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Charging HST on Services

Place of Supply Rules for Services

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Do you need to charge Harmonized Sales Tax (HST) on the services you provide? This article outlines and discusses the place of supply rules for services which determine whether or not HST needs to be charged.

HST on Services

The place of supply rules for supplies of services are generally based on the address of the recipient obtained by the supplier in the normal course of business, although there are exceptions.

Passenger transportation services, freight transportation services, postage and mail delivery services and telecommunication services are covered by specific place of supply rules (explained in Sections 6 to 9 of Harmonized Sales Tax: Place of supply rules for determining whether a supply is made in a province, GST/HST Technical Bulletin B-103, Canada Revenue Agency).

There are four general place of supply rules for services which determine the application of HST:

1) The supply of a service is proposed to be made in a province if in the normal course of business the supplier of a service obtains an address of the recipient that is located in the province...

2) If Rule 1 does not deem the supply of the service to be made in a province and the Canadian element of the service is performed primarily (more than 50%) in the participating provinces, the supply is... deemed made in the participating province in which the greatest proportion of the Canadian element of the service that is performed in the participating provinces is performed. (The Canadian element of the service refers to the portion of the service that is performed in Canada.)

3) If Rule 2 does not deem the supply of a service to be made in a participating province because the service is performed equally in two or more participating provinces, the service is ...deemed to be supplied in the participating province among those provinces that has the highest rate for the provincial component of the HST. If two or more of the participating provinces in this case have the same rate for the provincial component, HST will be required to be charged by the supplier using that particular rate.

4) If Rule 1 does not deem the supply of the service to be made in a province and the Canadian element of the service is performed otherwise than primarily (50% or less) in the participating provinces, the supply is proposed to be made in a non-participating province (Harmonized Sales Tax: Place of supply rules for determining whether a supply is made in a province, GST/HST Technical Bulletin B-103, Canada Revenue Agency, pp. 25-27).

Personal services are not covered by these general place of supply rules, except for advisory, consulting or professional services, which are covered by these general rules unless another specific rule applies to them.

Generally, when you provide personal services, if you perform "substantially all (90% or more)" of a personal service in the presence of the individual to whom it is rendered primarily (more than 50%) in the participating provinces, you charge HST based on the participating province in which the greatest proportion of the service is performed.

If the personal service is equally performed in two or more participating provinces, you charge HST based on the participating province that has the highest tax rate.

If substantially all (90% or more) of a personal service is performed in the presence of the individual to whom it is rendered (50% or less) in the participating provinces, "the supply is proposed to be made in a non-participating province" and you would charge only GST.

HST on Services Related to Tangible Personal Property

The application of HST depends on whether or not the tangible personal property stays in the same province(s) while the service is performed. For instance, if you provide automobile repair services in Ontario, the vehicles are staying in Ontario while you make the repairs, and subject to HST at a rate of 13%.

If two or more participating provinces are involved, the service is deemed to be supplied in the participating province among those provinces for which the rate of the provincial component of the HST is the highest (Ibid., p. 29).

If the tangible personal property does not stay in the same provinces while the service is performed, HST must be charged if:

  • the property is situated primarily (more than 50%) in participating provinces at any time the Canadian element of the service is performed,
  • the service is performed primarily (more than 50%) in participating provinces, and
  • the greatest proportion of the performance of the service, which is performed in the participating provinces, is performed in that participating province.

If the tangible personal property is situated otherwise than primarily (50% or less) in participating provinces (e.g., situated primarily in non-participating provinces or situated equally in participating and non-participating provinces) at any time the Canadian element of the service is performed or the service is performed otherwise than primarily (50% or less) in participating provinces, the supply of the service is proposed to be made in a non-participating province and HST would not be charged (Ibid., p. 29).

HST on Services Related to a Location-Specific Event

Services that relate to a location-specific event are an exception to the general place of supply rules. Services related to events such as a performance, festival, ceremony, convention, conference, symposium or similar event that will be primarily (more than 50%) performed at the location of the event in a province is proposed to be made in that province. So if you were providing services to a festival in Ontario, you would charge HST at a rate of 13%.

The Canada Revenue Agency's Harmonized Sales Tax: Place of supply rules for determining whether a supply is made in a province, GST/HST Technical Bulletin B-103 covers the place of supply rules for quite a few other topics, such as repair and maintenance services, computer-related services and Internet access, and customs brokerage services, so refer directly to the Bulletin if you need details on these.

See also: HST & Intangible Personal Property in Canada

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