Applewood – Tax Court of Canada finds that a car dealer who promoted and processed credit insurance to its customers was supplying a GST/HST exempt “arranging for” service
A car dealer entered into a “Dealer Agreement” with a distributor of credit insurance products under which it was agreed that it would “up sell” the insurance products and assist the car customers in applying for the insurance in consideration for a commission of over 50% of the insurance premium. Pizzitelli J applied the single supply doctrine in finding that the predominant element of what was being supplied by the dealer was an exempt supply of arranging for the insurance – and that the exclusion in (r.4) of the definition of an exempt financial services for promotional and various administrative services did not apply. He stated:
…[T]he “purchaser” whose perspective one must objectively look through is the consumer of the end supply that is the subject matter of the transaction. In our case, that is the car buyer who buys the insurance product and he would clearly and objectively know he was buying insurance, not the expertise or training, or commercial efficacy or profitability of the Dealer or its staff as the predominant elements of the transaction, notwithstanding that such services … may have an ancillary role to play in his decision making process… . There is simply no merit to the Respondent’s argument that the services or duties under the Dealer Agreement that may be said to be owed to [the distributor] from the Appellant constitute the predominant element of the services to be provided under the Dealer Agreement… .
Neal Armstrong. Summary of Applewood Holdings Inc. v. The Queen, 2018 TCC 231 under ETA s. 123(1) – financial service – (r.4).