CIBC World Markets – Tax Court of Canada finds that an ETA s. 150(1) election denied zero-rating for services provided to a parent’s non-resident branches
Administrative services provided by CIBC World Markets Inc. (WMI) to its parent (CIBC) respecting activities carried on by CIBC through its non-resident branches would have been zero-rated but for an ETA s. 150(1) election that had been made between them (which deemed services and licences of property supplied between members of the closely-related CIBC group to be exempt financial services). (Zero-rating would have generated input tax credits.) WMI made a subtle argument that although those non-resident branches were deemed non-resident persons respecting their branch activities for zero-rating purposes, they could not be members of a closely-related group to the extent of such activities.
Bocock J recognized that finding that the election denied zero-rating “renders a ‘sub-species’ of exported financial services less competitive.” Nonetheless, he found the statutory language deeming financial services following a s. 150 election to be exempt rather than zero-rate to be too emphatic and specific to accommodate what might have been the broader policy.
Neal Armstrrong. Summary of CIBC World Markets Inc. v. The Queen, 2018 TCC 103 under Schedule VI, Pt. IX, s. 1.