BJ Services Co. Canada v. The Queen, [2002] GSTC 124 (TCC)

A Canadian public company ("Nowsco") that was engaged in the provision of oil field services incurred significant fees for services rendered by financial advisors and a law firm in connection with seeking a "white knight" following the commencement of a takeover bid for its shares, as a result of which it was able to secure a higher price for its shares from the original bidder.

After quoting (at para. 55) a Finance Press Release stating that s. 141.01 was "designed to clarify the requirement to apportion GST paid on indirect inputs for registrants, such as financial institutions, who make both taxable and exempt supplies of goods or services," C Miller T.C.J. found that as s. 141.01 was intended as an apportionment provision to allocate inputs between taxable supplies and non-taxable supplies, it did not apply to Nowsco, which was engaged exclusively in making taxable supplies. Consequently, "the stringent purpose test contained in s. 141.01 is not applicable to Nowsco's case and, therefore, does not alter a finding that the fees were incurred in the course of commercial activity" (para. 62).

A Canadian public company ("Nowsco") that was engaged in the provision of oil field services incurred significant fees for services rendered by financial advisors and a law firm in connection with seeking a "white knight" following the commencement of a takeover bid for its shares, as a result of which it was able to secure a higher price for its shares from the original bidder. Miller J. found that even if he considered that the primary purpose of Nowsco in incurring these fees was to maximize shareholder value, this purpose did not take the inputs outside the realm of commercial activity for purposes of s. 169 given that a public company will suffer adverse financial consequences if it does not behave as commercially expected, and there was a secondary purpose of maintaining the ongoing viability and economic health of the company.