Subsection 188(1) - Prizes
The respondent trained and drove standardbred race horses at various Ontario race tracks, and received directly from the race track a share of the purses, calculated as 5% to the driver and 5% to the trainer.
Stratas JA stated (at paras. 19, 22):
[A] "prize" under subsection 188(2) is an honour, an award or winnings that are won by those who demonstrate superiority or achievement over and beyond the rest of the field of competitors in a competition or contest. A fee, on the other hand, is remuneration, emolument, recompense or compensation that is earned by a particular person for performing particular services under a contract of employment or other direct retainer. …
In this case, the only possible conclusion is that the monies received by the respondent are success fees for driving and training services it provided to owners, not "prizes" within the meaning of subsection 188(2)….
In support of this conclusion, he referenced Rule 18.11 of the Rules of Standardbred Racing enacted under the Racing Commission Act 2000 (Ontario), and stated (at para. 24):
[T]he Rule confirms that "drivers' and/or trainers' fees" [my emphasis] are deducted from the owners' purse money. This shows that drivers and trainers are not entitled to purse money; rather, they are entitled to their "fees" and they are entitled to have them paid from the purse money.
13 June 2013 Interpretation Case No. 109782
ACo was a registrant which, in order to promote sales of its products, provided purchasers with a chance to win a cash prize directly from it by participating in a "game of chance [which] is conducted through having certain labels affixed to a product's packaging." In finding that s. 188(1) did not permit ACo to claim an input tax credit with respect to the payment of the cash prizes, CRA found that the promotional contest was not itself a business or an adventure in the nature of trade, but instead was part of the retail business which it promoted given the "high degree of interconnection and interdependence between the retailing of products that are taxable for purposes of the GST/HST and the promotional contest."
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|Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Business||promotional contest part of retail business||124|