23 November 2016 Interpretation 165129

A corporation (“Parent”) holds units of subsidiary trusts and has argued that it incurred GST/HST to supply management services to those unit trusts. Although it has provided sample invoices, it has not provided management services agreements.

CRA indicated “the nature of any management services provided by the Parent would have to be clarified to determine how any particular property or service could be considered to be an input into those services, before determining the extent that the property or service was acquired for the Parent’s commercial activities.” Furthermore, legal or consulting services acquired by Parent to purchase trust units would not be considered to be acquired in the course of commercial activity, and that properties or services acquired in retaliation to commercial activities of another person, such as flights in traveling for their benefit or obtaining advice on growth of the trusts, would not qualify as being acquired for consumption or use in relation to Parent’s commercial activities.

A corporation (“Parent”) holds units of subsidiary trusts and has argued that it incurred GST/HST to supply management services to those unit trusts. Although it has provided sample invoices, it has not provided copies of management services agreements.

In noting that s. 186(1) could not be used as the basis for claiming input tax credits, in relation to the investments in the unit trusts, CRA stated:

The [Trusts] are not corporations, but trusts. Therefore, subsection 186(1) will not be applicable to any property or services acquired by the Parent in relation to its holding of trust units in any of the [Trusts], or in relation to its interest in any other entity (such as a partnership) which is not a related corporation. For example, to the extent that the Parent acquired legal or consulting services in relation to its holding of units in one of the [Trusts], it will not be eligible to claim ITCs under subsection 186(1).