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GST/HST Place of Supply Rules - IPP

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Sales Taxes  ->  GST/HST  ->  Place of Supply Rules -> Intangible Personal Property

Place of Supply Rules for Intangible Personal Property (IPP)

Intangible personal property (IPP) is, in general, a right rather than a physical object.  This would include intellectual property, contractual rights (such as a lease or licence), options, rights in relation to goods that are not in possession, and other rights that are enforceable by the courts.

A participating province is a province which charges HST, which includes a federal component (5%) and a provincial component.  A non-participating province charges 5% GST only, and no provincial component.  For rates by province/territory, see Sales Tax Rates in Canadian Provinces and Territories.

Where IPP is supplied via a lease, licence or similar arrangement, and an amount is billed for each period, or "lease interval", each lease interval could be subject to HST at a different rate.  This depends on the extent that the supply of IPP can be considered made in a different province based on the application of the place of supply rules for IPP.  The supply for each lease interval is considered to be made on the earliest of 

bullet the first day of the lease interval,
bullet the day on which the lease payment for that interval becomes payable, and
bullet the day that payment is made.

General place of supply rules for supplies of IPP:

  1. Supplies of IPP that
    1. can be used in Canada
    2. can only be used primarily (more than 50%) in the participating provinces

    will be considered to be made in a participating province and subject to the HST

  2. Supplies of IPP that
    1. can be used in Canada
    2. can only be used primarily (more than 50%) outside the participating provinces

    will be considered to be made in a non-participating province and subject to the GST

  3. The place of supply for supplies of IPP that can be used
    1. other than only primarily in the participating provinces and
    2. other than only primarily outside the participating provinces

    (i.e., 1 and 2 do not apply) will depend on a number of additional factors.

Specific place of supply rules, not the above general rules, apply to supplies of IPP that relate to goods, real property and services.

Other Resources

Canada Revenue Agency (CRA) Place of supply rules, including for intangible personal property

Department of Finance News Release 2010-014 Place of Supply - Supplies of Intangible Personal Property

Revised: September 19, 2017

 

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