Great-West Life – Federal Court of Appeal states that the GST “financial services” definition should be applied based only on the “predominant elements” supplied

A third party (Emergis) provided automated claims processing services to Great-West Life, which administered or insured various client drug plans, so that the prescription drug claim of an employee would be processed at the pharmacy counter upon presentation of a magnetic card.

In the Tax Court below, Owen J ultimately found that the charges of Emergis to Great-West for this service were taxable under the Financial Services and Financial Institutions (GST/HST) Regulations, as they were "quintessentially administrative in nature." More interestingly, he also found that in the absence of this Regulation, the service would have been exempt as being for the payment of insurance policy claims – notwithstanding that the Emergis service entailed the provision of taxable supplies described in para. (r.4) of the financial services definition, e.g., collecting, collating or providing information. He stated that "those services do not represent the essential character or substance of the supply, which is paying drug benefits to plan members."

In the Court of Appeal, Woods JA did not comment directly on the (now, apparently ineffectual) para. (r.4) rule, but appeared to essentially agree with this general approach when she stated:

…[I]t is necessary to determine the predominant elements of the supply if it is a single compound supply. It is only the predominant elements that are taken into account in applying the inclusions and exclusions in the “financial service” definition.

Neal Armstrong. Summary of Great-West Life Assurance Co. v The Queen, 2016 FCA 316 under Financial Services and Financial Institutions (GST/HST) Regulations.