CRA has published a new Memorandum regarding ITC claims by qualifying institutions
CRA has published a new Memorandum on the rules applicable to determining the input tax credit claims, pursuant to the detailed rules in ETA s. 141.02, of qualifying institutions. Very generally, these are banks, insurers or securities dealers that otherwise would be entitled in their two preceding fiscal years to ITCs for residual (i.e., non-exclusive) inputs at above specified thresholds expressed in terms of dollars and as a percentage of the total tax payable on such inputs.
CRA has a leaning towards interpreting an input under the s. 141.02 rules as being a direct input (generally, an input to the making of a combination of taxable and exempt supplies) rather than being a non-attributable input (generally, one that cannot be attributed to the making of supplies), stating in this regard:
A business input that might be considered an indirect input for cost allocation purposes (for example, certain overhead expenses) is a direct input for purposes of section 141.02 if the business input is not an excluded or exclusive input and can be attributed in whole or in part to the making of a particular supply or supplies. [CRA’s emphasis]
CRA provides various examples, all of which are illustrative of basic propositions apparent from the legislation, rather than addressing interpretive points.
Neal Armstrong. GST/HST Memorandum17-13 [17.13] Application of Section 141.02 to Financial Institutions That Are Qualifying Institutions, 23 July 2021 under s. 141.02(1) – exclusive input, direct input, s. 141.02(8) and s. 141.02(32).