Excise and GST/HST News - No. 110, 8 December 2021

Incidental sellers of insurance

After indicating that it uses the term “incidental seller” to refer to “a person who assists the insurer in the issuance of insurance but whose principal business is normally carried on outside the insurance industry (such as retailers, automotive dealers, banks, travel agents),” and noting that an “incidental seller’s service supplied to the insurer would typically include promoting the insurance, assisting the incidental seller’s customer in understanding and obtaining the insurance from the insurer, and collecting the premium from the customer and sending it to the insurer,” CRA stated:

Previously, the CRA viewed these supplies made by incidental sellers as taxable supplies on the basis that the predominant element of each supply was that of a promotional and administrative service.

However, after referring to the Applewood Holdings and Zomaron, it stated:

The CRA will apply principles from these decisions to an incidental seller’s supply of services of arranging for the supply of insurance to an insurer.

Where the essential character of the service for which an incidental seller earns its fees is the sale of insurance on behalf of the insurer to the customer, it will generally be considered an exempt supply of a financial service. In such circumstances, the supply by the incidental seller is arranging for the issuance of a financial instrument (such as, an insurance policy).

There may be circumstances where an incidental seller is doing more than arranging for the supply of insurance. In those cases, it will be a question of fact whether the supply may be something other than an exempt supply of a financial service.

Digital economy

After referring to the introduction by the 2021 Budget of “GST/HST measures that related to the digital economy,” CRA stated:

As discussed in the Excise and GST/HST News No. 109, affected businesses and platform operators are expected to comply with their obligations to register, collect and remit the GST/HST as set out under the new rules and legislative provisions to ensure that the GST/HST applies effectively and fairly to e-commerce transactions. As announced in Budget 2021, the CRA will work closely with affected businesses and operators to assist them in meeting their obligations. Where such businesses and operators show that they have taken reasonable measures but are unable to meet their new obligations for operational reasons, the CRA will take a practical approach to compliance and exercise discretion in administering the measures during a 12‑month transition period, starting July 1, 2021.

Before the CRA exercises its discretion in the administration of the new measures, an affected business or platform operator must first make a submission to the CRA requesting forbearance and obtain the CRA’s written approval that such discretion will be exercised. Submissions may be made to the CRA after July 1, 2021, until further notice.

Co-ownership of a vehicle by an Indian and a non-Indian

Regarding where there is relief from GST/HST when a vehicle is purchased by an Indian and a non-Indian, CRA stated:

Generally, when a vehicle is purchased by an Indian and a non-Indian, the relief of the GST/HST will apply if the following conditions are met:

• the Indian and the non-Indian purchase the vehicle as co-owners and are jointly and severally, or solidarily liable for the cost of the vehicle
• the Indian shows proof of their status to the vendor
• if the vehicle is purchased off-reserve, the vendor delivers the vehicle to a reserve and maintains evidence of delivery

The purchasers will be both jointly and severally, or solidarily liable where both names appear on the bill of sale or other similar document. It is a question of fact as to who is the purchaser of the vehicle, as well as where the delivery of the vehicle was made.