CIBC – Federal Court of Appeal finds that VISA provided a GST/HST-exempt financial service to CIBC

CIBC issued Visa credit cards and utilized the Visa payment system, for which it paid fees to VISA. It was acknowledged that such charges otherwise came within the exempt financial services definition, relevantly described as including “the services of paying money (paragraph (a)), arranging for the payment of money (paragraph (l)), and any service provided under an agreement relating to payments of amounts for which a credit card voucher or charge card voucher has been issued (paragraph (i)),” and the only issue was whether the exemption was ousted by the services being of an “administrative” nature.

In finding that this exclusion did not apply, Laskin JA emphasized factual findings by the Tax Court that:

Visa’s services “form an essential part of the ability for CIBC to offer credit card based services to their clients," … they "[give] CIBC customers the ability to purchase goods and services anywhere in the world without CIBC having to individually contact each merchant to set up payment arrangements with them," and that "[i]f CIBC was forced to create such a payment network on its own, even if technically feasible, this network would invariably be much less widely accepted than the one offered by Visa." (para. 63)

He added:

Visa’s services relieve CIBC and other issuers of the need to investigate and analyze the risk profile and solvency of the merchants that accept credit cards in payment for goods and services. To describe the benefit that CIBC obtained from Visa’s services … as "quintessentially administrative," [as was done by the Tax Court] does not … adequately recognize the reality of the benefit that CIBC derived. (para. 63)

Neal Armstrong. Summary of Canadian Imperial Bank of Commerce v. Canada, 2021 FCA 10 under Financial Services (GST/ HST) Regulations – s. 4(2)(b).

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