Corp A, which is a large business per s. 236.01, and s. 27 of the New Harmonized Value-Added Tax System Regulations, No.2 (the Regulations), sells and leases vehicles through its Dealership), reimburses the Dealerships for basic warranty repair services, and repairs performed under "Service Contracts," and reimburses Dealerships for providing loaner cars (from the Dealership's lot or, failing that, from a car rental agency) for their basic warranty customers whose vehicles cannot be driven and must be kept at the Dealership overnight.
After ruling that Corp A is not required to recapture the input tax credits with respect to the provincial part of the HST paid to the Dealerships for loaner vehicle charges included in the weekly electronic claim statements for repair services performed on vehicles, CRA stated:
[Corp A] is acquiring a single supply of a repair service that is subject to the GST/HST. The charge in respect of a loaner vehicle under either the basic warranty coverage or Service Contract is part of the consideration for the supply of the repair service. …
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