HST/GST: CRA confirms the potential bite of new exclusions from financial services

When various financial industry participants expressed alarm at the scope of various amendments to the definition for HST and GST purposes of financial service, which appeared to substantially narrow this category of exempt supply, the Minister of Finance issued a press release on March 26, 2010 reassuring the participants that the intent was only to "restore the situation that existed prior to [certain] court decisions" (principally Canadian Medical Protective Association).

This has not stopped CRA from relying on the new provisions to justify a narrow interpretation of what is exempt.  CRA has indicated that a service of arranging for banks to provide loans to customers of a manufacturer and its dealers was not an exempt "financial service" because the service provider was providing credit management services (excluded under new para. (r.3) of the definition) and preparatory services such as customer assistance and document processing (excluded under new para. (r.4)).

Neal Armstrong.  Summary of 29 July 2011 HQ Letter 82567 under s. 123(1) - financial service.