Canada: Budget 2016: Proposed GST/HST Amendments

Last Updated: March 31 2016
Article by Jamie M. Wilks and Ehsan Wahidie, Student-at-Law

Budget 2016 announced a number of GST/HST changes that will be of significant interest to those in the call centre industry, as well as to certain businesses currently treated as "de minimis financial institutions" for the purposes of the Excise Tax Act (the "ETA").

Exported Call Centre Services

Budget 2016 proposes a new zero-rating export provision to specifically address call centre technical or customer support services (the "Support Services") supplied to non-resident persons that are not registered for GST/HST purposes.

This new provision will apply where two conditions are fulfilled. First, the non-resident is not a "consumer" of the services. In this regard, a "consumer" of the services means an individual who acquires the services for personal consumption, use or enjoyment.

Second, it must reasonably be expected at the time the supply is made that the Support Services are to be rendered primarily to individuals who are outside Canada at the time the support is rendered. For this purpose, a person to whom a service is rendered is the person who receives the benefit, consumption, enjoyment or use of the Support Services – in this context, the customers of the non-resident who call into the call center, rather than the person who pays for them.

The proposed amendment will apply, when enacted, to any supply made after March 22, 2016 ("Budget Day"). In addition, this amendment will apply retroactively to supplies made before Budget Day if the supplier did not, on or before that day, charge, collect or remit an amount as or on account of GST/HST in respect of the supplies. In other words, suppliers who took the risk of not charging, collecting and remitting GST/HST on the basis of the law as it existed before Budget Day (the "Previous Law") will receive the benefit of retroactive relief from potential assessment.

For providers of Support Services, this change is significant. Under the Previous Law, there was uncertainty as to whether the supply of Support Services would qualify for existing zero-rating provisions. Arguably, if any part of a service was "rendered to an individual while that individual is in Canada", the supply of the service to the non-resident would be excluded from being a zero-rated supply (and therefore be subject to GST/HST). As a result, if even a de minimis portion of the service was rendered to callers in Canada when receiving the call centre Support Services, the supply of the entire service could be excluded from GST/HST zero-rating relief. This amendment largely resolves that uncertainty.

There are a couple of other points to consider. First, it should be noted that the Support Services affected by the proposed new zero-rating provision do not necessarily have to be performed by a call centre. The Support Services could be effected "by means of" any other telecommunications, such as through Internet access. Second, supplies of (i) "a supply of an advisory, consulting or professional service" or (ii) "a service of acting as an agent of the non-resident person or of arranging for, procuring or soliciting orders for supplies by or to the non-resident person" are excluded from the proposed new zero-rating export provision, although such services may be zero-rated under other existing provisions of the ETA.

De Minimis Financial Institutions ("FIs" )

A so-called de minimis FI (as defined in the ETA) may be subject to more restrictive input tax credit ("ITC") allocation rules that may restrict its ability to claim ITCs.

As de minimis FIs may provide significant financial services, and may compete with traditional or mainstream FIs (such as banks, insurance companies and investment dealers), the rules governing de minimis FIs are intended to ensure that de minimis FIs do not receive any unfair competitive advantage under the GST/HST rules vis-à-vis mainstream FIs. However, under the existing rules, a person who earns more than $1 million in interest income in respect of bank deposits may be considered to be a de minimis FI, even though they do not, in practical terms, compete with mainstream FIs.

Budget 2016 proposes amendments to narrow the scope of the definition of a de minimis FI to exclude, in computing whether a person has interest income (or other income from the making of supplies of certain financial services) in excess of the $1 million threshold to be a de minimis FI, interest earned in respect of demand deposits, term deposits and GICs with a term not exceeding 364 days. This proposal implicitly acknowledges that the existing legislation extends too broad a net by capturing businesses exceeding the de minimis threshold as a result of receiving interest on short-term deposits made with mainstream FIs.

In determining whether a registrant is a FI, this proposed amendment will generally apply to the person's taxation years beginning after Budget Day. However, this exclusion also applies for the purpose of determining whether a person is a "reporting institution" (and, therefore, is required to file a Financial Institution GST/HST Annual Information Return ) throughout a fiscal year of the person that begins before Budget Day and ends on or after that day.

These amendments not only provide financial relief by broadening the availability of ITC claims, but also relieve the administrative burden of allocating expenses between a business' "commercial activity" and short-term deposit making activity (and certain other financial activities) for the purposes of determining ITC eligibility.

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2016

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Jamie M. Wilks
Ehsan Wahidie, Student-at-Law
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.