Farm Credit Canada – Tax Court of Canada finds that “loan corporation” for GST/HST purposes has a broader meaning than its provincial regulatory meaning
A listed financial institution, whose definition includes a “person whose principal business is the lending of money,” will usually also be a selected listed financial institution (SLFI) if it has a cross-Canada business. Different types of SLFIs are subject to different attribution rules for determining the blended HST rate of tax to which they are ultimately subject. One of these SLFI categories is for “a trust and loan corporation, a trust corporation or a loan corporation.” Quite oddly, “loan corporation” is not defined.
Farm Credit Canada (a federal Crown corporation providing financing assistance to farmers) argued that it was not a “loan corporation” because the quoted phrase above had a well understood meaning given that the provincial legislation regulating trust and loan corporations defined a “loan corporation” as a corporation that was incorporated for the purpose of borrowing money from the public (which Farm Credit Canada did not do) and then lending or investing such money.
D’Arcy J found that a loan corporation simply refers to a corporation whose principal business is the making of loans (notwithstanding that the Regulation did not use this phrase appearing in the listed financial institution definition), stating:
There are no provisions in the GST Act that state that a listed financial institution whose principal business is the lending of money is only a “loan corporation” for the purposes of the Attribution Regulations if it accepts deposits from the public. In my view, if Parliament had intended such a result it would have added that specific condition to the legislation. …
Neal Armstrong. Summary of Farm Credit Canada v. The Queen, 2017 TCC 29 under Selected Listed Financial Institution Attribution Method (GST/HST) Regulations, s. 26(1).