IPP that can be used other than only primarily in participating provinces and other than only primarily outside participating provinces

Generally, three general place of supply rules apply where the Canadian rights for a supply of IPP (other than a supply of supply of IPP that relates to real property or goods or a supply of IPP that relates to services that is deemed to be made in a province based on the specific place of supply rule for IPP that relates to services) can be used otherwise than only primarily (50% or less) in participating provinces and otherwise than only primarily (50% or less) outside participating provinces.

Basically, these rules can apply where the Canadian rights for the property are not limited to being used only primarily (more than 50%) in the participating provinces or to being used only primarily (more than 50%) outside the participating provinces. Also, unlike the place of supply rules for IPP that can only be used primarily in participating provinces, these rules can result in the supply of IPP being considered made in a province that is not a participating province.

Rule 1

If the value of the amount for the supply of the IPP is $300 or less, the supply is made in a province if the supply is made through a permanent establishment of the supplier located in the province in the presence of an individual who is, or who acts on behalf of, the recipient, or through a vending machine situated in the province, and the IPP can be used in the province.

Example
An individual purchases a movie pass that provides ten adult admissions to any of a popular movie chain's locations. The chain has one or more locations in every Canadian province. The individual purchases the pass at a cost of $80 at one of the chain's Ontario locations.

The Canadian rights for the movie pass can be used less than primarily in the participating provinces and less than primarily outside the participating provinces. Also, the supply of the IPP is made in the presence of the recipient through a permanent establishment of the supplier that is in Ontario and the IPP can be used in Ontario. The supply of the IPP is therefore made in Ontario and the HST will apply at a rate of 13%.

Rule 2

If Rule 1 does not consider the supply to be made in a province, the supply may be considered made in a province if the supplier obtains an address of the recipient in the province in the normal course of business. Specifically, the supply of the IPP is made in a province if:

• in the normal course of business the supplier obtains an address that is;
  • a home or a business address in Canada of the recipient; or
  • if more than one such address is obtained, the home or business address in Canada of the recipient that is most closely connected with the supply; or
  • if the supplier does not obtain a home or business address in Canada of the recipient, any other address in Canada of the recipient that is most closely connected with the supply; and
• the address is in the province; and
• the IPP can be used in the province.

Example
A supplier in British Columbia (BC) supplies software by way of licence to a company in BC for use by its employees at its various offices throughout Canada. The software is downloaded electronically over the Internet. There are no restrictions with respect to where the software may be used. The business address of the recipient obtained by the supplier for the supply of the software is in BC.

The Canadian rights for the software can be used less than primarily in the participating provinces and less than primarily outside the participating provinces. Also, in the normal course of business, the supplier obtains a business address of the recipient in Canada that is in BC and the IPP can be used in BC. The supply of the IPP is therefore made in British Columbia and the HST will apply at a rate of 12%.

Rule 3

If the supply of the IPP is not considered to be made in a province under Rule 1 or Rule 2, the supply is made in the participating province for which the rate for the provincial part of the HST is the highest among the provinces in which the property can be used. 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.

Example
An individual purchases an air transportation pass that provides the individual with unlimited travel between Ontario, Manitoba, Saskatchewan and Alberta. No address is obtained by the supplier.

The Canadian rights for the air transportation pass can be used less than primarily in the participating provinces and less than primarily outside the participating provinces. The supply of the IPP is made in Ontario and the HST will apply at a rate of 13% because it is the province in which the IPP can be used that has the highest rate for the provincial part of the HST.

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