day the value becomes ascertainable.

Subsection (6) deals with situations were a supply becomes payable on a given day, but all or part of the consideration is unascertainable on that day. For example, consider a sale of real property where the consideration was to include both a fixed amount a variable amount based on annual income derived from the property over a period of time. The tax on the fixed amount, i.e. the ascertainable amount, would be calculated on the day that amount is paid or becomes payable according to the agreement. The tax on the variable amount would only become taxable on the day when the value of the consideration is ascertainable, i.e. at year end during life of the agreement.

In other words, subsection 168(6) separates the tax on the value of the consideration into two distinct portions, one that is ascertainable and another that will become ascertainable. In the instant case, at the very least the majority of the value of the consideration was ascertainable at the time the payments were made.

Even if the consideration was not ascertainable, payments were still made, and as stated in our response to the question for Situation 1, pursuant to subsection 168(2), tax is payable separately on the value of each partial payment on the earlier of the day on which the partial payment is paid and the day on which the partial payment becomes due.

Summary of follow-up Question 1B

Does the change in place of delivery result in a new agreement?

CRA Comments on Question 1B

Given the lack of details of a specific scenario, it is difficult to provide a definitive response. However, the change to the delivery address may be performed by an amendment of the contract and would not necessarily be considered a novation, i.e., a new agreement. In practical terms, for a novation there must be an indication that the creditor accepts the new contract in full satisfaction and substitution for the old contract.

Summary of Question 2:

A contract signed on June 15, 2011 respecting a sale of tangible personal property specifies that the title to the property was transferred effective January 1, 2011. No payment was due nor made before the contract was signed.

Summary of Question

Will the vendor be considered delinquent because the GST was not collected and remitted with his February 2011 return (re ETA 168 3)? Or will the CRA accept that the GST be collected and remitted at the time of the contract was signed?

CRA Comments on Question 2

The general rule on when tax is payable (subsection 168(1) of the ETA) states that tax under Division II in respect of a taxable supply is payable by the recipient on the earlier of the day the consideration for the supply is paid and the day the consideration for the supply becomes due.

Subsection 168(3) of the ETA provides that, where all or any part of the consideration has neither been paid nor become due on or before the last day of the calendar month following the month in which the supply is completed, tax calculated on the value of the consideration or part thereof, is payable on that day. In the case of a sale of tangible personal property, paragraph 168(3)(a) provides that the supply is completed ownership or possession of the property is transferred to the recipient.

Subsection 168(6) of the ETA states that where under subsection (3) or (5) tax is payable on a given day and the value of consideration, or part thereof, for the taxable supply is not ascertainable on that day, the tax calculated on the value of the consideration, or part thereof, that is not ascertainable on that day is payable on the day the value becomes ascertainable.

It is a question of fact when consideration becomes ascertainable. If the value of consideration in respect of the taxable supply was not ascertainable until the contract was signed on June 15, 2011, the tax on this supply is payable on June 15, 2011, the day the contract was signed. However, if the consideration became ascertainable on some earlier date, then that would be the date that would be the relevant date in determining when tax became payable.

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Q.27. Section 156 election: Newco's purchase of token supplies

Summary of Facts / Background

“Qualifying member” as defined in s. 156(1) requires a person to be a registrant who has last manufactured, produced, acquired or imported all or substantially all of its property for use exclusively in a commercial activity.

Deeming rules in s. 141.1(3) provide that anything done in connection with the acquisition or establishment of a commercial activity shall be deemed to have been done in the course of a commercial activity.

Summary of Question

Would the purchase of property of a nominal value such as office supplies enable a newly incorporated entity to enter into a s. 156 election where items acquired will be used either (i) in connection with the acquisition or establishment of a commercial activity; or (ii) the commercial activity that is eventually carried on? NewCo purchases an electronic device before purchasing personal property from a closely related corporation and the President of the NewCo uses that device (i) to negotiate the agreement of purchase and sale; and (ii) to correspond with third party advisors in connection with the transfer. Would that electronic device constitute property that was acquired for use exclusively in a commercial activity so as to permit NewCo to enter into a s. 156 election?

CRA Comments

Where a NewCo does anything (other than make a supply) in connection with the acquisition or establishment of a commercial activity of the NewCo that permits it to become a registrant and where the NewCo acquires property such as the electronic device referred to in this question for carrying out its start-up activities, the electronic device would be property for purposes of paragraph 156(1)(c) of the definition of “qualifying member”. Where the electronic device was acquired for the purpose of acquiring or establishing a commercial activity of the registrant, it will be deemed to have been acquired in the course of commercial activities of the registrant. In this example, we understand that the electronic device is all or substantially all of the property of the NewCo. If the electronic device is used exclusively in the commercial activity of the NewCo and all the other requirements that apply to the NewCo for electing under section 156 are satisfied, the NewCo would be eligible to enter into an election under section 156.

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Q.28. Section 167 election and leased premises

Summary of Question

Often where there is a supply of a “part of a business” and the supplier carries on business in single premises, the purchaser will not acquire ownership, possession or use of the portion of the supplier’s premises used to carry on the part of the business being transferred.

GST/HST Interpretation Letter 11735-15 May 1996, indicates that, “where the real property used in the supplier's business is not acquired by the recipient (i.e., the recipient intends to rent from a third party or purchase another building to carry on the business), the real property subsequently acquired by the recipient must be less than 10% of all the property required to carry on the business.” Is that still CRA’s position, or is it only necessary to consider the property that is being acquired under the agreement and not what is subsequently acquired?

Summary of Analysis

A vendor rents its premises and transfers all of its assets (worth $5,000,000), other than its office lease, to a purchaser. It does not make sense that the s. 167 election would apply in circumstances where the purchaser entered in to an arm’s length lease for premises (which would generally have a fair market value of $0), but the election would not apply if the purchaser acquired the building it uses for its premises for $10,000,000.

CRA Comments

It is a question of fact whether a particular transaction would qualify as a supply of a “part of a business”. It is not clear, based on the facts provided, that this requirement would be met in the scenario presented.

Assuming that the supply in the example would qualify as a supply of a part of a business, the property acquired under the agreement for the supply would need to be all or substantially all (i.e., 90% or more) of the property that can reasonably be regarded as being necessary for the recipient to be capable of carrying on the part of the business. As a result, any property that is acquired by the purchaser subsequently or in the possession of the purchaser (e.g., real property) that can reasonably be regarded as being necessary for the recipient to be capable of carrying on the part of the business would need to be 10% or less of all the property required to carry on the part of a business as a business. The fair market value of leased property would be a question of valuation. GST/HST Rulings generally does not provide a determination of the fair market value of property.

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Q.29. Application of section 186

Summary of Facts / Background

Parentco is a GST/HST registrant, resident in Canada. On January 25, 2012, it owned all of the shares of SubCo (and was thus related), and ParentCo signed a contract with a law firm re selling 60% of the shares of Subco. Once the transaction was concluded on March 1, 2012, the two corporations were no longer related.. The law firm billed Parentco on April 1, 2012. At all times, all or substantially all of the property of Subco is property that was acquired for consumption, use or supply in its commercial activities.

Summary of Question

Would s.186 apply to allow Parentco to claim ITCs for HST paid on the law firm’s bill even though Parentco and Subco were not related on April 1 when GST/HST became payable?

Summary of Analysis

We submit that s.186(1) applies to deem the legal services to have been acquired by ParentCo for use in commercial activities. When services were acquired, Parentco and Subco were related (ETA s. 186(1)(a)). When tax in respect of the acquisition became payable, all or substantially all of the property of Subco was property that was acquired for consumption, use or supply in its commercial activities (ETA s. 186(1)(b)).

CRA Comments

According to the facts provided, ParentCo is a registrant, resident in Canada and is related to SubCo at the time ParentCo acquires legal services that relate to selling 60% of the shares of SubCo. At all times, including the time the GST/HST in respect of the legal services becomes payable or is paid without becoming payable, all or substantially all of the property of SubCo is property that was acquired for consumption, use or supply in its commercial activities.

Given the preceding facts, for purposes of determining ITCs of ParentCo, to the extent these legal services relate to SubCo’s shares, the services would be deemed under subsection 186(1) to have been acquired in the course of commercial activities of ParentCo provided all or substantially all of the property of SubCo was property that was last acquired by SubCo for consumption, use or supply exclusively in the course of its commercial activities. ParentCo would be eligible for ITCs provided the other requirements under section 169 for claiming an ITC are met.

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Q.30. Free supply rule

Summary of Facts / Background

Corporation A, a GST registrant, holds debt and equity interests in several other corporations. Corporation A incurs expenses (including GST) that are used to enable Corporation A to provide business advice to such other corporations. The other corporations are GST-registered and are engaged exclusively in commercial activities. S. 186(1) does not apply. No fees are payable for advice received. The purpose of providing the advice is to facilitate or further the businesses of the other corporations.

Summary of Question

Does s. 141.01(4) apply to permit Corporation A to claim ITCs on expenses incurred in providing the “free” business advice?

CRA Comments

It appears that Corporation A is not providing business advice in the course of its endeavour because it would appear that this scenario is more consistent with paying the expenses of another person (i.e., the expenses incurred to provide the business advice for no consideration to corporations in which Corporation A has invested) rather than carrying on its own separate business. As a result, it appears that the conditions in paragraph 141.01(4)(a) are not met in this situation.

Even if it could be considered that a supply of business advice was provided in the course of Corporation A’s endeavour and the conditions in paragraph 141.01(4)(a) were met, it would appear that Corporation A’s purpose in making supplies of business advice for no consideration would be to facilitate or further Corporation A’s own purposes of managing its investment in the other corporations, and those purposes are not the making of taxable supplies for consideration.

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Q.31. Damage payments

Summary of Facts / Background

A purchaser illegally breaches a contract with a supplier. The Court grants certain amounts to the supplier as damages resulting in the termination of the contract.

An amount is paid as a penalty or indemnity for terminating the contract. That amount is subject to s. 182 ETA and is therefore deemed to be GST included.

Are the following amounts paid pursuant to a breach of contract also subject to s. 182 ETA?

Summary of Question

Compensation due to financial loss and a loss in profit

The Court determined that a financial loss occurred due to the termination of the contract as the supplier had incurred numerous expenses, including for specialized equipment not otherwise useful to the supplier. As well, the Court established that the supplier would have had a profit. Do those compensation amounts qualify as amounts paid as a consequence of the breach of the contract such that s. 182 ETA should apply?

CRA Comments

Provided the payment to the registrant supplier is an amount other than consideration for the supply (under the agreement for the supply) and the payment is made as a consequence of the breach or termination of the agreement for the making of the taxable (other than zero- rated) supply, subsection 182(1) would apply to amounts paid as damages relating to financial loss and loss of profit incurred by the registrant supplier. A review of relevant documentation (e.g., the terms of the relevant contract(s)) would be required.

Compensation obtained for damaging the business reputation

The Court concluded that the purchaser spread negative comments about the supplier and granted an amount in compensation for damages. Does that qualify as amounts paid as a consequence of the breach of the contract such that s. 182 ETA applies?

CRA Comments

Where a damage payment is awarded for damaging a business reputation and not made as a consequence of the breach or termination of an agreement for the making of a taxable (other than zero-rated) supply, subsection 182(1) would not apply. Under such circumstances, a compensation payment would not be subject to subsection 182(1). However, a compensatory damage payment in respect of an agreement for the making of a taxable supply will fall under subsection 182(1) if all of the criteria of that subsection have been met. A review of the relevant documentation would be required.

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Q.32. Non-taxable damage payments

Summary of Facts / Background

The following example from the original GST Policy Statement P-218: Tax Status of Damage Payments Not Within Section 182 of the Excise Tax Act is not included in the updated policy released on August 9, 2007:

SAMPLE RULING NO. 4

Our understanding of the facts and transactions is as follows:

Statement of Facts

1. A freight carrier (Transco) badly damaged the goods that it was transporting for its customer (Shipco).
2. Under the terms of the original agreement for the transportation of the goods, Transco was required to reimburse Shipco for the full value of the goods and ownership of the goods then passed to Transco.
3. As part of the settlement, Shipco signed a release form releasing Transco from any further liability for the damaged goods.
4. Transco is a registrant and Shipco is a registrant making taxable supplies (not zero- rated).
5. Transco was able to salvage the goods and sell them for a portion of their original value.

Ruling Requested

The payment by Transco to Shipco is not subject to GST/HST.

Ruling Given

The payment by Transco to Shipco is not subject to GST/HST.

Rationale

The payment is not consideration for a taxable supply. It is in essence compensatory and is not made in exchange for a supply of property or services by the other party. Additionally, the acceptance of the payment does not result in the payment being consideration for a supply, in that it represents compensation for the loss of Shipco's goods. The payment is meant to restore, to some degree, Shipco to the position it was in prior to the damage occurring. The change in ownership of the goods under the original agreement is not the reason for the compensation.

Summary of Question

Has the above conclusion changed?

CRA Comments

The omission of Sample Ruling No. 4 in Policy Statement P-218R issued on August 9, 2007, was not indicative of a change in policy. Rather, the policy statement was revised to clarify the application of section 182 of the ETA to amounts that are paid otherwise than as consideration for a supply such as damage payments. Based on the terms of any relevant agreement, there may be an instance in such a scenario where the amount paid by Transco to Shipco may not be an amount that is paid otherwise than as consideration for a supply but rather consideration for a supply of property. A review of the relevant agreement would be required to determine the underlying reason for the payment.

The conclusion remains the same however with respect to the application of subsection 182(1). Subsection 182(1) would not apply to the amount paid by Transco to Shipco since the requirement that the payment must be made to the person who was to be the supplier under the original agreement was not met.

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Q.33. Charactierization of telecommunication services

Summary of Facts / Background

Telecommunication services provided by non-traditional means can be characterized as either a supply of (a) a "service of emitting, transmitting or receiving signs, signals, writing, images or sounds or intelligence of any nature by wire, cable, radio, optical or other electromagnetic system, or by any similar technical system" or (b) making available for such emission, transmission or reception telecommunications facilities of a person who carries on the business of supplying services referred to in paragraph (a). Also, it can be difficult to apply the existing place of supply rules.

Summary of Question

Following Question 14 from last year’s round table, has the CRA issued any rulings or interpretations or does the CRA have any direction to offer regarding these non-traditional telecommunication services, for example voice over internet protocol ("VOIP")?

CRA Comments

The CRA is currently considering the determination of the place of supply for certain supplies of telecommunication services such as the ones noted in the question. We have not recently issued any precedent setting rulings or interpretations with respect to the non- traditional telecommunication services described.

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Q.34. Deal vouchers

Summary of Facts / Background

Several internet companies offer “grouped purchase” arrangements. They sell a “coupon/voucher” (in electronic format) which would entitle the purchaser to receive goods or services from a third party supplier at a specific discounted price. However, if an insufficient number of visitors mark their interests in a given “coupon/voucher”, the deal is taken off the website and the “coupons/vouchers” are not sold.

The “coupons/vouchers” usually have an expiry date. After that date, the customer can still redeem the “coupon/voucher” against goods or services from the third party supplier, but only at the value equal to the price that the customer paid for the “coupon/voucher”.

Example

• An internet company publishes a potential promotional offer. The internet company and the third party suppliers are registered for GST/HST and deal at arm’s length.
• The website indicates that 50 customers must accept to purchase a “coupon/voucher” before a given date for that promotion to take place or it will be withdrawn.
• More than 50 customers accept..
• A customer purchases a “coupon/voucher” for $20 from the internet company, who purchased the “coupon/voucher” from the third party supplier.
• The customer receives and may print an electronic copy of the “coupon/voucher” for presentation to the third party supplier. The “coupon/voucher” has no intrinsic value.
• The “coupon/voucher” states that “taxes and gratuities are not included”. It also indicates the dates and the time of day it can be used. Other restrictions may also apply, such as that it cannot be applied against purchases of alcohol, no cash back, cannot be used before a certain date, limit one “coupon/voucher” per purchase, etc.
• The “coupon/voucher” entitles the customer to a meal for a value of $40 at a given restaurant. The restrictions noted in the bullet immediately above apply.
• The customer goes to the restaurant and orders a meal of $40 and pays with the “coupon/voucher”, either via a printed version or with a handheld device.
• Alternatively, the customer may order a meal for $100, use the “coupon/voucher” to pay $40 of the total and another form of payment for the remainder.
• After the expiry date, the customer is still able to use the “coupon/voucher” at the restaurant, but only for a value of $20, and the same restrictions apply.

Summary of Question

1. How would the GST/HST apply on the sale of the “coupon/voucher” by the internet company to the customer?
2. How would the GST/HST apply on the supply of goods or services by the third party supplier upon redemption of the “coupon/voucher” by the customer?
3. Would the “coupon/voucher” qualify as a gift certificate under section 181.2 of the Excise Tax Act (Canada) (“ETA”) or as a coupon under section 181 of the ETA? Would the response change if the “coupon/voucher” had no expiry date so that the customer could use the $40 value at any time in the future?
4. Assume that the internet company does not sell the “coupon/voucher” to the customer but rather only provides the platform for the third party supplier to sell same to the customer, i.e., the third party supplier sells the “coupon/voucher” to the customer. Please respond to questions (b) and (c) in light of this change in facts.

CRA Comments

The GST/HST treatment of deal-based vouchers depends on the terms of the particular agreements between the parties and whether the voucher is a coupon or a gift certificate. The CRA requirements with respect to gift certificates are set out in Policy Statement P-202 Gift Certificates. Based on the facts presented, the voucher is for a supply of a restaurant meal, is sold for consideration (i.e., the promotional price), is redeemable for the meal and has no intrinsic value. Hence, the voucher issued by the internet company is considered to be a gift certificate.

Summary of Question

How would the GST/HST apply on the sale of the “coupon/voucher” by the internet company to the customer?

CRA Comments

Section 181.2 provides that, for GST/HST purposes, the issuance or sale of a gift certificate for consideration shall be deemed not to be a supply and, when given as consideration for a supply of property or a service, the gift certificate shall be deemed to be money. Therefore, neither the internet company nor the merchant would be required to account for GST/HST on the issuance or sale of the voucher.

Summary of Question

How would the GST/HST apply on the supply of goods or services by the third party supplier when the “coupon/voucher” is redeemed?

CRA Comments

The GST/HST registrant merchant who accepts the voucher is required to account for the GST/HST payable by the customer on the value of the consideration of the taxable supply of the meal. At the time of redemption, the voucher is treated as money that is used as full or partial payment towards the purchase of the meal.

Since the merchant intends to supply the meal otherwise valued at the regular price of $40 for the promotional price of $20 paid for the voucher, the value of the consideration upon which GST/HST must be accounted for should be determined by reference to the promotional price of $20. At a later time, if the merchant agrees to apply the $20 paid for the voucher in whole or in part against any other taxable supply of meals, GST/HST is payable based on the value of consideration charged for the taxable supply.

Summary of Question

Would the “coupon/voucher” qualify as a gift certificate under s. 181.2 of the ETA or as a coupon under s. 181 of the ETA? What if the “coupon/voucher” had no expiry date ?

CRA Comments

For purposes of the application of section 181.2 the voucher is considered to be a gift certificate for the following reasons: the voucher is for a supply of a service, the voucher is sold for consideration, the voucher is redeemable for a meal and the voucher has no intrinsic value.

As long as these conditions remain unchanged, the voucher will be viewed as a gift certificate whether or not it contains an expiry date.

Summary of Question

If the internet company only provides the platform for the third party supplier to sell the “coupon/voucher” to the customer, how would the answers to questions (b) and (c) change?

CRA Comments

The answers provided in b) and c) would not change whether the sale of the voucher was made by the internet company or the third party supplier.

Please note that a registrant whose business involves the promotion and/or marketing of vouchers should charge, collect and remit GST/HST on amounts retained as consideration for the supply of the service provided to the merchants.

Although section 181.2 deems the issuance or sale of the gift certificate not to be a supply for GST/HSTpurposes, a person who makes that supply is still considered to be engaged in a commercial activity. Therefore, the person may be eligible to claim as input tax credits (ITCs) the GST/HST paid on expenses related to its commercial activity provided all of the requirements under section 169 for claiming ITCs are met.

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Q.35. Reimbursable coupons

Summary of Facts / Background

A registered retailer accepts a reimbursable coupon from a customer for the supply of a particular taxable good that the retailer ships to the customer. The coupon specifies a fixed-dollar amount of $113 including “all applicable sales taxes”. An identical coupon is used by customers in participating and non-participating provinces, with the retailer adjusting its pre-tax selling price in each province so that the after-tax price (including after retail sales tax (RST) in some provinces) always equals $113. The retailer receives reimbursement for the full coupon value ($113) from a third person.

Summary of Issue

There seems to be a problem with the calculation of the “tax collected” under s. 181(2)(b) in provinces like Manitoba that levy a provincial RST. In Manitoba, there is 7% RST and 5% GST for a total sales tax rate of 12% on the pre-tax selling price. In this case the consideration portion of the total coupon value would be $100.89 (i.e., 100/112 x $113), the RST would be equal to $7.06 (i.e., 7% x $100.89) and the GST would be equal to $5.05 (i.e., 5% x $100.89). The deemed “tax collectible” under s. 181(2)(a) is correct (i.e., the rule simply says that the tax collectible is equal to what it would be if the coupon were not accepted). However, the deemed “tax collected” under s. 181(2)(b) would be too high ($5.38) – i.e., based on the definition of “tax fraction” which in this case would be equal to 5/105. The “tax fraction” should, instead, be equal to 5/112. The problem is that the definition of “tax fraction” fails to take into account the RST component of the total coupon value.

Summary of Question

Since the tax collectible is correctly determined under s. 181(2)((a) (as $5.05), and since s. 181(2)(b) refers to the registrant as having been deemed to have collected “a portion of the tax collectible”, would the CRA accept the registrant including only the $5.05 in net tax (instead of $5.38) in this example? Does it depend on whether the third person who would be seeking to claim an ITC under s. 181(5)? How would s. 181(5) be applied (i.e., what amount of ITC would the third person obtain)?

CRA Comments

Subsection 181(1) defines the “tax fraction” of a coupon value. The tax fraction for a coupon redeemed for a supply made in a participating province is the appropriate fraction that takes into account the tax rates for both the provincial component of the HST for that participating province and the federal component of the HST. The tax fraction for a coupon redeemed for a supply made in a non-participating province is 5/105 taking into account the tax rate for the GST. The legislation does not contemplate situations where the coupon value may include RST.

The tax fraction for a coupon redeemed for a supply made in Manitoba, a non-participating province, is thus 5/105. For a coupon valued at $113, the GST included in this amount would thus be $5.38 ($113 × 5/105). Moreover, pursuant to paragraph 181(2)(b), the amount of tax deemed to have been collected in respect of a supply made in a non-participating province is also $5.38.

Also, subsection 181(5) states that the registrant person paying a reimbursement would be entitled to an ITC equal to the tax fraction of the coupon value or in this case $113 x 5/105 which is $5.38. The amount of tax deemed to have been collected under subsection 181(2) should not be less than the corresponding ITC claimed under subsection 181(5).

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Q.36. Director liability

Summary of Question

S. 323(4) ETA authorizes the Minister to issue a notice of assessment to a director of a corporation re an unsatisfied tax debt of such corporation under the ETA. S. 323(5) sets a limitation period of two years from the date the person “last ceased to be a director of the corporation”.

Where the sole director of a corporation resigns but submits a notice of objection in response to GST assessments raised against the corporation, does the CRA consider the individual to be a “de facto” director and therefore the two year limitation period has not started?

Where there continues to be a director or where the CRA takes the position that a sole director who has resigned is still acting as a “director”, is there administrative policy re any period of years beyond which the CRA would not pursue the director?

CRA Comments

Under subsection 323(1) of the Excise Tax Act (the ETA), a person who is a director of a corporation at a time when the corporation fails to remit an amount of net tax as required, or fails to repay GST/HST refund amounts to which it was not entitled, may be personally liable, together with the corporation, to pay these amounts, including any applicable interest or penalties. Under subsection 323(4), the Minister may assess the director for this amount. However, under subsection 323(5), a director is not liable if the assessment is raised more than two years after the person ceased to be a director.

The ETA does not address when a person ceases to be a director, nor does it define the word “director”. It would be a question of fact, and applicable incorporating law, as to whether the sole director of a corporation that resigns but submits a notice of objection in response to GST assessments raised against the company (in order to reduce or eliminate the director’s potential personal liability), would be considered a “de facto” director, or would remain legally a director, that is, a “de jure” director. If under the applicable incorporating law, the person is still a “de jure” director, the two year time limit for assessing the director, under subsection 323(5) would not have begun. If the person is no longer a “de jure” director, but is still carrying on the functions that a director would perform, such as engaging in discussions or negotiations regarding corporate matters or giving instructions in the name of the corporation, the person would be considered a “de facto director”, and as such, the two year time limit under subsection 323(5) for assessing that director would also not have begun.

The Canada Revenue Agency (the CRA) does not have an administrative policy concerning when a director may, or may not be, assessed. In our view, the only time limit to assessing a director in respect of a liability under subsection 323(1) of the ETA, is the two year time limit established under subsection 323(5).

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Q.37. Natural resource royalties

Summary of Question

Pursuant to s. 162(2) of the ETA, a supply of certain natural resource rights is deemed not to be a supply and therefore GST does not apply on any consideration payable for the supply of the right. An exception is set out in s. 162(3). In particular the supplier of rights is making a taxable supply and therefore is required to charge GST/HST if the supply is made to (a) a consumer; or (b) a person who is not a registrant and who acquires the right in order to make supplies to consumers. Where the recipient of the rights is a corporation registered for GST, there would appear to be no supply and no GST is applicable. However, where the recipient is an individual, it is difficult for the supplier to be able to comply with the ETA without interrogating the recipient as to whether the rights are for the recipient’s personal use or a “business” of making supplies only to consumers. What level of due diligence is acceptable for a supplier of rights that fall within the provisions of s. 162?

CRA Comments

Subsection 162(3) provides an exception to the deeming rules of ss. 162(2). Under ss. 162(3) the exception applies where the supply is made to (a) a consumer; or to (b) a person who is not a registrant and who acquires the right in order to make supplies to consumers.

We understand from our communications with the author of the question that, of particular interest is the application of section 162 in the case where a registrant operator makes supplies of stones or aggregate to an individual in return for the payment of a royalty.

The first question which the scenario raises is whether the supply is a supply of a right under 162(2) or a supply of the stone or aggregate. A supply of the right under ss. 162(2) would conceivably require the recipient to provide their own crusher and other equipment to facilitate the extraction of the resource. A supply of the stone or aggregate would be merely that: a supply of TPP which would be taxable under the general ETA rules regardless of the status of the recipient. The circumstances around each supply such as invoicing and the nature of any agreements will aid in determining the nature of the supply.

Where it is determined that the supply is of a right under ss. 162(2), the exceptions to the deeming rule under ss. 162(3) place an onus on the supplier to determine whether the recipient is a registrant and, if not, whether the recipient is a consumer (as defined in ss. 123(1)); or a person who is not a registrant and who acquires the right in order to make supplies to consumers.

In determining whether the recipient is a registrant, the CRA offers a GST/HST registry site where it can be determined whether, at the date of the transaction, a person was registered. The person requesting the information must enter the registration number, the business name and the date of the date of the transaction. The internet address of the GST registry is this: http://www.cra-arc.gc.ca/esrvc-srvce/tx/bsnss/gsthstrgstry/menu-eng.html . Even though it is possible that a “registrant” as defined under ss. 123(1) may not be registered, CRA would generally accept evidence of a search in the registry as a reasonable effort having been undertaken by the supplier determine the registration status of the recipient.

If indeed the recipient is not registered, and thus generally assumed not to be a registrant, the supplier must determine whether the recipient is a consumer (defined at ss. 123(1); or a person who is not a registrant and who acquires the right in order to make supplies to consumers. Where the unregistered recipient is a consumer or makes supplies of the products to consumers, amongst supplies to other recipients, the supply of the right is subject to the GST/HST.

No formal guidelines have been established for a supplier of a right under s. 162 to follow to ensure that the supplier is properly applying the ss. 162(3) exception. However, once it is determined that the recipient is not a registrant as explained above, the CRA would generally accept a declaration signed by the recipient stating that the recipient is not acquiring the right as a consumer or in order to make supplies of the products to consumers, as reasonable evidence that the supply of the right is properly deemed not to be a supply and not subject to the exception under ss. 162(3). Where the supply of the right is made under a written agreement, the declaration could be integrated in the agreement.

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Q.38. Medical care services

Summary of Question

In view of the TCC decision in Jema International Travel Clinic Inc. which determined that registered nurses could provide “medical care”, will CRA amend its Policy Statement P-248, The Application of GST/HST to the Supply of an Independent Medical Examination and to Other Independent Assessments, such that “medical care” is no longer limited to services performed by, or under the supervision of, a medical doctor and can include services performed by other health care professionals?

CRA Comments

The CRA is considering the impact of the Judge’s finding in the Jema case that the Appellant operated a health care facility in which the Appellant provided medical care. In the meantime, there will be no change to CRA’s policy as set out in Policy Statement P-248.

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Q.39. GAAR

Summary of Question

Does Copthorne Holdings affect how GAAR will be applied in the context of GST/HST? Have CRA’s policies changed?

CRA Comments:

In Copthorne Holdings1, the Supreme Court of Canada (“SCC”) applied the general anti- avoidance rule (”GAAR”) provisions found in section 245 of the Income Tax Act (“ITA”). The judge stated that under subsection 245(3) of the ITA, a transaction will be an avoidance transaction if it results in a tax benefit and is not undertaken primarily for a bona fide non tax purpose. An avoidance transaction may operate alone to produce a tax benefit, or may operate as part of a series of transactions to produce a tax benefit. The SCCjudge found that the Tax Court judge was correct to find that the certain transaction in question was not primarily undertaken for a bona fide non tax purpose. Because there was a series of transactions which resulted in a tax benefit, the finding that one transaction in the series was an avoidance transaction satisfies the requirements of subsection 245(3).

The phrase “series of transactions” is found in both the Excise Tax Act (“ETA”) and ITA GAAR provisions; while this phrase is defined under subsection 248(10) in the ITA, no parallel definition exists in the ETA.

The GAAR provisions found in section 274 of the ETA closely resemble the GAAR provisions under the ITA. It is intended that the ETA and ITA GAAR provisions will generally be administered in as similar a manner as possible, with allowances for differences in how the provisions are drafted. CRA’s policy with respect to the application of the GAAR for GST/HST purposes is described in Memorandum 500-6-9, General Anti-Avoidance Rule.

Whether the GAAR will apply to a particular GST/HST transaction or to a series of transactions that includes that transaction is a question of fact.

1 Copthorne Holdings Ltd. v. R., 2011 SCC 63

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Q.40. Objection and Appeals update

Summary of Question

Some re-assessments following decisions on HST objections have not been assigned a reference number. What is the “practice” re issuing reference numbers for re-assessments? Is this a change and if so, why was it done? Are there any other changes to the way objections and appeals are processed?

CRA Comments

Prior to April 2007, Appeals offices prepared manual notices of re-Assessment and a “Notice Number” was inserted on the notice.

Since the implementation of the redesigned GST/HST system in April 2007, all notices of assessment and reassessment are produced electronically. These notices share a “common look and feel”. Instead of a “notice number” at the notice level, post-April 2007 notice show a “Reference Number” for each assessment communicated in the notice.

A GST/HST Notice of Reassessment issued by Appeals is normally presented in the following manner. The first page of the Notice entitled “RESULTS” starts with the following verse: “This Notice is issued as a result of your Notice of Objection”. The following pages entitled “SUMMARY OF (RE)ASSESSMENT” detail the assessments for each reporting periods. All of the “SUMMARY” pages bear a Reference Number. In other words, if five reporting periods are reported in the Notice of Reassessment, the notice will contain five reference numbers; one for each period.

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Q.41. Update on audit issues and discussion

Summary of Question

Request for update re any new or developing audit issues.

CRA Comments

Comments were provided verbally at the meeting.

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Q.42. Update on Court Cases/Objection and discussion

Summary of Question 1

Request for update re any new or developing issues in the Court Cases/Objection Area.

CRA Comments

Handout provided at the meeting.

Summary of Question 2

Has the SCC’s decision in Century Services Inc. v. Canada and Quebec (Revenue) v. Caisse populaire Desjardins de Montmagny et al. resulted in changes in policy or in procedures for auditors/collectors?

CRA Comments

Yes; procedures have changed to respect the above decisions.

On accounts subject to CCAA proceedings, outstanding GST/HST collected but unremitted to the CRA used to be treated as being held in trust for the Crown. After the Supreme Court of Canada (SCC) decision in Century Services Inc. (Ted LeRoy Trucking Ltd), where the CCAA plan had not been sanctioned by the Court, the Crown lost its deemed trust priority for all GST and ATSCA debts . Unless these debts are secured, theCRA will file an unsecured claim for the entire amount of the debt. Only the deemed trust amounts associated with unremitted source deductions currently have a priority in CCAA proceedings.

In a decision rendered by the Supreme Court of Canada in the Quebec (Revenue) v. Caisse Populaire Desjardins de Montmagny, the GST/QST component of accounts receivable generated by a supplier prior to its bankruptcy, and subsequently collected by the trustee or received directly by the Crown from customers of the supplier were found to form part of the bankrupt’s estate, and thus subject to any priority contest between creditors in the bankruptcy. As a result, CRA policies, which held that these GST/QST amounts constituted property of the Crown and recoverable from the trustee, were revoked.

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Q.43. Updated gift certificate policy document, temporary recapture of ITCS, and place of supply TIB

Summary of question

Request for update on timing for the release of revised P-202 “Gift Certificates” dated February 20, 1996, TIB B-104 “Harmonized Sales Tax – Temporary Recapture of Input Tax Credits in Ontario and British Columbia” dated June 2010, and TIB B-103 “Harmonized Sales Tax — Place of Supply Rules for Determining Whether a Supply is Made in a Province”.

CRA Comments

P-202 “Gift Certificates” dated February 20, 1996
It is anticipated that the revised GST/HST Policy Statement P-202, “Gift Certificates” will be issued in the next couple of months.

TIB B-104 “Harmonized Sales Tax – Temporary Recapture of Input Tax Credits in Ontario and British Columbia” dated June 2010
We are currently in the process of updating GST/HST Technical Information Bulletin B-104 Harmonized Sales Tax – Temporary Recapture of Input Tax Credits in Ontario and British Columbia, dated June 2010. The updates will include references to the applicable provisions in Part 6 of the New Harmonized Value-Added Tax Systems Regulations No. 2, updates on telecommunication property and services that are subject to recapture, and how to determine the amount subject to recapture for an input tax credit on a motor vehicle allowance. Baring any unforeseen circumstances, we should have the updated bulletin ready for release this summer.

TIB B-103 Harmonized Sales Tax – Place of supply rules for determining whether a supply is made in a province
We are currently finalizing the update of GST/HST Technical Information Bulletin B-103 Harmonized Sales Tax — Place of Supply Rules for Determining Whether a Supply is Made in a Province and expect to release it for public consultation in April 2012.

Generally, the bulletin is being updated to address various place of supply related issues that we have identified or that have arisen since it was last updated in June 2010. This includes various issues that have been raised in the context of some of the written questions that you have submitted for past meetings.

The updated bulletin will be considerably larger than the previous version. It will include additional narrative, additional illustrative examples with diagrams, and flow charts to illustrate the application of certain rules. It will also confirm our existing interpretative position with respect to various place of supply related issues that are not new issues, but are issues that we have been asked about. Relevant legislative references will also be included throughout the bulletin.

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Q.44. Mileage allowances and RITCS – use of a factor

Summary of Facts / Background

The CRA has been in discussions with the Department of Finance and Ontario as to the use of a factor to determine the portion of a mileage allowance for motive fuel for consumption or use in a qualifying motor vehicle to enable a GST/HST registrant to determine the recaptured ITC pursuant to s. 236.01 of the ETA.

Summary of Question

1. Request for an update re the discussions with the Department of Finance and Ontario.
2. Will the CRA accept a factor determined by the GST/HST registrant that is reasonable in the circumstance?
3. What would the CRA consider in determining the reasonableness of a factor chosen by a GST/HST registrant?
4. Will the CRA update TIB B-104 “Harmonized Sales Tax – Temporary Recapture of Input Tax Credits in Ontario and British Columbia”, June 2010, to address the use of a factor for mileage allowances?

CRA Comments

1. Section 174 of the Excise Tax Act (the ETA) deems the property or services for which an allowance is paid to be acquired by the person paying the allowance. A mileage allowance paid in respect of a qualifying motor vehicle is subject to the recapture of input tax credits (RITC) requirement in Ontario and British Columbia, under section 236.01 of the Excise Tax Act (the ETA ), to the extent that:
   1. A large business pays the allowance, and
   2. The property and/or service for which the allowance is paid would be a specified property or service had it been acquired directly by the large business.

   The Canada Revenue Agency (the CRA) considers the portion of a mileage allowance attributable to depreciation, and in Ontario, motive fuel, other than diesel, to be the portion of the allowance that would be paid in respect of specified property.

   The Department of Finance has advised the CRA that the Government of Ontario has decided against developing an administrative factor that could be used for calculating the RITC on a mileage allowance paid in respect of a qualifying motor vehicle. Instead, the CRA would allow for a fair and reasonable approach to determine the portion of the ITC on that mileage allowance that would be attributable to specified property and services, and therefore, subject to recapture.

2. Depending on the specific fact circumstances, the CRA, upon audit, would generally accept a factor determined by the GST/HST registrant that is reasonable in the circumstance.
3. Motor vehicle allowances cover many components, such as fuel, depreciation, maintenance, insurance, licensing, or registration. Based on the composition of the allowance that the GST/HSTregistrant pays, the CRA would generally look for a registrant’s reasonable allocation among the components to determine the RITC amount on this type of allowance.
4. Yes the Technical Information Bulletin, B-104, Harmonized Sales Tax – Temporary Recapture of Input Tax Credits in Ontario and British Columbia, dated June 2010, will be updated to include the most current information on calculating the RITC on a mileage allowance.

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Q.45. TRAVEL ALLOWANCES

Summary of Question

The travel allowance includes elements that are subject to a point of sales rebate (gas). Can a taxpayer use the 12/112 factor for travel allowance in BC? If yes, how should large businesses calculate the ITC recapture?

CRA Comments

Section 174 of the ETA, and Part 2 of the New Harmonized value-Added Tax System Regulations No. 2, deem 12/112ths of the allowance for the use of a motor vehicle substantially all within the province of British Columbia to be tax paid.

Motor vehicle allowances generally include a component that covers the cost of fuel; however, fuel purchased in British Columbia is subject to a point of sale rebate equal to the 7% provincial component of the HST. New subsection 234(4.1) of the ETA (found in section 2.2 of the Deduction for Provincial Rebate (GST/HST) Regulations) prevents any input tax credit, rebate, refund or remission under the ETA or any other Act of Parliament, to be credited, paid, granted or allowed to the extent that the amount can be determined directly or indirectly, to an amount that is subject to a point of sale rebate. As a result, only part of the deemed tax paid on an allowance for motor vehicle use in British Columbia can be claimed as an input tax credit (ITC) or as a rebate.

Because section 174 deems the person paying the allowance to have consumed or used any property or service in relation to the allowance, ITCs with respect to allowances paid by large businesses for qualifying motor vehicles for use in British Columbia are subject to recapture to the extent that allowances are paid in respect of specified property and services. Motor vehicle allowances cover many components, such as fuel, depreciation, maintenance, insurance, licensing, or registration. Of these components, for a mileage allowance for travel within British Columbia, only the depreciation component would be considered to be in respect of specified property. Large businesses would use their own reasonable allocation based on the composition of the motor vehicle allowances that they pay to determine the RITC amount on these allowances.

We appreciate the comments that you have provided to us in the past with respect to the place of supply rules and look forward to receiving your comments regarding the updated bulletin after it is released.

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Q.46. FOREIGN SEMINARS – ARE SERVICES IN PART IN CANADA

Summary of Facts / Background

A US Company, registered for GST, provides seminars in the US. They wish to sell conference packages at trade shows in Canada for a conference in the US. A representative of US Co would come to a trade show in Canada and pay for a booth at which US Co will advertise a conference.

Summary of Question

Would the services be considered to be rendered in part in Canada and the foreign conference subject to GST/HST if the forms to sign up for the conference are completed and the payment received in Canada? Would it make a difference if the forms were completed in Canada, but only approved after the representative returned to the US to process payment? What if the recipient receives incidental printed materials in Canada that include a workbook to be used at the seminar?

CRA Comments

Based on the limited information provided, it is unclear what the specific services to which the question is referring to are, and what their significance would be with respect to the determination of the place of supply.

Notwithstanding the fact that the conference packages are sold in Canada by a GST/HST registrant, if the supply is a supply of the right to attend a conference, that supply could be deemed to be made outside Canada under subsection 142(2) of the ETA by virtue of the fact that the right may not be used in Canada. The place where the payment is processed or the forms are signed would not have an impact on the place of supply in this case.

Furthermore, it is unlikely that the provision of incidental printed material would impact the determination of the place of supply of the right in the circumstances.

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Q.47. ASSESSMENTS INVOLVING THIRD PARTY IMPORTERS

Summary of Facts / Background

US Co, registered for GST, sells goods to a Canadian retailer (CR). A third party importer of record (IOR), also registered for GST/HST, is contracted by US Co. IOR is a constructive importer and has possession of the goods at importation. IOR does not take title to the goods, but provides delivery and other services relating to the goods in Canada. There is no agency election between US Co and IOR. IOR charges and collects applicable GST/HST from CR and remits it.

Summary of Question

Will the CRA assess US Co for the same GST/HST payable by CR?

CRA Comments

The information provided in the question is insufficient to provide a conclusive response. The basis for some of the assumptions made in the scenario are unclear including what the reason would be for an agency election not to be made between US Co if it is available. Also unclear are how IOR could be considered to be the constructive importer of the goods, the full extent of what it has agreed to supply and what its consequential tax obligations would be in relation to the other parties. Based on the limited information provided, if delivery of the goods supplied by US Co to CR occurs in Canada the supply of the goods would be made in Canada under subsection 142(1) of the ETA and US Co would have an obligation to collect tax in respect of the supply. This would be the case regardless of an obligation by IOR to collect and remit tax from CR in respect of a supply that it makes.

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Q.48. GST/HST RETROACTIVE REGISTRATION

Summary of Facts / Background

We understand CRA has changed its administrative policy re timelines for GST/HST registrations. CRA previously had an informal administrative policy to permit retroactive registrations back 30 days.

The new practice makes a voluntary registration effective on the date the CRA receives the application. We understand that if a prior effective date is requested and is within 30 days, it will be granted if the entity informs CRA that tax has been collected, even without further documentation. If an effective date is requested beyond 30 days, the CRA will require documentation that the tax was collected as early as the requested date.

We understand that small suppliers had complained that their registration requests were back-dated by 30 days without their approval.

Summary of comments/practical implications of new policy

With reorganizations or acquisitions where a new entity is incorporated and taxable assets are immediately transferred to that entity, the new entity often cannot be formed until a few days before closing (common in commercial real estate), or even the day of closing (common in a “Plan of Arrangement”). The new policy creates uncertainty whether the GST/HST registration for the new entity will have an effective date that is on or before closing, even if the application is forwarded to the CRA prior to closing.

Registrations can no longer be physically taken to the taxpayer’s local tax office. There is no guarantee that the forms will arrive or will not be misplaced. The CRA also does not inform registrants when their forms are deficient and are not processed.

Furthermore, a registrant cannot contact the local office to confirm the receipt and status of its application. Taxpayers must contact the centralized Business Window, which, if the application does not appear to be set up within normal processing time, routinely advises the taxpayer to resend the application to the local office and mark it as “urgent”.

Although immediate registration is offered by telephone, some information necessary to register an entity for GST/HST may not be available immediately. A company often will not have received confirmation of the business number before closing. Telephone registration is also difficult for partnerships and trusts, and is not allowed at all for non-resident entities.

Those with short-time frames for closing face a dilemma of whether to proceed with no certainty that the new entity will be registered for GST/HST purposes with an effective date on or before closing, or whether to delay closing until this uncertainty is resolved. Such a delay may have other significant implications, such as income tax, and may not be commercially viable.

The acquisition entity may be denied ITCs in connection with GST/HST it has incurred if it is not registered on a timely basis, which could have HST implications. Furthermore, a s. 167 election will be unavailable if the acquisition entity is not registered on the date of the transaction, which could result in unrecoverable GST/HST being payable by the entity on the acquisition. This is harsh given that GST/HST should be fully recoverable where parties are exclusively involved in commercial activity.

This is unfair. It will be very difficult for commodity tax practitioners to give taxpayers comfort that the acquisition entity will be registered for GST/HST purposes on or before closing. This new policy could be a significant impediment to mergers, acquisitions and large commercial transactions.

Summary of Question

Will the CRA revert to its long-standing policy of automatically permitting retroactive voluntary registrations for up to 30 days where the retroactive registration is requested by the taxpayer?

CRA Comments

For a voluntary GST/HST registration the CRA will accept an effective date of registration that is within 30 days of the date when the registration was made, regardless of the method of registration (online, telephone, or paper). See attached link to the CRA website for further confirmation.

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/rgstrng/ffctv-eng.html