CRA continues to consider that costs incurred respecting capital raises to fund an operating subsidiary are not creditable under ETA s. 186(1)

Memorandum 8.6, para. 11, Example 3, indicates that “HoldCo” may not claim input tax credits under ETA s. 186(1) for legal and accounting costs incurred in connection with raising money through issuing shares, even where the issuance proceeds are used to purchase additional shares in “OpCo,” all of whose property is acquired for consumption, use or supply in widget manufacturing - on the basis that the services are acquired for consumption or use in relation to the first order supply (the share issuance) and not in relation to the shares of OpCo. Although this approach was rejected by the Tax Court in Stantec, CRA will not revise this example, stating that the Tax Court decision was an informal procedure case and that its approach on this issue was not dealt with on the appeal to the Federal Court of Appeal.

Neal Armstrong. Summary of 26 February 2015 CBA Roundtable, Q. 17 under ETA s. 186(1).