Transitional rules in relation to intangible personal property can prove to be quite tricky.
Intangible personal property includes contractual rights, intellectual property (eg. Patents, trade secrets, trademarks, trade names, copyrights or industrial designs), rights to acquire a membership and rights in relation to goods that are not in the possession of a person. However, payments for intangible personal property supplied by way of lease, license or similar arrangement are subject to the transitional rules for leases and licenses.
The sale of intangible personal property is subject to GST or HST on the earlier of the day that the amount comes due (typically the invoice date) or the date the amount is paid without having come due.
An example where GST only would apply is where a right to use a digital picture is acquired and becomes due in June, but the digital picture is downloaded and used in July. Since the right was acquired before July 1st, only GST would apply.
