CIBC – Tax Court of Canada finds that Visa’s fees to CIBC were subject to GST given inter alia that it was not a “person at risk”

CIBC issued Visa credit cards and utilized a credit card payment system that was operated and managed by Visa Canada. Visa Canada essentially acted as a largely automated go-between between the “issuer,” who provided the funds for a purchase at a merchant by a cardholder, and the “acquirer,” who used such funds to pay the merchant. Visa Canada added $18M in GST or HST to its charges for its services to CIBC in the years in question, and CRA denied CIBC’s s. 261 rebate claim therefor.

Rossiter CJ found that the services of Visa were “quintessentially administrative in nature” so as to be excluded from being a financial service by virtue of s. 4(2)(b) of the Financial Services and Financial Institutions (GST/HST) Regulations. Furthermore, Visa did not qualify as a “person at risk” so as to be excluded from the application of this Regulation: Rossiter CJ accepted a statement by Finance “that the person at risk exception is not meant to apply to risks which have only a remote chance of occurring.”

But for this Regulation, the services supplied by Visa Canada would have qualified as exempt “financial services” under para (l) of the definition (arranging for payment) or para. (i) therof (services relating to an agreement for which credit card vouchers were issued). As in Global Cash Access, the exclusions from financial service that were added in paras. (r.3) to (r.5) of the financial services definition did not have much traction.

Neal Armstrong. Summaries of CIBC v. The Queen, 2018 TCC 109 under ETA s. 123(1) – supply, asset management service, financial service – s. (l), s. (i), s. (r.3), s. (r.4), s. (r.5), Financial Services and Financial Institutions (GST/HST) Regulations, s. 4(2)(b), s. 4(3)(c), s. 4(1) – person at risk.