Financial Services

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1.1.6 Single Supplies or Incidental Supplies

These concepts may be helpful in determining the tax status of a particular sale.

A single supply will have a single tax status (in other words tax will be charged consistently on the whole supply). If a supply is incidental to another, the incidental supply will take on the tax status of the main supply.

First one must determine whether the supply is a single supply. The CRA identifies several criteria that suggest a single supply:

  • the property/service is provided by one supplier and to one recipient
  • the supplier is not supplying different distinct elements
  • the recipient is unaware of specific elements of the supply
  • the recipient cannot acquire the elements separately

According to the CRA:

"[T]wo or more elements are part of a single supply when the elements are integral components; the elements are inextricably bound up with each other; the elements are so intertwined and interdependent that they must be supplied together; or one element of the transaction is so dominated by another element that the first element has lost any identity for fiscal purposes."

If a supply is not a single supply, one of the supplies may still be incidental to another. In order to be incidental, the supply must be made with the main supply for a single charge and it must play a minor or subordinate role in relation to the main supply.

The CRA has a policy statement on this topic that contains several examples.

The CRA's flowchart for this topic (reproduced below) is particularly helpful. S. 138 at the bottom right of the chart refers to incidental supplies.

CRA's Flowchart which summarizes the information on the link provided above.

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