An automobile dealer (the “Dealer”) enters into contracts with customers, which could be conditional sales contracts, instalment sales contracts, credit agreements or finance contracts with instalments, and assigns each contract to a lender, so that the lender receives an assignment of all amounts then due and over time. Upon assignment, the Dealer is to receive a payment based on the amount to be financed by a customer under the contract, and the Dealer also receives a fee in respect of the assignment.
In connection with ruling that the assignment is a financial supply under (d) of financial service and the fee part of the (exempt) consideration therefor, CRA stated:
[E]ach… Contract…[is] a “debt security”… as each one represents a right to be paid money. When the Dealer’s rights under each of these Contracts are assigned…the Lender is acquiring from the Dealer the right to receive the stream of payments from the Customer under the Contract. The assignment of these rights is a financial service under paragraph (d)….
The Fee received by the Dealer…under the Contracts… forms part of the consideration received for the exempt supply, that is the assignment of the Contract… .