IPP that relates to goods

Ordinary location of goods

Generally, the supplier and recipient by mutual agreement, determine where the ordinary location of property is at any given time. By mutual agreement, this location of property can change from time to time. Therefore, even if the original written agreement for a supply of property specified that the property will be located in a non-participating province, the parties might mutually agree subsequent to the signing of the contract that the property will be moved at a particular time to a participating province, in which case the latter location will be the "ordinary location" of the property at that particular time.

IPP that relates to goods

The general rules for supplies of IPP will not apply to supplies of IPP that relate to goods. Instead, the following rules will apply:

• A supply of IPP that relates to property that is ordinarily located in Canada is made in a participating province if the property in Canada to which the IPP relates is ordinarily located primarily (more than 50%) in the participating provinces and the greatest proportion of the property that is ordinarily located in the participating provinces is ordinarily located in that province. If property is ordinarily located equally in two or more participating provinces, the IPP is considered to be supplied in the participating province among those provinces for which the rate for the provincial part of the HST is the highest. If two or more of the participating provinces in this case have the same rate for the provincial part, the HST will be required to be charged by the supplier using that particular rate.
• A supply of IPP that relates to property that is ordinarily located in Canada is made in a non-participating province if the property is ordinarily located less than primarily (50% or less) in participating provinces.

Examples where the HST will apply
An Ontario company makes a supply to a Quebec company of an option to purchase a work of art that is ordinarily located in New Brunswick. The property that is ordinarily located in Canada to which the IPP relates is ordinarily located primarily in the participating provinces and the greatest proportion of the IPP that is ordinarily located in the participating provinces is ordinarily located in New Brunswick. The supply of the IPP is therefore made in New Brunswick and the HST will apply at a rate of 13%.

A company in Ontario makes a supply to another company in Ontario of IPP that relates to property that is located in Canada and outside Canada. The property ordinarily located in Ontario represents 20% of the total property and the property ordinarily located in the United States represents 80% of the total property. The property that is ordinarily located in Canada to which the IPP relates is ordinarily located primarily in the participating provinces and the greatest proportion of the property that is ordinarily located in the participating provinces is ordinarily located in Ontario. The supply of the IPP is therefore made in Ontario and the HST will apply at a rate of 13%.

Example where the GST will apply
A company in Ontario makes a supply of IPP to another Ontario company that relates to property. The property that is ordinarily located in Ontario represents 40% of the property and the property that is ordinarily located primarily in Quebec represents 60% of the total property. The property that is ordinarily located in Canada to which the IPP relates is not ordinarily located in the participating provinces. The supply of the IPP is therefore not made in a participating province and GST will apply at a rate of 5%.

For more examples, see GST/HST Technical Information Bulletin B-103, Harmonized Sales Tax - Place of supply rules for determining whether a supply is made in a province.

Forms and publications

• GST/HST Technical Information Bulletin B-103, Harmonized Sales Tax - Place of supply rules for determining whether a supply is made in a province