GST/HST Memorandum 3-3-3
August 2024

This memorandum cancels and replaces, in part, Draft GST/HST Technical Information Bulletin B-103, Harmonized Sales Tax – Place of supply rules for determining whether a supply is made in a province.

Except as otherwise noted, all statutory references in this publication are to the provisions of the Excise Tax Act (ETA), and all references to the Regulations are to the New Harmonized Value-added Tax System Regulations. The information in this publication does not replace the law found in the ETA and its regulations.

If this information does not completely address your particular situation, you may wish to refer to the ETA or relevant regulation, or call GST/HST Rulings at 1‑800‑959‑8287 for additional information. If you require certainty with respect to any particular GST/HST matter, you may request a ruling. GST/HST Memorandum 1-4, Excise and GST/HST Rulings and Interpretations Service, explains how to obtain a ruling or an interpretation and lists the GST/HST rulings centres.

If you are located in Quebec and wish to request a ruling related to the GST/HST, please call Revenu Québec at 1‑800‑567‑4692. You may also visit the Revenu Québec website at revenuquebec.ca to obtain general information.

For listed financial institutions that are selected listed financial institutions (SLFIs) for GST/HST or Quebec sales tax (QST) purposes or both, whether or not they are located in Quebec, the CRA administers the GST/HST and the QST. If you wish to make a technical GST/HST or QST enquiry related to SLFIs, please call 1‑855‑666‑5166.

GST/HST rates

Reference in this publication is made to supplies that are subject to the GST or the HST. The HST applies in the participating provinces at the following rates: 13% in Ontario and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.

Table of Contents

• General
• Tangible personal property supplied by way of sale
  • Deemed delivery
    • Supplier retains a common carrier on behalf of the recipient
  • Delivery of tangible personal property on exercise of option
  • Sale of a specified motor vehicle
• Tangible personal property supplied otherwise than by way of sale
  • Deemed supply
  • Supply of property for each lease interval
  • Supply for more than three months – specified motor vehicle
  • Supply for more than three months – property other than specified motor vehicle
    • Ordinary Location of Property
  • Supply for three months or less
    • Deemed delivery in a province
    • Single determination of place of supply based on initial delivery
• Railway rolling stock supplied otherwise than by way of sale
  • Rule 1 – Supplier delivers to a recipient in a province
  • Rule 2 – Place of supply for lease interval
  • Rule 3 – Renewal of agreement
  • Rule 4 – Agreements entered into before April 1, 1997
  • Rule 5 – Agreements entered into before July 1, 2010
  • Rule 6 – Agreements entered into before April 1, 2013
• First Nations goods and services tax – place of supply
  • Supply is deemed to be made on FNGST lands in a non-participating province
  • Supply is deemed to be made on FNGST lands in a participating province
  • Supply is deemed to be made in Canada, but not on FNGST lands

General

1. Taxable supplies of property or services that are made in Canada are generally subject to the GST (the federal part of the HST) under subsection 165(1) at the rate of 5%. In addition, taxable supplies that are made in a participating province are subject to the provincial part of the HST under subsection 165(2) at the provincial rate for the province, which results in the application of the HST at the relevant harmonized rate.

2. In the case of a taxable supply that is made in Canada, it is necessary to determine the province where the supply is made in order to apply the applicable tax and rate. Provincial place of supply rules exist for GST/HST purposes to determine the province in which a supply is deemed to be made.

3. Generally, the place of supply rules described in Chapter 3 of the GST/HST Memoranda Series are also used to determine if the First Nations goods and services tax (FNGST) applies to supplies where a First Nation or an Indigenous government has imposed the FNGST. For more information, refer to paragraphs 48 to 54 of this memorandum.

4. For further information regarding the legislative framework as well as the issues to consider before applying the provincial place of supply rules, refer to GST/HST Memorandum 3-3-2, Provincial Place of Supply – Overview.

5. Unless otherwise indicated, all references in this memorandum to supplies are to taxable (other than zero-rated) supplies made in Canada.

6. References in this memorandum to terms, concepts and examples are made in the context of the provincial place of supply rules for persons registered under Subdivision D of Division V of Part IX of the ETA (the regular GST/HST regime).

7. The Canada Revenue Agency (CRA) generally does not administer provincial taxes, duties or fees imposed by provincial legislation, other than the QST for persons that are selected listed financial institutions (SLFIs) for GST/HST or QST purposes or both. To determine whether any provincial taxes, duties or fees are applicable in respect of a supply (for example, the QST in Quebec for persons that are not SLFIs), contact the appropriate provincial taxation authority.

8. For the purposes of the provincial place of supply rules, the following provisions under Part I of Schedule IX apply:

• Pursuant to section 2, a floating home and a mobile home that is not affixed to land are each deemed to be tangible personal property and not real property.
• In accordance with section 3, where an agreement for a supply of tangible personal property is entered into but the property is never delivered to the recipient, the property is deemed to have been delivered where the property was to be delivered under the terms of the agreement.

Tangible personal property supplied by way of sale

9. Pursuant to subsection 123(1), sale in respect of property, includes “any transfer of the ownership of the property and a transfer of the possession of the property under an agreement to transfer ownership of the property”.

10. Pursuant to section 1 of Part II of Schedule IX, a sale of tangible personal property is generally made in a province if the supplier delivers the property or makes it available in the province to the recipient of the supply.

11. This rule is usually based on the province in which legal delivery of the goods to the recipient occurs, which can generally be determined by reference to the terms of the agreement for the sale of the goods and the applicable sale of goods law.

12. A specific place of supply rule applies with respect to the sale of a specified motor vehicle in certain circumstances. This rule is explained in paragraphs 19 to 24 of this memorandum.

Deemed delivery

13. The place of supply rule under section 1 of Part II of Schedule IX is generally based on the province in which legal delivery of the goods to the recipient occurs, but may be overridden by section 3 of Part II of Schedule IX. Pursuant to section 3, tangible personal property is deemed to be delivered in a particular province, and not in any other province, if the supplier does any of the following:

• ships the property to a destination in the particular province that is specified in the contract for carriage of the property
• transfers possession of the property to a common carrier or consignee that the supplier has retained on behalf of the recipient to ship the property to such a destination
• sends the property by mail or courier to an address in the particular province

Supplier retains a common carrier on behalf of the recipient

14. In order for the deemed delivery rule to apply, the supplier must be sufficiently involved in securing the transportation of the good. The supplier must retain a common carrier or consignee on behalf of the recipient (rather than on the supplier’s behalf or on behalf of a person other than the recipient) to have the good shipped to a province pursuant to terms negotiated, and instructions provided, by the supplier.

15. The fact that a supplier may be reimbursed for shipping costs does not affect whether a supplier is considered to have retained a common carrier or consignee on behalf of the recipient.

16. A supplier that merely contacts a common carrier or consignee to indicate that the good is ready to be transported pursuant to an arrangement that has already been established by the recipient with the carrier or consignee, or that is merely made aware of such an arrangement, is not considered to have retained the carrier or consignee on behalf of the recipient.

Delivery of tangible personal property on exercise of option

17. Pursuant to subsection 136.1(1.1), a recipient of a supply by way of lease, licence or similar arrangement of tangible personal property that exercises an option to purchase the property under the arrangement is, for greater certainty, deemed to take delivery of the property supplied by way of sale at the place and time at which the recipient ceases to have possession of the property as a lessee and begins to have possession of the property as a purchaser.

18. In other words, the place of supply rules for the sale of the tangible personal property are based on the place where the recipient begins to have possession of the property as a purchaser rather than the place where the recipient first obtained possession of the property as a lessee or licensee under the arrangement.

Sale of a specified motor vehicle

19. Under subsection 123(1), a specified motor vehicle means a vehicle that is, or that would be if it were imported, classified under one of several tariff items in Schedule I to the Customs Tariff. Generally, this includes all motor vehicles, other than racing cars classified under heading number 87.03 of Schedule I to the Customs Tariff and any prescribed motor vehicles. Currently, there are no prescribed motor vehicles.

20. A supply by way of sale of a specified motor vehicle is generally deemed to be made in a province in accordance with the rules for supplies of tangible personal property by way of sale, as discussed in paragraphs 9 to 12 of this memorandum. However, under section 33.1 of the Regulations, the supply of a specified motor vehicle by way of sale is deemed to be made in a province under a special rule if all of the following occur:

• the vehicle was delivered or made available to the recipient in a participating province
• the vehicle is registered (other than on a temporary basis) under the laws of another province relating to the registration of motor vehicles by or on behalf of the recipient
• the registration is completed on or before the day that is seven days after the day on which the vehicle was delivered or made available to the recipient of the supply
• the supplier maintains evidence satisfactory to the Minister of the registration

21. In these circumstances, the supply by way of sale of the specified motor vehicle is deemed to be made in the other province where the vehicle is registered by or on behalf of the recipient.

22. The supplier is required to maintain both of the following in its records as documentary evidence:

• a dated copy of the permanent registration of the vehicle in the particular province in the recipient’s name
• a copy of the vehicle purchase agreement or other sales document, such as a bill of sale, that indicates the date of delivery of the vehicle

23. In order to substantiate, to the relevant vehicle registration authority of a particular participating province, that self-assessment of the provincial part of the HST is not required when the vehicle is registered in that province, the recipient is required to make both of the following available to the vehicle registration authority:

• a copy of the vehicle purchase agreement or other sales document, such as a bill of sale, showing the date of delivery of the vehicle in another participating province
• proof that the provincial part of the HST in respect of the particular participating province is payable, or has been paid, in respect of the supply

24. For further information and an overview of the application of the provincial part of the HST to sales of specified motor vehicles, refer to GST/HST Info Sheet GI-119, Harmonized Sales Tax – Place of Supply of Specified Motor Vehicles Delivered and Registered in a Different Province.

25. For further information regarding the application of the HST and the rebate of the provincial part of the HST referred to in examples 12 and 13, refer to GST/HST Info Sheet G‑119 and Form GST495, Rebate Application for Provincial Part of Harmonized Sales Tax (HST).

Tangible personal property supplied otherwise than by way of sale

Deemed supply

26. Pursuant to subsection 136(1), a supply by way of lease, licence or similar arrangement, of the use or right to use tangible personal property, is deemed to be a supply of tangible personal property.

Supply of property for each lease interval

27. Pursuant to subsection 136.1(1), where a supply of property is made by way of lease, licence or similar arrangement for consideration that is attributable to a period (referred to as a lease interval) that is the whole or a part of the period during which possession or use of the property is provided under the arrangement, a separate supply of the property for separate consideration is deemed to be made by the supplier and received by the recipient for each lease interval.

28. The supply for each lease interval is deemed to be made on the earliest of the following days:

• the first day of the lease interval
• the day on which the lease payment attributable to that lease interval becomes due
• the day that the lease payment is made

29. As a result, separate supplies of tangible 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 tangible personal property supplied otherwise than by way of sale, as explained in paragraphs 30 to 38 of this memorandum.

Supply for more than three months – specified motor vehicle

30. Pursuant to subparagraph 2(b)(i) of Part II of Schedule IX, a supply of a specified motor vehicle (as defined in paragraph 19 of this memorandum) otherwise than by way of sale, under an arrangement where continuous possession or use of the vehicle is provided for more than three months, is deemed to be made in a province if the vehicle is required to be registered under the laws of the province relating to the registration of motor vehicles at the time the supply is made.

31. Taking into consideration the application of subsection 136.1(1), the province in which a supply of a specified motor vehicle is made for each lease interval and the applicable rate of tax can vary based on the province in which the vehicle is required to be registered at a particular time.

Supply for more than three months – property other than specified motor vehicle

32. Pursuant to subparagraph 2(b)(ii) of Part II of Schedule IX, a supply of tangible personal property (other than a specified motor vehicle) otherwise than by way of sale, under an arrangement where continuous possession or use of the property is provided for more than three months, is deemed to be made in a province if the ordinary location of the property, as determined at the time the supply is made, is in the province.

33. Subsection 136.1(1) continues to apply in respect of such supplies. As a result, a separate supply of the tangible personal property is deemed to be made for each lease interval on the earliest of the following days:

• the first day of the lease interval
• the day on which the lease payment attributable to that lease interval becomes due
• the day that the lease payment is made

Ordinary Location of Property

34. For purposes of the place of supply rules, the ordinary location of property is deemed by section 4 of Part I of Schedule IX to be the location where the supplier and the recipient mutually agree that the ordinary location of the property is to be at a particular time.

35. In other words, the mutual agreement of the supplier and recipient is determinative even where the property is actually located at a different place at the relevant time from what had been agreed upon.

36. The mutual agreement of the parties may change from time to time. As a result, even if the original written agreement for a supply of property specified that the property would be located in a particular province, the parties may mutually agree subsequent to the signing of the contract that the property is to be moved at a particular time to a location in another province. In this case, the latter location would be the ordinary location of the property at that particular time.

Supply for three months or less

37. Under paragraph 2(a) of Part II of Schedule IX, a supply of tangible personal property otherwise than by way of sale, under an arrangement where continuous possession or use of the property is provided for a period of no more than three months, is deemed to be made in the province in which the supplier delivers the property or makes it available to the recipient of the supply.

Deemed delivery in a province

38. While the above place of supply rule is generally based on the province where legal delivery occurs, tangible personal property is deemed by section 3 of Part II of Schedule IX to be delivered in a particular province, and not in any other province, if the supplier does any of the following:

• ships the property to a destination in the particular province that is specified in the contract for carriage of the property
• transfers possession of the property to a common carrier or consignee that the supplier has retained on behalf of the recipient to ship the property to such a destination
• sends the property by mail or courier to an address in the particular province

Single determination of place of supply based on initial delivery

39. Pursuant to section 4 of Part II of Schedule IX, the province in which the supply of tangible personal property is made in the case of a lease, licence or similar arrangement of three months or less is determined only once based on the initial delivery of the property and does not change for subsequent lease intervals, if any, under the arrangement.

Railway rolling stock supplied otherwise than by way of sale

40. The following specific place of supply rules apply where railway rolling stock is supplied otherwise than by way of sale.

Rule 1 – Supplier delivers to a recipient in a province

41. Pursuant to subsection 26(1) of the Regulations, a supply of railway rolling stock otherwise than by way of sale is made in a province if the supplier delivers the rolling stock or makes it available to the recipient of the supply in that province.

42. This place of supply rule is generally based on the province in which legal delivery of the rolling stock to the recipient occurs. However, for purposes of the rule, under section 3 of Part II of Schedule IX, the rolling stock is also deemed to be delivered in a particular province, and not in any other province, if the supplier ships the rolling stock to a destination in the particular province that is specified in the contract for carriage of the rolling stock or transfers possession of the rolling stock to a common carrier or consignee that the supplier has retained on behalf of the recipient to ship the rolling stock to such a destination.

Rule 2 – Place of supply for lease interval

43. Despite Rule 1, subsection 26(2) of the Regulations provides that the province where the supply of the rolling stock is determined to be made for the first lease interval is the province in which all supplies of the rolling stock for subsequent lease intervals are deemed to be made.

Rule 3 – Renewal of agreement

44. Pursuant to subsection 26(3) of the Regulations and subject to Rules 4 to 6 below, if continuous possession or use of railway rolling stock is given by a supplier to a recipient throughout a period under two or more successive leases, licences or similar arrangements entered into between the supplier and the recipient (that is, where the arrangement is renewed), the rolling stock is deemed to have been delivered or made available to the recipient under each of those arrangements at the location at which it is delivered or made available to the recipient under the first of those arrangements.

Rule 4 – Agreements entered into before April 1, 1997

45. Pursuant to subsection 26(4) of the Regulations, where a supply of railway rolling stock otherwise than by way of sale is made under a particular agreement that is in effect on April 1, 1997, and under the particular agreement, the rolling stock was delivered or made available to the recipient before that day, the following rules apply:

• the rolling stock is deemed to have been delivered or made available to the recipient under the particular agreement outside the participating provinces
• if the recipient retains continuous possession or use of the rolling stock under an agreement (the renewal agreement) with the supplier that immediately succeeds the particular agreement, Rule 3 applies as if the renewal agreement were the first arrangement between the supplier and the recipient for the supply of the rolling stock

Rule 5 – Agreements entered into before July 1, 2010

46. Pursuant to subsection 26(5) of the Regulations, where a supply of railway rolling stock otherwise than by way of sale is made under a particular agreement that is in effect on July 1, 2010, and under the particular agreement, the rolling stock was delivered or made available to the recipient in Ontario or British Columbia before that day, the following rules apply:

• the rolling stock is deemed to have been delivered or made available to the recipient under the particular agreement outside the participating provinces
• if the recipient retains continuous possession or use of the rolling stock under an agreement (the renewal agreement) with the supplier that immediately succeeds the particular agreement, Rule 3 applies as if the renewal agreement were the first arrangement between the supplier and the recipient for the supply of the rolling stock

Rule 6 – Agreements entered into before April 1, 2013

47. Pursuant to subsection 26(6) of the Regulations, where a supply of railway rolling stock otherwise than by way of sale is made under a particular agreement that is in effect on April 1, 2013, and under the particular agreement, the rolling stock was delivered or made available to the recipient in Prince Edward Island before that day, the following rules apply:

• the rolling stock is deemed to have been delivered or made available to the recipient under the particular agreement outside the participating provinces
• if the recipient retains continuous possession or use of the rolling stock under an agreement (the renewal agreement) with the supplier that immediately succeeds the particular agreement, Rule 3 applies as if the renewal agreement were the first arrangement between the supplier and the recipient for the supply of the rolling stock

First Nations goods and services tax – place of supply

48. The FNGST is a tax that may be imposed by a band council, other governing body of a First Nation or an Indigenous government on the lands that it governs. The FNGST at the rate of 5% applies to most supplies of property and services made on these lands.

49. Everyone has to pay the FNGST on the supply of property and services made on lands where the FNGST applies including Indians, Indian bands, or band-empowered entities. However, certain provincial and territorial governments do not pay the FNGST. The CRA uses the term Indian in this memorandum because it has legal meaning under the Indian Act.

50. For more information on the FNGST and the First Nations and Indigenous governments that impose the FNGST, go to First Nations Goods and Services Tax. You may also refer to GST/HST Technical Information Bulletin B-102, First Nations Goods and Services Tax – Place of Supply.

Supply is deemed to be made on FNGST lands in a non-participating province

51. The FNGST replaces the GST where the provincial place of supply rules deem the supply to be made on the lands where an FNGST is imposed and where those lands are located in a non-participating province. The supply is subject to the FNGST at the rate of 5%.

Supply is deemed to be made on FNGST lands in a participating province

52. The FNGST replaces the federal part of the HST where the provincial place of supply rules deem the supply to be made on the lands where an FNGST is imposed and where those lands are located in a participating province. The supply is subject to the FNGST at the rate of 5%.

53. Provided the purchaser meets the criteria set out in GST/HST Technical Information Bulletin B-039, GST/HST Administrative Policy – Application of the GST/HST to Indians, the provincial part of the HST would be relieved. Where the purchaser does not qualify for relief of the provincial part of the HST under Technical Information Bulletin B-039, registered vendors are required to collect the provincial part of the HST in participating provinces unless relief of that part is provided by some other legislation or policy.

Supply is deemed to be made in Canada, but not on FNGST lands

54. Where the provincial place of supply rules deem the supply to not have been made on FNGST lands, and the supply is made in Canada, then either the GST or the HST will apply depending on whether or not the supply is deemed to be made in a participating province.

Further information