Tax Court of Canada


Goods and Services Tax

Exempt supplies

Predominant element of taxpayer’s service was “financial service” notwithstanding some ancillary services

Taxpayer was car dealership that also sold insurance policies to customers, which covered various types of credit insurance to cover their lease or finance payments. Under dealership agreement, taxpayer was also required to provide complimentary policy to customers who purchased or leased vehicles for personal use that covered them for basic perils. Minister reassessed taxpayer and opined that taxpayer’s services did not amount to arranging for provision of insurance and denied taxpayer exemption from GST/HST for exempt supply of financial service as defined in s. 123(1) of Excise Tax Act. Taxpayer appealed. Appeal allowed. It was found that any objective analyses of dealer agreement would lead to conclusion that main purpose of contract was to sell insurance and not provide expert advice, personnel or commercial efficacy. It could not be concluded that, by appointing party as dealer to sell profitable product, this turned product into element of service being provided, per se. Predominant element of taxpayer’s service was arranging for sale of insurance, which fell within definition of “financial service”, notwithstanding that some of ancillary services provided by taxpayer could be considered promotional or administrative.

Applewood Holdings Inc. v. The Queen (2018), 2018 CarswellNat 7015, 2018 TCC 231, F.J. Pizzitelli J. (T.C.C. [General Procedure]).

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