CRA recharacterizes a Sharia-compliant financing arrangement as a secured loan to the Islamic client

Under a Sharia-compliant real estate financing arrangement that is somewhat analogous to a reverse repo, the Islamic client pays cash for X% of the property, and FinanceCo pays for (100-X)% of the property subject to a secured "repurchase" obligation of the client to buy that interest for cost plus an accruing "profit" amount.  In a somewhat apodictic interpretation, CRA stated that provided the client is liable under the arrangement to pay for the property, the applicable GST/HST is its liability rather than FinanceCo’s.  By inference, CRA is prepared to treat the client as in substance being the purchaser of the property at the time of its acquisition.

Neal Armstrong.  Summary of 18 February 2014 Interpretation 155500 under ETA  - s. 228(4).