(416) 864 - 6200

Tax & Trade Blog

  • Home
    Home This is where you can find all the blog posts throughout the site.
  • Categories
    Categories Displays a list of categories from this blog.
  • Tags
    Tags Displays a list of tags that have been used in the blog.
  • Bloggers
    Bloggers Search for your favorite blogger from this site.
  • Archives
    Archives Contains a list of blog posts that were created previously.

GST/HST on Advertising Barters

Posted by on in Tax Law
  • Font size: Larger Smaller
  • Hits: 9347
  • Subscribe to this entry
  • Print

If your business ever provides a good or service in exchange for advertising, you should be aware of a recent CRA ruling (RITS 2015-158946), dated November 4, 2015), which sets out how GST/HST applies to barter transactions and includes an example of a person who exchanges advertising services for goods or services. Case law such as 9022-8891 Québec Inc. (2006 TCC 60)confirmed that a barter of goods or services for advertising may constitute two taxable transactions for GST/HST purposes. RITS 2015-158946, however, provides more details on the tax consequences of a barter exchange - consideration, place of supply, input tax credits, and zero-rating - and represents a blueprint for the GST/HST analysis of barter transactions.


RITS 2015-158946 confirmed that under the ETA consideration rules an advertiser may need to charge and collect GST/HST when it provides advertising services in barter situations. The advertiser may also need to pay GST/HST to registrant customers for the credit note acquired in return for the advertising services. These requirements recognize the two separate transactions that comprise a barter. The consideration rules are found in subsection 153(1) and 153(3): a barter transaction may be subject to GST/HST on the basis of the supply’s FMV because the advertising-exchanged-for-product transaction does not fall within the similar kind exemption in subsection 153(3). Thus RITS 2015-158946 concluded that the advertiser must charge GST/HST on its services, even if it is paid via a credit note; moreover, the advertiser may need to pay GST/HST on the value of the credit note received from a registrant customer. 


Moreover, if GST/HST was payable, RITS 2015-158946 said that ITCs may be available to an advertiser who receives a product credit as payment (section 169). ITCs are generally available if GST/HST is paid or payable on receipt of the credit note, and the credit note is used in the advertiser’s commercial activities. (All other section 169 requirements must be met, such as the ITC documentation rules in subsection 169(4).) In addition, the advertiser may be able to claim an off-setting ITC if it self-assesses for GST/HST on a credit note from a US customer (division IV), for example, if the goods or services are to be used in part (although not exclusively) in commercial activities.


Interestingly, RITS 2015-158946 concluded that the sale or transfer of credit notes – but not their cashing in - is subject to GST/HST. 


RITS 2015-158946 is an excellent example of the interaction of some very complicated GST/HST rules on what may be an unconventional yet likely quite common commercial practice –which we interpret as an allusion to barter transactions in the underground economy.  The ruling also illustrates that GST/HST implications of even unorthodox commercial transactions may be deduced from basic principles. 


Kathryn Walker and Rob Kreklewetz

Millar Kreklewetz LLP, Toronto


A version of this article appeared in the August 2016 issue of Canadian Tax Highlights.

Last modified on


  • No comments made yet. Be the first to submit a comment

Leave your comment

Guest Sunday, 26 May 2024

Toronto Office

10 Lower Spadina Avenue, Suite 200, Toronto, Ontario, M5V 2Z2 Canada
Phone: (416) 864-6200| Fax: (416) 864-6201

Client Login

To access the Millar Kreklewetz LLP secure client file transfer system, please log in.