MELP was found to be performing its services to Canadian patients who underwent bariatric surgery at the surgical unit in Mexico of a Mexican company (“LIMARP”) as agent for LIMARP given that their conduct implied an agency arrangement.
However, its own fees (collected by deduction from the fees collected by it from the patients before remittance to LIMARP) were not zero-rated under s. VI-V-5 given that that the services which MELP performed on behalf of LIMARP (including a wide range of various pre-operation and post-operation services) were in significant part performed in Canada. Thus, services performed by LIMARP through its agent were performed in part in Canada, so that their place of supply was deemed under s. 142(1)(g) to be in Canada, contrary to the requirements of s. VI-V-5(b) that the zero-rated agency services be in respect of supplies made outside Canada (and, for similar reasons, neither s. 142(2)(g) or 143 deemed their place of supply to be outside Canada.) Regarding s. 143, Sommerfeldt J stated (at para. 103) that “LIMARP, by reason of its agent’s activities, was carrying on business in Canada.”
Sommerfeldt J noted (at para. 91) that “[w]hile subsection 142(1) is subject to section 143, subsection 142(2) is not” and in this regard, quoted Paradigm Ventures:
If a supply is deemed to be outside Canada under subsection 142(2), it does not lose the benefit of that provision just because it is not deemed to be outside of Canada under section 143[,] and if a supply is deemed to be outside Canada under section 143, it does not lose the benefit of that provision just because it is not deemed to be outside of Canada under subsection 142(2).