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THE ADVOCATE V O L . 7 5 P A R T 2 M A R C H 2 0 1 7 219 1. GST (goods and services tax) means the tax that is imposed under the Excise Tax Act, RSC 1985, c E- 15, as amended (“Excise Tax Act“). 2. CRA regards a “legal service” as being a service that is rendered by a lawyer (and presumably by a notary public) engaged in the practice of law and could also include “services provided by articling students or other students and support staff, to the extent that their services are intended to assist the lawyer in the provision of the lawyer’s service and are undertaken under the supervision of the lawyer”. “Typically, fees charged by lawyers for legal services may include out-of-pocket expenses incurred by a lawyer in the ordinary course of their practice in addition to fees for professional services. Such expenses or ‘disbursements’ are treated as part of the fees for legal services for purposes of the GST/HST unless the expense was incurred by the lawyer as the client’s agent.” See CRA, GST/HST Memorandum 5.3, “Exempt Legal Services” (May 2016). 3. Unless otherwise stated, all statutory references herein are to the Excise Tax Act. 4. Subsection 123(1) defines “recipient” of a supply of a service as meaning the person who is liable to pay consideration for the supply and, if no consideration is payable for the supply, the person to whom the service is rendered. 5. Subsection 123(1) defines “supply” as meaning inter alia the provision of a service made in any manner including sale, transfer, barter, exchange, licence, rental, lease, gift or disposition. This definition is expanded by section 133, which deems the entering into of an agreement to provide a service to be a supply of the service made at the time the agreement is entered into and deems the provision of a service under the agreement to be part of that supply and not a separate supply. 6. Subsection 123(1) defines “supplier” in respect of a supply as meaning the person making the supply. 7. Subsection 123(1) defines “commercial activity” of a person as meaning: (a) a business carried on by the person (other than a business carried on without a reasonable expectation of profit by an individual, a personal trust or a partnership, all of the members of which are individuals), except to the extent to which the business involves the making of exempt supplies by the person, (b) an adventure or concern of the person in the nature of trade (other than an adventure or concern engaged in without a reasonable expectation of profit by an individual, a personal trust or a partnership, all of the members of which are individuals), except to the extent to which the adventure or concern involves the making of exempt supplies by the person, and (c) the making of a supply (other than an exempt supply) by the person of real property of the person, including anything done by the person in the course of or in connection with the making of the supply. Subsection 123(1) defines “exempt supply” as meaning a supply that is included in Schedule V of the Excise Tax Act. 8. Subsection 123(1) defines “registrant” as meaning a person who is registered, or who is required to be registered, under Subdivision d of Division V of the Excise Tax Act. 9. A supply of a service that is performed in Canada by a non-resident person is deemed by subsection 143(1) to be made outside Canada unless (a) the supply is made in the course of a business carried on in Canada or (b) the person is registered under Subdivision d of Division V of the Excise Tax Act at the time the supply is made. 10. Subsection 123(1) defines “exempt supply” as meaning a supply that is included in Schedule V of the Excise Tax Act. 11. Subsection 35(1) of the Interpretation Act, RSC 1985, c I-21 defines “province” as meaning a province of Canada and includes Yukon, the Northwest Territories and Nunavut. 12. All references to a lawyer include a notary public and a partnership of lawyers or notaries public, as the case may be. 13. In such circumstances the lawyer has the right under section 224 to recover the uncollected GST from the client. 14. Paragraph 132(1)(a). 15. A corporation that is not otherwise deemed by the Excise Tax Act to be a non-resident may be a factual resident of Canada under the common law. The common law has generally established that a corporation is resident in the country where the corporation’s “real business is carried on”, and for this purpose “the real business is carried on where the central management and control actually abides. … This is a pure question of fact to be determined, not according to the construction of this or that regulation or bye-law, but upon a scrutiny of the course of business and trading”: De Beers Consolidated Mines Ltd v Howe, 1906 AC 455 at 458 (HL). Usually central management and control abides where the members of the board of directors hold their meetings. A corporation is resident at the location where its central management and control is factually exercised and not where it is required to be exercised by its articles of incorporation or otherwise. It may well happen that the directors of a corporation who hold office abnegate their duties and that actual control of the corporation is exercised by other persons (e.g., one or more shareholders). In these circumstances the corporation would be resident in the country where control is actually exercised. 16. Subsection 250(6) of the Income Tax Act, RSC 1985, c 1 (5th Supp), as amended (“Income Tax Act“) relates primarily to international shipping corporations and ensures that such corporations are not resident, or taxable, in Canada. As amended, subsection 250(6) states: For the purposes of this Act, a corporation that was incorporated or otherwise formed under the laws of a country other than Canada or of a state, province or other political ENDNOTES


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