GST/HST Memorandum 3-3-5 “Place of Supply in a Province – General Rules for Intangible Personal Property” January 2025

Limitation in situs of use determined by the agreement or by factual limitations

14. The general place of supply rules can require a determination of the extent, if any, to which the use of the Canadian rights is limited to one or more provinces, which may generally be found in the terms of the agreement for the supply governing the use of the rights. …

15. However, the use of the rights may be limited to one or more provinces by the nature of the rights being supplied without such a restriction being explicitly stated in the terms of the agreement. For instance, if as a matter of fact, the right that is supplied could only ever be used from a single location in a single province, then the use of the right would be considered to be limited to that province regardless of whether this is explicitly stated in the terms of the agreement.

Application of place-of-supply rules can change at the beginning of each lease interval

19. … [S]eparate supplies of intangible personal property that are deemed to be made for each lease interval may be subject to the GST or the HST at a different rate, to the extent that those supplies are deemed to be made in a different province based on the application of the place of supply rules for intangible personal property.

Whether situs of use is limited is determined by the terms of the supply agreement rather than actual use

14. The general place of supply rules can require a determination of the extent, if any, to which the use of the Canadian rights is limited to one or more provinces, which may generally be found in the terms of the agreement for the supply governing the use of the rights. It is important to note that the location where the Canadian rights are actually used does not determine whether such rights are limited to being used in particular provinces; instead, it is only necessary to determine the provinces where the rights are allowed to be used.

15. However, the use of the rights may be limited to one or more provinces by the nature of the rights being supplied without such a restriction being explicitly stated in the terms of the agreement.

Use of rights must be specifically limited

29. [S. 6(1)] does not apply if the use of the rights is not specifically limited to one or more of the participating provinces. This would be the case, for example, if the rights can be used on an unlimited basis in more than one participating province.

Example 2

The licence of software by an Ontario supplier to an Ontario company provides that it may only be used at the licensee’s Ontario head office – so that under s. 6(1) the place of supply is in Ontario.

Example 3

A Nova Scotia company supplies another Nova Scotia company a franchise that provides the right to operate a retail business in Ontario (the place of supply, as that is the only province in which the IPP may be used).

Example 4

The place of supply of a pass, entitling an individual to admission to two plays at two theatres in Ontario and to admission to one play at a theatre in New Brunswick, is Ontario.

Example 5

A student in Ontario with a New Brunswick permanent address purchases for $250 at an Ontario membership desk a six-month membership to use the club’s fitness facilities, which are in both provinces. Under s. 6(2)(a) the place of supply is in Ontario.

Example 6

An individual purchases, at a New Brunswick theatre, for $300 a movie pass to attend 10 movies at any of a movie chain’s five cinemas in N.B. or Nova Scotia - N.B. is the province of supply.

Reasonableness of regarding an address as a business address

39. For purposes of clauses 6(2)(b)(i)(A) and (B) of the Regulations (and clauses 8(b)(i)(A) and (B) of the Regulations, as outlined in Rule 3B), which are based on a specific type of address, it must be reasonable for the supplier to be able to conclude that the type of address obtained is a business address of the recipient based on information that is available to the supplier. For example, if an online supplier asks its customers to provide what it identifies on its website as a business address for billing purposes and this is the only address of the recipient that the supplier obtains in the ordinary course of its business, the supplier is not required to verify whether the address provided by the recipient is actually a business address of the recipient.

Meaning of address obtained in the ordinary course of business

41. [This rule] does not require a supplier to obtain an address of the recipient that the supplier does not already obtain in the ordinary course of its business. …

42. An address of the recipient obtained by a supplier is only relevant [as a business address] if it is obtained in the ordinary course of the supplier's business practices in connection with the supply. However, any address of the recipient obtained in the ordinary course of business of the supplier should be taken into consideration in applying the rule. The relevant address of the recipient also does not have to be an address obtained in respect of every supply made to the recipient for it to be considered a relevant address obtained in the ordinary course of business.

Contracting and other business addresses

43. An address of the recipient obtained by a supplier in the ordinary course of business could therefore include any of the following:

• an address of the recipient from which the supplier is hired in connection with a supply pursuant to an agreement for the supply (the contracting address)
• an address of the recipient that the supplier deals with in connection with a supply
• a billing address of the recipient in connection with a supply

Example 8

• A student in Ontario with a New Brunswick permanent address purchases for $250 at an Ontario membership desk a six-month membership to use the club’s fitness facilities, which are in both provinces. On the automatic six‑month renewal, the renewal fee of $250 is automatically billed to the student's credit card with confirmation sent by mail to the home address on file in New Brunswick which, under Reg. 6(2)(b)(i)(A), is the province of supply.

Primacy generally accorded to the contracting address

50. The address of the recipient from which the supplier is hired pursuant to the agreement for the supply (the contracting address) is generally the address that is most closely connected with the supply. This address will therefore determine the province in which the supply is made where it is in Canada and is obtained by the supplier in the ordinary course of its business.

51. The determination of the place of supply can therefore be made with certainty at the time the supply is first made where the contracting address is identified in the agreement for the supply or, if it is not identified in the agreement, it has otherwise been obtained by the supplier in the ordinary course of its business. Where the recipient is a corporation, the contracting address could be the corporation's head office.

52. If the contracting address of the recipient is not obtained, the address most closely connected with the supply would be the address of the recipient that the supplier has the most contact with and that the supplier mostly uses in connection with the supply.

Reg. 6(2)(b)(i)(C) could apply, e.g., to a billing address

53. Clause 6(2)(b)(i)(C) …and … 8(b)(i)(C) … further provides that if the supplier does not obtain a home or business address in Canada of the recipient in the ordinary course of its business, but in the ordinary course of its business the supplier obtains another address in Canada of the recipient, the supply is made in the province in which the address that is most closely connected with the supply is located.

54. [In this context] … there is no requirement for the address of the recipient to be an address at which the recipient is located.

55. The types of addresses that could fall under this … Rule … could include an address of the recipient such as a billing address. The address must be obtained by the supplier for a legitimate underlying business reason. This address may correspond to an address that is in fact a home or business address of the recipient but that the supplier does not know is a home or business address because it is not the supplier's ordinary business practice to obtain this type of address. For instance, this could be the case where the supplier does not require recipients to identify the address as being a home or a business address.

Example 9

• A Quebec supplier licenses software to a Newfoundland company, which may only be used from the recipient’s offices in Newfoundland, New Brunswick and Quebec. In the ordinary course of its business, the supplier only obtains a Newfoundland address of the recipient, so that Newfoundland is the province of supply

Example 10

• An Ontario company supplies a Quebec company with a copyright for $500 that can only be used in Ontario and Nova Scotia and, in the ordinary course of business, obtains a Quebec address of the recipient. Reg. 6(2)(b) does not apply because the address is not in a participating province (see Reg. 6(2)(b)(ii)) nor in a province in which the copyright may be used (see Reg. 6(2)(b)(iii)). Accordingly, HST is imposed under Reg. 6(2)(c) at the rate for Nova Scotia, which has the highest rate for the participating provinces in which the copyright may be used.

Example 15

• An Ontario company licenses software to a Quebec company for use throughout Canada with the only business address of the recipient received in the ordinary course of business being an address in Quebec, which is the place of supply.

Example 17

• An Ontario individual purchases over the phone a membership than can be used in any province. The ordinary business practice of the B.C. supplier is to obtain the home address of the recipient (in this case, in Ontario) verified with credit card authorization and a billing address to which the membership card and invoice can be sent (here, in Quebec). The province of supply is Ontario (the Ontario address is what is relevant).

Example 21

• A lawyer operating an Ontario law firm and living in Quebec purchases access to an online law website by a subscription from an Ontario content provider and, consistent with the ordinary business practice of the provider, provides the law firm address as the business address and the lawyer's home address as the billing address. The Ontario contracting address is the one most closely connected with the supply and the IPP may be used in Ontario – so that the province of supply is Ontario.

Example 33

• A registered supplier supplies website access by monthly subscription from its business address in Ontario, giving access and download rights to digitized content, and with no restrictions as to where subscribers may use the website access. One customer is a regular GST/HST registered non-resident which supplies a Texas home address in the ordinary course of business of the supplier.
• Since in the ordinary course of business, the supplier has not obtained a Canadian address of the non-resident, and the content may be used anywhere in Canada, the province of supply is whichever of Newfoundland, New Brunswick, PEI and (subject to the upcoming rate reduction) Nova Scotia that is closest in proximity to the supplier’s business address.