Thang Tax Law Quoted in Bloomberg BNA Tax Story on GST/HST

Thang Tax Law Quoted in Bloomberg BNA Tax Story on GST/HST


Simon Thang was quoted for his comments on the Club Intrawest GST/HST decision by the court of appeal.

Simon Thang was quoted in a Bloomberg BNA tax story about a recent Goods and Services Tax/Harmonized Sales Tax decision of the Federal Court of Appeal. The decision, Club Intrawest 2017 FCA 151 deals with membership fees for  international timeshare rentals. The Court of  Appeal concluded that only the portion of the fees attributable to Canadian timeshare properties should be subject to GST/HST. Although the result may seem intuitive and fair, there was uncertainty whether the technical “place of supply” rules treated the membership fees as a “single supply” deemed made entirely in Canada and, therefore, entirely taxable.  In the story, published on July 20, 2017, Simon Thang provided the following comments on the outcome and the potential implications, especially for non-residents:


…the appellate court reached an appropriate outcome in the Intrawest case through a “novel nuance” to the single supply analysis. But it’s unclear how often it will apply, as the court noted that the confusion was because legislators didn’t envision such situations arising, Thang, a principal with Thang Tax Law, told Bloomberg BNA.

“It will be interesting to see if this approach of unbundling an otherwise single supply can be taken in other contexts. For example, services provided to non-residents are generally zero-rated (i.e., taxed at 0 percent) unless they relate to tangible property situated in Canada at the time the service is performed or they relate to real property situated in Canada,” he said.

“Could this decision allow zero-rating of the portion relating to property outside Canada, even where a single supply is provided to the non-resident? We will have to wait and see.”

Non-residents should consider reviewing their agreements to see if they can be made into separate supplies, which would eliminate the need for an “all-or-nothing” decision on whether GST/HST applies, Thang said. That might reduce the risk of the Canadian component of supplied services “tainting” the zero-rating of the non-Canadian component, he said.

The case is a reminder that, for GST/HST purposes, bundles of goods and services may actually be treated as a single, composite supply. This means that otherwise exempt supplies become taxable as part of a single taxable supply or, conversely, that otherwise taxable supplies become exempt as part of a single exempt supply. It may be possible to split the supplies up, although not always. Whether there are single or multiple supplies is often a difficult decision to make; it is dependent on the specific facts and should consider the growing body of court cases.

Simon Thang, LL.B, LL.M (Taxation) is Toronto tax lawyer practising exclusively in the areas of Canadian sales tax (GST/HST, PST), and customs and trade. He is the principal of Thang Tax Law.