CRA applies Zomaron to an ISO earning participation commissions for signing up merchants for payment processing

The Taxpayer, an independent sales organization, agrees to solicit merchants on behalf of an “acquirer” in order that the acquirer may make exempt supplies to the merchant (under a separate agreement) for the processing of credit and debit card payments for the merchant’s customers within a payments networks. In finding that the fees generated to the Taxpayer (mostly computed as a percentage of the total credit card sales volume generated) very well may be GST/HST exempt “arranging for” financial services, CRA stated:

There is indication that the Taxpayer has direct involvement and effort in the provision of the acquirer’s supplies of financial services made to merchants under the merchant agreement. The Taxpayer has some autonomy within [the Agreement …] to recommend fees and rates to the acquirer with respect to the merchant agreements. There appears to be a significant degree of reliance by both the acquirer and the merchant on the Taxpayer in concluding the merchant agreement and the information substantiates the Taxpayer’s intention of effecting a supply of a financial service.

The above reasoning is reminiscent of the analysis in Excise and GST/HST News - No. 109, June 28, 2021, which concluded with the statement:

The CRA will only apply the Zomaron decision to supplies made by an ISO/MSP if the same fact situation exists.

“Same” includes “similar.”

Neal Armstrong. Summary of 15 June 2021 GST/HST Interpretation 196187 under ETA s. 123(1) – financial service – para. (l).