Club Intrawest held that that although there was a single supply of services respecting real estate situated inside and outside Canada, the single supply could be split for purposes of applying the place of supply rules in s. 142, stating:
[T]he services relating to the operation of the vacation homes located in Canada are services in relation to real property situated in Canada and hence are a taxable supply—the services relating to the operation of the Intrawest vacation homes situated outside of Canada are services related to real property situated outside of Canada and hence are a non-taxable supply.
Will CRA apply the FCA’s decision to all similar situations – and can a single supply be broken down into “inherently distinct” parts for other purposes? CRA responded:
The CRA will apply the FCA’s decision regarding services relating to real property (that is, splitting up a single supply of services in relation to real property) to similar situations where a single supply of a service is made in relation to real property situated inside and outside Canada for purposes of the place of supply rules in section 142 of the ETA only.
We note that the end result of the FCA decision is generally consistent with the CRA’s position … B-103 … regarding the application of the place of supply rules in section 142 to services in relation to real property, pursuant to which only the proportion of the service that relates to the real property that is situated in Canada is considered to be made in Canada and subject to GST/HST.
