Sun Life – Tax Court of Canada finds that the holding of vacant office space by a GST-exempt business for potential future taxable rentals qualified for ITC purposes as commercial activity

Many of the Sun Life sales people were independent contractors, who sublet space in Sun Life office premises. In calculating the portion of its rental costs for which it was entitled to input tax credits, Sun Life included vacant offices which were set aside for potential future rentals to such recruits, and allocated a pro rata portion of common areas, such as meeting rooms (which CRA argued were being used by the sales reps qua promoters of Sun Life exempt financial products rather than qua subtenants.)

Owen J confirmed Sun Life's methodology. Its success on the vacant space point is authority for the first-order supply rule (under which the focus is on the direct rather than indirect purpose for a supply) applying not only to an on-supply but also potentially to property held for a potential future direct use.

Neal Armstrong.  Summary of Sun Life Assurance Company of Canada v. The Queen, 2015 TCC 37, under ETA, s. 141.01(5).