Characterization of supplies

In determining whether a particular supply made by electronic means is a supply of intangible personal property or a supply of a service, the Canada Revenue Agency will consider a number of factors.

This approach considers the nature of the agreement between the supplier and the customer, and whether the agreement is in substance for work (or work and materials), or for property (including a right to use the property).

Whether a supply is made in or outside Canada, affects the tax that applies to that supply.

Intangible personal property

Factors that generally indicate that a supply made by electronic means is intangible personal property are:

• a right in a product or a right to use a product for personal or commercial purposes is provided, such as intellectual property or a right to use intellectual property (e.g., a copyright), or rights of a temporary nature (e.g., a right to view, access or use a product while on-line);
• a product is provided that has already been created or developed, or is already in existence;
• a product is created or developed for a specific customer, but the supplier retains ownership of the product; and
• a right to make a copy of a digitized product is provided.

Services

Factors that generally indicate that a supply made by electronic means is a service are:

• the supply does not include the provision of rights (e.g., technical know-how), or if there is a provision of rights, the rights are incidental to the supply;
• the supply involves specific work that is performed by a person for a specific customer; and
• there is human involvement in making the supply.

Forms and publications

• GST/HST Technical Information Bulletin B-090, GST/HST and Electronic Commerce