CRA finds that expenses incurred respecting a subsidiary unit trust are ineligible for ITCs unless incurred as management-services inputs

A parent corporation argued that it should be entitled to claim input tax credits for GST/HST on expenses incurred in relation to subsidiary unit trusts, on the basis that it was providing management services to them. In the absence of much background information on the management services, including not being provided with any management services agreements, CRA stated that “the nature of any management services provided by the Parent would have to be clarified to determine how any particular property or service could be considered to be an input into those services, before determining the extent that the property or service was acquired for the Parent’s commercial activities.”

In the absence of the consulting and other expenses in question qualifying as inputs to the Parent’s supply of management services, the Parent would not be entitled to ITCs therefor. For instance, the s. 186 rule (generally permitting a holding company to claim ITCs for GST/HST on expenses incurred in relation to its investment in a corporate subsidiary) was unavailable for investments in subsidiaries that were trusts rather than corporations.

Neal Armstrong. Summaries of 23 November 2016 Interpretation 165129 under ETA s. 141.01(2) and s. 186(1).