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March Pages 2017

THE ADVOCATE V O L . 7 5 P A R T 2 M A R C H 2 0 1 7 205 A PRACTICAL GUIDE TO DETERMINING WHEN TO CHARGE GST1 ON A SUPPLY OF LEGAL SERVICES By Thomas D. Ciz This article is intended to assist lawyers and notaries public in determining when, and at what rate, they are required to charge GST when they render legal and other services2 to their respective clients. BACKGROUND Part IX of the Excise Tax Act3 requires each “recipient”4 of a “supply”5 of particular services to pay GST computed at the applicable statutory rate and requires each “supplier”6 of such services to levy the GST on, and to collect it from, the recipient and to remit the GST to the federal government on behalf of the recipient. GST will generally apply to a supply of a service if it is made in whole or in part in Canada, it is a “taxable supply” (i.e., it is a supply that is made in the course of a “commercial activity”7), the supply is made by a “registrant”8 and the recipient is not exempt from taxation. Conversely, GST will not generally apply to a supply of a service if it is made wholly outside of Canada,9 it is an “exempt supply”,10 it is not made by a registrant or the recipient is exempt from taxation. The amount of GST that is payable by a recipient (other than a taxexempt recipient) of a taxable supply (which is made in Canada by a registrant) is computed by multiplying the value of the consideration for the supply by the applicable statutory rate. The rate to be applied depends on several factors, including the nature of the services that were supplied, the circumstances under which they were supplied and the place where the supply was made. If the taxable supply is a “zero-rated supply” (i.e., a supply that is listed in Schedule VI of the Excise Tax Act), the applicable rate will be 0 per cent. If the taxable supply is not a “zero-rated supply”, the applicable statutory rate will depend primarily on where in Canada the taxable supply is made or is deemed to be made. The current statutory rates of GST applicable to taxable supplies (other than zero-rated supplies) made in a


March Pages 2017
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