CIBC – Tax Court of Canada finds that the predominant element supplied by PC Bank to CIBC was a right to access Loblaw customers, engaging the (r.5) HST financial service exclusion
A subsidiary ("PC Bank") of Loblaw (“LCL”) had agreed with CIBC for CIBC to provide retail banking services under LCL's President's Choice trademark. Hogan J found that the predominant element of the supply made by PC Bank to CIBC was the provision of a “bundle of rights” consisting mainly of the right to solicit LCL’s clients in LCL’s stores, the right to use trademarks, and the right to issue points under the LCL Loyalty Program, and that “the Bundle of Rights … enabled CIBC to sell financial products and services” by “allow[ing] CIBC to tap into LCL’s loyal and extensive customer base.”
Given that para. (r.5) of the financial service definition provided an exclusion from financial service for “property … that is delivered or made available to” CIBC “in conjunction with” CIBC selling financial products of PC Bank, the supply made by PC Bank to CIBC was taxable.