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GST/HST — Advertising services

My client provided advertising services on the Internet through Google Adsense, and was paid by Google Inc. Some of the customers clicking on the Google ads were Canadian. The CRA audited my client's GST/HST return and decided that, since my client's services were performed in Canada, the "place of supply" of its services was in Canada and HST should apply. The auditor proposed to assess my client for some $10,000 of unremitted HST.

I got on the phone to the auditor and explained to him that, even though the "place of supply" of the services was indeed in Canada, the services were zero-rated under Excise Tax Act Schedule VI, Part V, section 8, because they were provided to Google Inc., an unregistered non-resident. The auditor, who was not well trained in GST/HST, eventually understood my technical argument and dropped his proposal to assess for unremitted HST.

Problem solved!