CRA notes that overheads may be direct rather than non-attributable inputs to financial institutions

In the context of general comments on whether a new ITC allocation method proposed by a financial institution for claiming its excluded, direct and non-attributable inputs would qualify as a "direct attribution" (i.e., permitted) method under the somewhat detailed input tax credit methodology rules in ETA s. 141.02, CRA noted that an input treated as an indirect input for cost allocation purposes (for example, certain overhead expenses) may nonetheless qualify as a direct input for s. 141.02 purposes, i.e., “overhead” expenses may often be regarded by CRA as contributing to the making of supplies.

Regarding the use of “causal” allocation of inputs (where tracking of inputs does not work), CRA indicated that “using an allocation base of the relevant employees’ time may be appropriate and could reflect the use of the input; however, an allocation base of employees time may not be used for an input unless the input is used equally amongst all employees included in that base.”

Neal Armstrong. Summary of 9 November 2020 GST/HST Interpretation 210124 under ETA s. 141.02(12).