Gift certificate for purpose of s. 181.2 of Excise Tax Act must be form of property

Tax - Goods and Services Tax - Supply

Pursuant to credit card agreement, ALP provided bank’s cardholders with membership in air miles loyalty program (Aeroplan Mile Program or AMP) and provided referral services and marketing in respect of bank’s cards. Bank paid Goods and Services Tax (GST) on payments to ALP (A Payments) on basis that supplies made by ALP (A Supplies) were taxable supplies but later claimed A Supplies were exempt financial services. Minister of National Revenue denied bank's application for rebate of GST paid in error. Bank appealed on ground that A Payments were consideration for ALP’s issuance of Aeroplan Miles as “gift certificate” to bank’s customers, such that they were deemed not to be supply by s. 181.2 of Excise Tax Act. Appeal dismissed. A Supplies were subject to GST. Various elements of A Supplies were part of single compound supply of AMP Program by ALP to bank. True nature of AMP Program, credit card agreement and A Supplies was to market and promote bank credit cards. A Supplies were single compound supply of promotional and marketing services by ALP to bank and were characterized as supply of service. Gift certificate for purpose of s. 181.2 of Act must be form of property, and definition of service in s. 123(1) of Act excluded property, so service cannot be gift certificate. A Supplies could not be characterized as supply of gift certificates for s. 181.2 of Act, but were taxable supplies. Aeroplan Miles and A Supplies were not “gift certificates” even if A Supplies were single compound supply of intangible property in form of Aeroplan Miles. Bank would have been entitled to rebate of amount paid two days after period stated in appeal, if it had been successful on main issue.

Canadian Imperial Bank of Commerce v. The Queen (2019), 2019 CarswellNat 1231, 2019 CarswellNat 4358, 2019 TCC 79, 2019 CCI 79, Henry A. Visser J. (T.C.C. [General Procedure]).

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