Recipient

When cardholders of RBC credit cards used their cards for purchases from a foreign merchant, RBC would earn an “interchange fee” from the foreign bank or other “merchant acquirer” of the foreign merchant for accepting the charge. Upon such acceptance, the cardholder discharged their purchase obligation to the merchant, RBC advanced the amount charged (less its interchange fee) to the merchant acquirer for crediting to the merchant’s account, and RBC would then request payment of the balance from the cardholder at the end of the applicable billing cycle.

Smith J stated (at para. 87):

It must also be remembered that the interchange fee is paid by the merchant acquirer and not by the cardholder. The merchant acquirer is the “recipient” of the authorization and payment service at issue because it pays for the service although the cost is ultimately borne by the merchant who receives a discounted payment.

A Sobeys subsidiary (“LBL”) sold $98 million of tobacco products during the 14 months starting in January 1999 to a status Indian (Roberta MacNaughton) operating a variety store on an Indian reserve. As soon as LBL delivered the products to the store vicinity, and it received the cash consideration, the products were loaded onto the waiting trucks of customers, in turn, of Roberta MacNaughton. The Minister’s position was that LBL sold the tobacco products to such third-party customers who were not status Indians, with MacNaughton being compensated for her involvement in this scheme through volume rebates – so that such sales were not exempted under s. 87 of the Indian Act.

Visser J found that MacNaughton was the “recipient” of such sales, i.e., there was an oral agreement between her and LBL to purchase the products and she was liable under that agreement to pay LBL therefor. He further stated (at para. 142):

I also note that the sale of the Tobacco Products from [LBL] to Roberta MacNaughton often resulted in a resale to her customers almost simultaneously. They were in essence flash sales, which are common types of sales.

A claimant of the new residential rental property rebate (NRRPR) is required under s. 256.2(3)(a) to be the “recipient” of the supply of the property meaning, generally, that it is liable for the consideration for the supply under the purchase agreement. A corporation which took title to newly-constructed residential properties which it paid for with its own funds and rented out, was denied the NRRPR because it was not named in the purchase agreement (the builder required that individuals be named as the purchasers, so that the individual shareholders of the corporation were so named).

McPhee J noted that Cheema (dealing with the new housing rebate under s. 254) made a similar finding, and stated (at paras. 44-45):

Similar to section 254, subsection 256.2(3)(a) does not distinguish between beneficial and legal ownership, so it is of no consequence that the three related individuals acquired the Subject Properties as bare trustees of the Appellant. …

Similar to the Cheema decision, it is the relationship between the purchaser and the seller that is relevant to the entitlement to the NRRPR rebate, not the relationship between the co-purchasers.

Westcoast reimbursed (through Manulife as its agent) employees who had incurred various health care services – including some which were GST/HST-taxable, namely, acupuncture, massage therapy, naturopathy and homeopathy services. Sommerfeldt J found that the employees were the recipients of these taxable services notwithstanding that there generally was no written contract with the care provider and, in some instances, the health care provider was paid directly by Westcoast (through Manulife). In this regard, he stated (at para. 53):

[W]hen an employee of Westcoast or a family member attended upon a health care provider to obtain a Subject Service, even in a direct-billing situation, it was the employee or family member (and not Westcoast or Manulife) who entered into the agreement with the health care provider for the provision of the service. Under that agreement for the provision of the Subject Service, it was the employee or family member who was liable to pay the consideration for that service. In a direct-billing situation, pursuant to the assignment by the employee to the health care provider of the employee’s right to be reimbursed by Manulife (on behalf of Westcoast), in conjunction with the direct-billing arrangement between the health care provider and Manulife, and using money from the Operating Fund, Manulife, on behalf of Westcoast, satisfied the employee’s or family member’s obligation to pay the consideration. However, the direct-billing arrangement did not negate or vitiate (although it satisfied) the employee’s or family member’s liability under the agreement to pay that consideration. Thus, it is my view that paragraph (a), and not (b), of the definition of "“recipient” in subsection 123(1) of the ETA," is the operative provision in this situation. Accordingly, as the employee or family member was the person liable, under the agreement for the supply of the Subject Service, to pay the consideration for that service, it was the employee or family member (and not Westcoast) who was the recipient of the service.

Stewardship Ontario (“SO”) was a not-for-profit corporation that operated, as part of a regime governed by the Waste Diversion Act, 2002 (Ontario) ("WD Act") an Ontario program for recycling various types of waste such as paints, solvents, batteries, empty propane tanks and antifreeze. It collected the waste and paid for its processing or disposal. “Stewards,” being persons who had a commercial connection with such waste, were statutorily responsible for paying fees to SO to reflect their reasonable share of the associated costs.

After rejecting the Crown’s argument that SO was not making supplies but instead merely performing a statutory duty, D’Arcy J found, respecting the Crown’s argument that the “Steward Fees” were a “regulatory charge” rather than a “user fee,” that they were payable by “operation of law” (i.e., under the WD Act) and thus came within the definition of consideration. He then stated (at para 119):

Under paragraph (b) of the definition of recipient in subsection 123(1) of the GST Act, the MHS Stewards are deemed to be recipients of the supply since they were the persons who were liable to pay the consideration for the supply.

The vendor of a commercial property signed a sale agreement with a purchaser (Mayling) who was not registered for HST purposes – but then, on closing, was directed to transfer title to a purchaser (840 Holdings), which was HST-registered. The vendor was later informed that, in fact, 840 Holdings was purchasing on behalf of two other registered companies who had acquired beneficial co-ownership interests in the property – and who self-assessed themselves for the applicable HST.

Bocock J found that there was no contemporaneous documentation to establish that the “beneficial owners” had relieved 840 Holdings of its obligations under the purchase agreement, so that the vendor was liable for failure to charge HST on a sale to an unregistered purchaser (Mayling).

A parent corporation ("GEM") holding a subsidiary engaged in HST-exempt activities (of operating nursing homes) reduced the non-creditable HST that the subsidiary otherwise would have borne on management fees charged by GEM to the sub, by having the group’s key executive draw a salary from the subsidiary for the performance of management services respecting the subsidiary’s homes. Sommerfeldt J accepted this approach, and rejected CRA assessments which grossed-up the fees charged by GEM to the subsidiary by the amount of the executive’s salary at the subsidiary, and conversely imputed the earning of management fees by the subsidiary from GEM.

Sommerfeldt J also accepted that the activities of the parent relating to new home construction in other subsidiaries were conducted as their agent, notwithstanding that it booked the expenditures as assets on its books and sent purported invoices for those amounts to the subsidiaries when the work was largely completed. In his view, it was quite contrived to consider that, as each brick was laid, the parent was acquiring the ownership of that brick rather than such brick becoming the property of the real estate owner (i.e., the subsidiary.)

An agreement for the purchase of a new condo by the individual appellant was amended shortly before closing at the insistence of the mortgage lender (the "Credit Union") to add her (Ms. Richards) as a co-purchaser (with Ms. Richards receiving a 1% ownership interest in the condo at closing). Hershfield J declined to follow Al-Hossain, which suggested that the combined effect of ss. 254(2) and 262(3) was to deny the new housing rebate as a (1%) interest in the condo was supplied to an unrelated person (Ms. Richards) who was not acquiring the condo as a primary residence.

He characterized the amended purchase agreement as instead entailing, at most, a supply of a 1% interest in the property by the taxpayer to Ms. Richards in consideration for Ms. Richards’ guarantee – and as not resulting in any interest in the condo also being supplied by the builder to Ms. Richards.

In addition, after referring to the “ultimate liability” doctrine in Bondfield, Hershfield J. concluded that Ms. Richards was not a recipient of the supply of the condo unit by the builder, so that s. 262(3) did not apply, stating (at paras. 44, 46):

Ms. Richard’s only liability was to the Credit Union. That was the intent of the parties… . The Appellant accepted ultimate liability for payment to the builder in the unlikely event the builder was able to make a case against Ms. Richards.

[A] party to a contract of purchase and sale whose sole intent and purpose throughout the entire series of transactions is to help the original purchaser obtain financing and who ultimately has no liability to the builder is not a “recipient” and not a “particular individual” under subsection 262(3) or paragraph 254(2)(a).

The limited partnership units of the appellant were held by a sub-trust (the "Trust") of an income fund (the "Fund"). Unit subscription proceeds received by the Fund on its initial public offering ("IPO") and on a subsequent private placement of Fund units were used to acquire debt and units of the Trust, which in turn subscribed for LP units of the appellant. The appellant used those proceeds to acquire intellectual property and related rights to be used by it in a pizza franchising business. Before completion of the IPO, the Fund, Trust, appellant and its general partner entered into a "Financing Agreement" in which they agreed that all financing expense in connection with the IPO, other than the underwriters' fee, were to be incurred on behalf of the appellant; and at the same time the appellant entered into an "Administration Agreement" with the Fund in which it agreed to administer the Fund and "as agent of the Fund" to pay for all outlays and expenses incurred by it in such administration.

V. Miller J found that, as pursuant to the Administration Agreement, various expenses (principally relating to the IPO and private placement) were incurred by the appellant as agent for the Fund, the appellant was not the recipient of the related services and was not entitled to input tax credits therefor (para. 31). The Financing Agreement did not render the appellant the recipient of such supplies as the supplies were not made pursuant to that agreement (para. 26), nor could it be construed as causing there to be a re-supply of the services by the Fund to the appellant, as the services were consumed by the Fund (para. 32).

The Appellant (a car manufacturer) was the administrator of various defined benefit pension plans for its employees. It directed the trustee of the plans to pay the fees of third party portfolio advisors out of the trust assets. As it was the Appellant who was contractually obligated to pay those fees, and as s. 267.1 did not deem the portfolio advisory services to have been acquired by the trust, the Appellant was the recipient of those services.

(referred to with approval in City of Calgary.)

The appellants, which were community service agencies, received funding from Quebec City to operate summer play programs for children. Revenu Quebec assessed on the basis that this was consideration for taxable supplies by the City, notwithstanding that a supply of such services to the parents would have been exempt under Sched. V, Part VI, s. 12. Lamarre Proulx TCJ noted (at para. 52) that the City:

is, in part, the recipient of the service delivered to the [parent] third parties. The third party is also a recipient of the service, whether he has to pay part of the price or nothing at all.

She found (at para. 54) that where (as here) "there is a direct link between the subsidy and the price of the service, the subsidy must be regarded as the consideration, or part of the consideration, for the service, and it is taxable if the service is taxable." However, as it was accepted that the supply was exempt under s. 12, that consideration was not taxable.

The appellant, which completed the excavation and concrete work on large construction projects and hired subcontractors to complete the projects, paid a second (new) subcontractor to remedy the deficient work of the original subcontractor. Though the appellant paid the new subcontractor, it recovered this cost by reducing the amounts paid to the original subcontractor under a “back-charge.” In finding that the original subcontractor rather than the appellant was the recipient of the supply of the remedial work (so that the appellant was not entitled to an input tax credit for the GST charges of the second contractor), Campbell J stated (at para. 123):

[W]e must determine who was “ultimately” liable to pay for the supply. .. By accepting this back-charge, the original subcontractor acknowledged its responsibility for the work deficiencies and assumed liability for the invoice. Although the Appellant’s name appeared on the face of the invoice, it was the original subcontractor, not the Appellant, that accepted ultimate liability for the invoice including the GST on that invoice.

The Appellant, which was entitled to issue its own bank notes, entered into a reciprocal agreement with other banks pursuant to which it was entitled to a flat fee per transaction when customers of the other banks were issued bank notes of the Appellant (or bank notes of the Bank of England) through ATMs of the Appellant.

The Appellant was unsuccessful in establishing that the fees received by it were eligible for zero rating under a provision that applied to "the issue by a bank of a note payable to bearer on demand". Rather than being properly so described, the reciprocity fee payable to the Appellant was received by it in consideration of its providing to the counterparty bank a supply consisting of a service to a customer of that bank in the form of a facility to withdraw cash, in whatever form it was dispensed.

The Appellant, which was in the business of building new homes, offered to prospective buyers of its homes the services of real estate agents who would act in the sale of their existing homes, and had undertook to pay the agents' fees provided that the purchase of the new house from the Appellant went through. Although the estate agents were supplying a service to the prospective buyers, the fact that the Appellant instructed them and paid their fees had the consequence that the transaction between them and the Appellant constituted a supply of services by them to the Appellant.

Passengers whose flights were delayed received meal vouchers from British Airways which they could present at various restaurants in the terminal. Macpherson of Cluny J. dismissed an appeal from a decision of the Commissioners that under this arrangement there was a supply of property by the restaurants to the passengers rather than to British Airways.

The registrant was correctly assessed for failure to collect GST on charges to its commercial tenants for property taxes, utilities and insurance.

An arrangement under which the taxpayer provided nurses and, therefore, their services, to hospitals and received from the hospitals commission payments and also reimbursement for the nurses' salaries was characterized as an "intermediary" situation (i.e., the taxpayer acted as a mere intermediary between the nurses and the hospital introducing the two so that the nurse could provide her services to the hospital) rather than a "vicarious performance" situation (in which the taxpayer was contractually obliged to provide the services of the nurses to the hospital). Accordingly, the taxpayer was not making supplies of (exempt) nursing services to the hospitals and could deduct input tax.

Agreements that the taxpayer entered into with gas station operators (the "merchants") and also with customers of the taxpayer were drafted on the basis that employees of the customers, who were issued cards by the taxpayer, would purchase fuel as agent for the taxpayer, with the fuel then being sold by the taxpayer to the customer. In rejecting this characterization with respect to situations where the fuel initially was property only of the merchant, the Commissioners noted (at. p. 856) that property in the fuel would pass at the pump from the merchant to the cardholder, and a measurable period of time would then pass before the cardholder signed the supply voucher. Accordingly, property in the fuel did not pass to the taxpayer, with the result that the taxpayer was not making a taxable supply of fuel to the customer.

In finding that the registrant, which provided dining, recreational and social facilities to employees of the Syncrude project in northern Alberta, was making taxable supplies to Syncrude in respect of grants received by it from Syncrude, Sobier TCJ. noted (at p. 75-4):

"The recipient of the supply, for the purposes of the Act, is the person liable to pay for the supply, even if the beneficiary of the supply is in fact a third party, as long as there is a direct link between the payment and the supply. In the instant case, Syncrude agrees to provide the appellant with monthly grants and the annual grant and the appellant agrees to provide activities and events to its members, Syncrude's employees. Syncrude derives the benefit of having good communication with its employee, better morale and therefore an increased productivity from having the appellant providing activities to its members in return [for] the grants. Consequently, Syncrude is the recipient of the supply of these activities ...".

The appellant along with seven individual employees was charged with manslaughter in connection with the sinking of its vessel. In finding that the appellant was the recipient of legal services provided by the separate counsel for each of the individual accused, the Tribunal stated:

"The Company, the evidence shows, not only approved the choice of solicitor but it also instructed the solicitor and agreed to pay it: and the solicitor would have had no right to recover costs and fees from the individual employee were the Company to be unable to or refuse to pay for any reason. The individual employee was admittedly a client of the solicitor, but that in no way displaces the fact that the Company was a client as principal in relation to each solicitor. The solicitors' services were, therefore, provided to the Company, notwithstanding that the individual employee also received the benefit of those services."