Canada: Intrawest Ruling: Annual Timeshare Fees For Vacation Homes Both Inside And Outside Canada Are Fully GST/HST-Taxable

In Intrawest v. The Queen1, the Tax Court of Canada, under the pen of Justice Steven K. D'Arcy, ruled against a favourable Canada Revenue Agency ("CRA") administrative policy and determined that Goods and Services Tax/Harmonized Sales Tax ("GST/HST") is applicable to 100% of the annual resort fee invoiced by a timeshare club for services rendered to its members even if those services relate, in part, to vacation resorts located outside of Canada.

The 72-page decision examines at length the so-called "made-in-Canada" rules contained in section 142 of the Excise Tax Act ("ETA").


Club Intrawest ("Intrawest") is a Canadian resident non-profit, non-stock corporation created to facilitate the administration and operation of vacation homes in connection with a timeshare ownership program ("Intrawest Program"). Members of the Intrawest Program hold timeshare points that entitle them to stay at vacation homes owned by Intrawest ("Points"). The vacation homes are located in Canada, the United States and Mexico. Members of the Intrawest Program pay an annual resort fee ("Annual Resort Fee") to cover such costs as property taxes, insurance coverage and salaries and benefits of Intrawest's employees. The amount of the Annual Resort Fee depends on the number of Points that a member holds.

Intrawest never collected GST/HST on the Annual Resort Fee on the ground that it was merely acting as agent on behalf of its members when it acquired the various goods and services in connection with the Intrawest Program. On this analysis, the Annual Resort Fee was simply a reimbursement of the expenses incurred by Intrawest and, as such, could not be construed as consideration for a taxable supply.

The CRA disagreed. It assessed Intrawest for uncollected GST/HST for its monthly periods between 2002 and 2007. Intrawest appealed this assessment, principally on the basis of the agency analysis. Intrawest also argued (in the alternative) that, to the extent that it might be found to have made a supply, the Annual Resort Fee should then be allocated between taxable supplies made within Canada (subject to GST/HST) and taxable supplies made outside of Canada (not subject to GST/HST) based on the Points issued with respect to Canadian vs. non-Canadian vacation homes.


1. Was Intrawest acting as an agent? As noted above, the CRA's response to Intrawest's agency argument was that the Annual Resort Fee was in fact consideration for a taxable supply of intangible personal property on the part of Intrawest. In deciding this issue, the Tax Court considered the three generally accepted components of an agency relationship2: (i) the consent of both principal and agent, (ii) a grant of authority to the agent by the principal, allowing the former to affect the latter's legal position, and (iii) control by the principal of the agent's actions. The Court's conclusions were as follows:


Intrawest did not provide the Tax Court with supporting evidence to the effect that its members consented to the agency relationship. Moreover, the Court found it difficult to conclude that the members would have appointed Intrawest as their agent without entering into an agency agreement.


One of the key issues related to the ultimate ownership of the vacation homes. If the members did not have any obligation to pay the expenses required to maintain the resorts, Intrawest could not have been in a position to affect the members' legal position in respect of such expenses and an agency relationship could not have existed.

Intrawest argued that the beneficial interests in the vacation resorts were held in a trust for the benefit of its members. However, Intrawest failed to provide evidence that this was the case. Furthermore, it did not provide any documents showing that the risks associated with the ownership of the vacation resort properties rested with the members.


In similar fashion to corporations that issue shares, Intrawest is controlled by a board of directors that is elected by its members. However, Justice D'Arcy noted that: "the question that must be asked is not whether the Members of the Appellant controlled the Appellant for corporate law purposes, but whether they exercised control over the Appellant pursuant to an agency agreement."3 Intrawest did not produce such evidence.


For the above-mentioned reasons, the Court reached the conclusion that Intrawest was not acting as an agent on behalf of its members. It followed from this that the Annual Resort Fee paid by the members was not a reimbursement of expenses incurred by Intrawest. Instead, it was consideration paid for a supply that could be subject to GST/HST under the ETA.

2. Was the supply made in Canada? Although Intrawest agreed that to the extent it made a supply, it was a taxable supply; it disagreed with the CRA on the application of the "made-in-Canada" rules under section 142 of the ETA.

Before considering the place-of-supply rules, the Court first had to determine whether the Annual Resort Fee was paid as consideration for a service rendered by Intrawest to each of its members or as an ongoing consideration for the Club Intrawest membership (i.e. a supply of intangible personal property) as the CRA claimed. In this regard, the Court ruled that the Annual Resort Fee was paid by the members in consideration for the supply of a service by Intrawest.

Intrawest also argued that it made separate single supplies of services in respect of each vacation home. The Court however considered that by using the Annual Resort Fee to fund its operations, Intrawest had made a single supply of services because it could only continue to operate the Intrawest Program if it incurred all of the costs associated with the timeshare program.


The Court then analyzed the so-called "made-in-Canada" rules, particularly paras. 142(1)(g) and 142(2)(g) of the ETA, commonly referred to as the general place-of-supply rules for services, and paras. 142(1)(d) and 142(2)(d), which create an exception to the general place-of-supply rules in the case of a service related to real property. In his analysis, Justice D'Arcy noted that section 142 of the ETA contains an internal inconsistency inasmuch as a plain reading of its provisions can, in certain circumstances, deem two mutually exclusive events to occur. Thus, in the circumstances of this case,

  • A plain reading of para. 142(1)(d) deems the single supply of the services by Intrawest to be made in Canada since the services relate to real property situated in Canada, and
  • A plain reading of para. 142(2)(d) deems the single supply of the services to be made outside Canada since the services also relate to real property situated outside Canada.

In the circumstances, this ambiguity obviously needed to be resolved. Rather unusually, the parties agreed about the resolution: both the CRA and Intrawest asked the Court to interpret the inconsistency in such a manner that the GST/HST would be applicable to only a portion of the Annual Resort Fee. However (even more interestingly!), the Court did not accept the parties' agreed position. Instead, after considering the ETA as a whole in light of the intentions of Parliament, Justice D'Arcy concluded that "the GST Act, when read as a whole, does not contemplate splitting a single supply that is made in Canada into a taxable portion and a non-taxable portion."4 For the Court, subsection 165(1) of the ETA - the provision that imposes the tax on taxable supplies that are made in Canada - contains no ambiguity and clearly imposes the tax on the full consideration for the taxable supply. Furthermore, dividing a single supply that is made in Canada would create other inconsistencies, for example: the claiming of input tax credits would not produce the intended results if only a portion of the consideration for a single supply was subject to tax. Therefore, the Court concluded, if Parliament had intended subsections 165(1) and (2) of the ETA to levy tax on only a portion of the consideration for a single supply of a service or property, then it would have included a provision allocating the tax paid to the taxable portion of the supply, as it did for some other sections in the ETA.

The Court found that Parliament's intentions were (i) to impose the tax, at the applicable rate, on all of the consideration for a single taxable supply that is deemed to have been made in Canada, (ii) to deem, under section 142, supply of services that are performed inside and outside of Canada to be made in Canada, and (iii) to impose the tax on supply of services to residents of Canada where the services are consumed at least partly in Canada. Furthermore, Justice D'Arcy stated: "they [the CRA and Intrawest] appear to be arguing that I should interpret the GST Act in a manner that offers special relief from taxation for a supply of services in relation to real property, relief that is not offered with respect to any other supplies of services, since the GST applies to all of the consideration for a supply of a service that does not relate to real property and is performed (consumed) partly in Canada."5 He also noted that the parties' interpretation would allow residents of Canada to escape a portion of the tax on a single supply of services that the resident consumes partly in Canada and would offer special relief that is not offered with respect to any other supply of services.

Finally, the Court concluded that paras. 142(1)(d) and 142(2)(d) of the ETA did not apply in the case at hand because "the words 'a service in relation to real property' in paragraphs 142(1)(d) and 142(2)(d) should be interpreted to mean that these paragraphs only apply if the single supply of a service relates solely to real property."6 However, a number of services performed by Intrawest in the administration of the Intrawest Program did not relate directly to real property. Therefore, the exception provided for in paras. 142(1)(d) and 142(2)(d) was not applicable. Finally, Justice D'Arcy stated that as the services were, in part, performed in Canada, para. 142(1)(g) was applicable and that as a result, the supply was deemed to have been made in Canada.

Therefore, even though the CRA was willing to concede that, in such circumstances, GST/HST apply only on a portion of the consideration for the taxable supply, the Court took a harder line, deciding that GST/HST applied to 100% of the Annual Resort Fee paid by Intrawest's members.


The Court concluded that if a service is performed partially or wholly inside Canada, the supply is deemed to be made in Canada and is therefore fully subject to GST/HST. Only when the service is performed wholly outside Canada is the supply deemed to be made outside Canada. However, as pointed out by the Court, certain services that are provided partially or wholly inside Canada to non-residents could be zero-rated under the general export rules. Unfortunately, this specific question was not before the Court and it is unclear whether GST/HST was in fact applicable to Annual Resort Fees collected from Intrawest's non-resident members. In practice, we believe that an annual resort fee charged to non-resident members of timeshare programs with respect to resorts located outside Canada could in fact be zero-rated under the export rules in certain situations.

Intrawest has appealed the decision to the Federal Court of Appeal.

The author wishes to thank Patrick Morin for his help in writing this article.


1. 2016 TCC 149.

2. Royal Securities Corp. v. Montreal Trust Co., [1966] OJ No 1078 at para. 55.

3. Supra note 1 at para. 187.

4. Ibid., para. 277.

5. Ibid., para. 312.

6. Ibid., para. 318.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions