CRA comments on determining ITCs for financial institutions

ETA s. 141.02 provides somewhat detailed guidance on the need for financial institutions to consistently apply acceptable methodologies for determining their entitlement to input tax credits for GST/HST on their inputs. Comments of CRA included that:

• Most inputs are likely to be allocable as “exclusive” or “direct” inputs rather than being “non-attributable” inputs.
• Direct tracking of inputs should be used where possible rather than “causal allocation,” i.e., using a systematic methodology to approximate the use of inputs.
• Generally, the categorization and allocation of business inputs must be done on an input-by-input basis and not based on “cost pools” of business inputs. The latter “are only appropriate where the use of grouping or pooling of business inputs results in the same ITC allocation result as would be arrived at if each business input was allocated without the use of pooling.”.

Neal Armstrong. Summary of 26 September 2018 Interpretation 167875 under s. 141.02(12).