River Cree Resort – Tax Court of Canada finds that the predominant supply made by the cash provider to an ATM owner was a taxable supply

The owner and operator of a casino resort (the Appellant) agreed with owner of ATMs (“Access”) which, in turn, had access to the Interac payment network of a network operator, that it would make various locations on its resort available for the siting of Access’ ATMS, load those ATMs with cash and provide the utilities, security, routine maintenance and customer support necessary to operate the ATMs. Cardholders who accessed such ATMs agreed to pay a per-transaction “surcharge fee” of under $4.00. The cash of the Appellant disbursed out of the ATMs was reimbursed to it with funds ultimately derived from the card issuer.

Graham J apparently was tempted to find that the Appellant was making two supplies to Access, one of which was an exempt supply of agreeing to provide the cash to the ATM users. However, he found that the parties’ pleadings effectively required him to treat the Appellant as making a single compound supply to Access. He concluded that such single supply was a taxable supply, stating:

… I find that [the cardholders] … paid the surcharge fee to Access for arranging for the transfer of money, not to the Appellant for transferring the money. …

Access benefited from having the Appellant transfer the money. It also benefited from having Access load the cassettes with cash. … However, it is clear to me that what Access most wanted was the exclusive right to place and operate ATMs at the Resort and to process all transactions arising therefrom. This was the predominant element of the supply it received … . …

[T]he predominant element of the single compound supply made in the Subsequent Periods was the exclusive right to place and operate ATMs at the Resort and to process all transactions arising therefrom.

The arrangements for earlier reporting periods differed in that the Appellant lent the cash to Access, who loaded it for its own account to the ATMs, rather than the Appellant being the cash provider at the ATMs. Given the reduced significance of the financial services (only loans) provided by the Appellant, the single supply made by it to Access was a fortiori a taxable supply.

Neal Armstrong. Summary of River Cree Resort Limited Partnership v. The Queen, 2022 TCC 45 under ETA s. 123(1) – financial service – (a).