The Canada Revenue Agency ("CRA") is looking at the characterization of telecommunication services provided by non-traditional means (such as Voice over Internet Protocol). Which HST place of supply rule applies depends on the characterization. What is important to know if that if the CRA does not have all the answers yet (which, it does not), you may not be charging HST properly if you do not ask them.
The CRA has already received a few advance ruling requests. The CRA has indicated that they are looking at 4 different requests that deal with VoIP services:
- supplies of VoIP services by a non-resident supplier where the communications are initiated outside Canada, but received in Canada;
- supplies of VoIP service calling plans for a flat fee;
- supplies of VoIP services provided where the communication are initiated in Canada, but received outside Canada; and
- supplies of VoIP services provided by a non-resident where the communications are initiated and received outside Canada, but routed through a server located in Canada.
If you have similar questions, it may be wise to request an advance GST/HST ruling from the CRA. It may take time (possibly years) before the CRA issues a policy statement based on the rulings it provides. It also may take months or years for the CRA to publish the rulings it gives to those who have asked. If you would like to receive your own binding ruling (that may be handed to a CRA auditor when they visit a supplier or a recipient of VoIP services), you will need to submit your own ruling request.
The great benefit of GST/HST ruling requests is that it demonstrates due diligence in the event that the CRA disagrees with you in the end. Acts that count as "due diligence" can relive a director from a director's liability claim.