Section 138 - Incidental Supplies


9056-2059 Québec Inc. v. Canada, [2011] GSTC 143, 2011 FCA 296

must have small relative value

In finding that the sale of zero-rated honey (which represented about half of the appellant's sales) was separate from, and not incidental to, the sale of access to winter skating trails and summer hiking trails, Trudel JA stated (at para. 34):

...section 138 refers to a secondary element in the sense of minor or non-essential....[I]t is not enough for the supply or service to be secondary; this supply or service must also be of small value in relation to the principal activity.

Camp Mini-Yo-We Inc. v. Canada, 2006 FCA 413

no application where already a single supply

The program at a Christian camp interwove religion with all aspects of daily life at the camp. The religious, and recreational and athletic services supplied by the camp were a single supply, so that section 138 had no application.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Schedules - Schedule V - Part V.1 - Section 1 - Paragraph 1(f) camp with evangelical purpose nonetheless provided recreational and athletic activities 222

See Also

Canadian Imperial Bank of Commerce v. The Queen, 2019 TCC 79, aff'd 2021 FCA 96

supply of Aeroplan Miles was ancillary to promotional services

Under an agreement between the appellant (CIBC) and Aeroplan, as the successor to Air Canada (“AC”) (the “Agreement”), Aeroplan agreed to provide CIBC credit card holders with membership in the Aeroplan Mile program and credit Aeroplan Miles to such members, with the result that the Cardholder would generally earn one Aeroplan Mile for each dollar of purchases charged to the Cardholder's Visa AeroCard account. Aeroplan would then invoice CIBC for the Aeroplan Miles credited to the Cardholder. The Cardholder would subsequently redeem the Miles in exchange for the acquisition of property or services chosen from a menu. The Agreement provided that the fees of AC were payable by CIBC “in consideration of AC referring or arranging for Aeroplan members and other members of the public to make Card Applications and in consideration of AC performing its other obligations herein which are incidental to the foregoing.”

After finding that Aeroplan made a single supply under the Agreement, Visser J stated (at para. 30):

[T]he individual elements of the Aeroplan Supplies are highly interconnected and each forms an integral part or component of the overall supply of the Aeroplan Mile Program by Aeroplan to CIBC. …[T] here is no evidence that CIBC would have been prepared to pay consideration to Aeroplan for any of the separate elements on their own, and Aeroplan issued invoices to CIBC in respect of its “participation in the Aeroplan Program” for each of CIBC’s credit cards, generally computed with reference to the number of Aeroplan Miles issued during the relevant billing period.

He went on to state (at para. 35):

…In the alternative, if the supply of the Aeroplan Supplies included multiple supplies, one of which was the separate supply of Aeroplan Miles, … the supply of the Aeroplan Miles was incidental to the supply of promotional and marketing services by Aeroplan to CIBC, such that the supply of the Aeroplan Miles is deemed by section 138 of the Act to be a part of the supply of the promotional and marketing services made by Aeroplan to CIBC.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Supply Aeroplan points program occurred as single supply 264
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Service Aeroplan Miles were supplied by Aeroplan to CIBC as a taxable service 376
Tax Topics - Excise Tax Act - Section 181.2 Aeroplan Miles were not gift certificates as they had no stated monetary value 193

Cartier House Care Centre Ltd. v. The Queen, 2015 TCC 278

s. 138 did not apply where the allocation of consideration among the components was apparent

The appellant, which was a for-profit operator of a B.C. residential care home, was invoiced periodically, based on an flat hourly rate, by a third-party independent contractor ("HARPS") for the services of its "care aides" (who performed personal services and provided assistance to residents with the activities of daily living), and "activity aides" (who focused on social activities for the residents and whose time represented 5.4% of the total).

After finding that the provision of the services of the care aides qualified as an exempt "homemaker service" under Sched. V, Pt. II, s. 13, Paris J found that s. 138 did not deem the activity aide services to form part of a single supply of care aide services. He stated (at paras. 75-6):

[T]he method of invoicing the activity aide and care aide supplies does not result in those services being provided for a single consideration. …[T]he total hours and fees for both types of aides were combined on the invoices because the hourly rate for all of those aides was the same. Therefore, the consideration for each category of worker would be determinable and separate amounts.

…[T]he activity aide services were not incidental to the care aide services. …[E]ach kind of service was independent of the other and had value as a separate supply.

See summaries under Sched. V, Pt. II, s. 13 and Sched. V, Pt. II, s. 1 – home care services.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Schedules - Schedule V - Part II - Section 1 - Home Care Service "personal care" included ADL assistance 409
Tax Topics - Excise Tax Act - Schedules - Schedule V - Part II - Section 1 - Institutional Health Care Service accommodation an institutional health care service 232
Tax Topics - Excise Tax Act - Schedules - Schedule V - Part II - Section 13 personal care services provided by independent contractors were exempted 483
Tax Topics - Statutory Interpretation - Interpretation/Definition Provisions general phases in definition not limited by following specific enumeration 185
Tax Topics - Statutory Interpretation - Noscitur a Sociis noscitur a sociis did not apply to general phases preceding list 206
Tax Topics - Excise Tax Act - Regulations - Public Service Body Rebate (GST/HST) Regulations - Section 2 - Government Funding funding for personal care services provided by independent contractors would be included 265

Global Cash Access (Canada) Inc. v. The Queen, 2012 TCC 173, rev'd in part 2013 FCA 269

taxable element insufficiently minor

The appellant ("Global") enabled casino patrons to use their credit cards to purchase cheques from Global which they could negotiate for cash. To this end, the patron first used his or her credit card at a kiosk on the casino premises (or at a cashier cage) to get the cheque-purchase transaction approved by the credit card issuer. The casino cashier then issued, on Global's behalf, a cheque made out by Global to the casino operator, which the casino operator then negotiated for cash provided to the patron. At issue was the taxability of fees paid by Global to the casino operator.

Woods J found that the activities of the casino operator in allowing kiosks on its premises and providing support services at the cashier cages, were excluded from the definition of (exempt) "financial services" in s. 123(1) under paras. (r.4) and (r.5) of that definition, whereas the casino operator's role of cashing the cheques was a financial service described in paras. (a) and (d) of the definition.

She then found that the above elements (kiosk provision, cashier services and cheque cashing) were "not so interdependent that they should be considered a single supply," it being "convenient, but not necessary, that the Casinos provide all of these elements" (para. 94), and "none of these elements are a minor part of the supply so as to be incidental" for purposes of s. 138 (para. 96). It was appropriate to allocate 25% of the fees paid to the casino operator as consideration for the exempt cheque-cashing service, and to treat the balance as taxable.

Canada Trustco Mortgage Company v. The Queen, 2004 TCC 792

sale of mortgages on fully-serviced basis with deferred purchase price labelling

The appellant ("CTM") sold mortgage loans made by it to arm's length securitization trusts and serviced the sold mortgages including collecting and accounting for payments, and dealing with renewals and defaults. The consideration for a sale for the most part comprised a "Closing Payment" paid by the purchaser trust out of the proceeds of commercial paper issuances and "Deferred Amounts" representing most of the cash subsequently generated to the trust from the purchased mortgages net of all other outlays. CTM did not explicitly charge the trusts for the servicing, but recorded fees for such services in its financial statements.

After finding that there was a single supply of a financial service by CTM, Bowman ACJ went on to find that if this were not the case, s. 138 or 139 would have applied to deem this result to have occurred, stating (at para. 25) that the above-summarized provisions of the sale agreement "establish conclusively that the consideration for the sale of the mortgages and the servicing of the mortgages was a single consideration." Respecting the reporting of an imputed servicing fee of 25 basis points per annum in CTM's financial statements, he stated (at para. 28) that "there is… no basis for the respondent to assume that a note in the financial statements of a party to a transaction who is not even the person primarily liable for the GST can override the intentions of both parties as evidenced in the agreement between them."

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Financial Service sale of mortgages on fully-serviced basis 301
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Supply sale of mortgages on fully-serviced basis 139

State Farm Mutual Auto Insurance Co. v. The Queen, [2003] GSTC 35

After finding that the U.S. head office of the appellant (an auto insurer) did not render or supply services to the Canadian regional office, Bowman A.C.J. went on to find that if such services were rendered, they were financial services. He noted that the respondent's argument "would essentially restrict financial services, in the context of the insurance business, to the issuance of an insurance policy to an insured" and that the concept of underwriting was much broader than this.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Financial Service 119
Tax Topics - Excise Tax Act - Section 220 charges to Canadian branch of an allocated portion of head office expenses were not for services rendered 72

Interior Mediquip Ltd. v. The Queen, [1994] G.S.T.C 86 (TCC)

The sale and installation of a van conversion package for wheelchair access (which included lowering the van floor, installing a wheelchair ramp, installing a power door, installing tie-downs for the wheelchair, and modifying the van's seats) was found to constitute the supply of a "particular property" for purposes of s. 138, rather than of a number of properties.

Customs and Excise Commissioners v. United Biscuits (UK) Ltd., [1992] BTC 5045 (Ct. Ses. (Inner House))

In finding that all of the consideration received by the taxpayer company for supplies of biscuits packed in tins was zero-rated, Lord Murray concluded (at p. 5050) that the supply of the tin was both "incidental" to the supply of biscuits (given that it was not "so elaborate, expensive or decorative as to qualify as a container in its own right") and was "integral" to the supply of biscuits both because it was the container in which the biscuits were in fact packaged, but further in the sense that the tin facilitated the supply of the biscuits to a restricted, quality market as well as prolonging their shelf-life and keeping the biscuits in better condition once consumption of the biscuits had begun.

British Airways plc v. Customs and Excise Commissioners, [1990] BTC 5124 (C.A.)

In finding that British Airways was providing a single supply of air transportation to its customers, rather than two supplies, namely, air transportation and catering services, Parker L.J. stated (p. 5129):

"In-flight catering is in my judgment as much part of the supply of transport as the many other things which British Airways provide for the comfort and convenience of their passengers such as sweets before take-off and landing, blankets, extra cushions, magazines and newspapers, and so on."

Administrative Policy

December 2003 Memorandum Case No. 41678

Given that the seller of mortgages on a fully-serviced basis was reporting separate servicing fee income, it was appropriate to consider that the sales were not being made for a single consideration, so that ss.138 and 139 did not apply.

7 September 2000 Ruling 11830-1B (Case 26962)

A supply of booth space together with chairs and tables to exhibitors by a registered charity hosting a conference relating to its objects was deemed in light of s. 138 to be a single supply of real estate which was exempt, given "that the provision of the tables and chairs does not materially affect the amount of consideration charged." CRA stated:

we consider a supply to be incidental to a particular supply if the supplier's primary objective is to provide the particular supply, and if the consideration would be the same or only marginally different if only the particular supply were made.

P-160 "Meaning of the Phrase 'where a particular property is supplied together with any other property or service'" (draft).

"Meaning of the Phrase 'reasonably regarded as incidental'" (draft).

Guide for Providers of Financial Services under "Mixed Supplies of Property and Services"

Section 138 does not apply if a separately identifiable charge is made for the incidental supply. "An incidental supply of a property or service refers to a supply that may be made casually, occasionally, pertaining to or subordinate to another principal supply of property or services".

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 139 51

31 July 2002 Headquarter Letter 37094

Amounts collected by a securitization trust from purchased mortgages were first allocated to cover certain expenses, then allocated to payment of the purchase price from the vendor and then any amounts left over were paid to the vendor. Since the amounts left over were not in respect of the consideration for the purchase, they were viewed as being in respect of a separate consideration for the supply of administration services. Accordingly, ss.138 and 139 were not applicable as the single consideration criterion contained in those sections had not been satisfied.


Brent F. Murray, "Multiple Supplies and Incidental Supply Rules", Canadian GST Monitor, No. 281, February 2012, p. 1

Notes that the 9056-2059 decision did not reference the discussion of "incidental in Canadian National Railway v. Harris, [1946] S.C.R. 352.

S. Aylward, D. Gresdal, "GST Treatment of Adjustments on Real Estate Closings", GST & Commodity Tax, Vol. XII, No. 8, October 1998, p. 59.

Tetreault, "Canadian Tax Aspects of Asset Securitization", 1992 Conference Report, p.23:31.