Service

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 AC made a single supply under the Agreement, and in finding that such single taxable supply was of promotional services rather than (as submitted by CIBC) a supply of “gift certificates” exempted under s. 181.2, Visser J stated (at paras. 32-33):

[T]he true nature or raison d'être of the Aeroplan Mile Program, the … Agreement and the resulting Aeroplan Supplies is to market and promote applications for and increased use of participating CIBC credits cards (and other participating CIBC financial products such as mortgages). The wording of both the … Agreement and Aeroplan’s invoices to CIBC makes this clear. … In effect, section 9 of the 2003 Credit Card Agreement explicitly stipulates that the marketing and promotional services (the referral activities) are the predominant element of the Aeroplan Supplies and further provides that all other supplies are incidental thereto.. …

…Aeroplan Payments were computed with reference to the number of Aeroplan Miles which were issued in a particular billing period as a convenient method for calculating the value of the marketing and promotional services provided by Aeroplan to CIBC.

He also noted (at para. 32) that a key CIBC witness testified that the Aeroplan Program allowed them “to attract more customers to CIBC, which we did.”

Stewardship Ontario (“SO”) was a not-for-profit corporation that operated, as part of a regime governed by the Waste Diversion Act, 2002 (Ontario) (the “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.

Before finding that SO was making taxable supplies, D’Arcy J first stated (at paras. 86-87):

A service is defined even more broadly to mean anything other than property, money and certain services supplied to an employer by an employee, an officer and certain other persons. The definition of service is extremely broad. If something is not property, money or what one could call an “employee service”, then it will be deemed to be a service.

As a result of the broad definitions of supply, property and service, the provision of anything in any manner will constitute a supply.

Findmypast carried on the business of providing access to genealogical and ancestry websites which it owned or in respect of which it held a licence. The search function (which only revealed that a particular set of records, e.g., the Register of births for a particular town and period, was available, but not the record contents) was available free of charge to the general public, but to access and download particular documents, customers could either take out a subscription for a fixed period or use a system known as Pay As You Go (“PAYG”) which involved the payment of a lump sum in return for which the customer received a number of “credits” (also referred to as vouchers) used to view records. The credits were only valid for a fixed period, but unused credits could be revived if the customer purchased further credits within two years. During the period in question the taxpayer accounted for value added tax (VAT) on the price of PAYG vouchers at the time when they were sold. The result was that tax was paid both for redeemed vouchers and the significant number of vouchers that remained unredeemed. The taxpayer claimed repayment of the VAT accounted for in respect of unredeemed vouchers during the period.

A preliminary issues was whether VAT should have been accounted for at the time when the vouchers were sold or when they were redeemed, having regard to s. 1(2) of the Value Added Tax Act 1994 (the “1994 Act”), which provided that “VAT on any supply of goods or services … becomes due at the time of supply” and s. 6(3) of the 1994 Act providing that generally a supply of services is to be treated as taking place at the time when the services are performed (to be read along with generally similar VAT Directive language).

Lord Drummond Young found (at paras 28, 33) respecting this issue, that a supply of services was made only at the time that particular records were downloaded:

[T]he search function cannot be considered an end in itself; it is no more than a means towards the customer’s ultimate end, namely viewing and downloading documents about the family that is being researched. … .

… The consideration for the payments made by customers to obtain PAYG credits is the ability to view or download particular items on the taxpayer’s website, and does not extend to the general search facility that is available both to customers and to the public. …

The members of the Appellant (which was a non-share Delaware corporation resident in Canada) included Canadian and U.S.-resident individuals who had been sold “Resort Points,” which could be periodically applied under a booking system to obtain access to particular resort condo units ("Vacation Homes") beneficially owned by the Appellant in Canada, the U.S. and Mexico. The Appellant paid various expenses respecting the Vacation Home operations which it recovered through “Annual Resort Fees” charged to its members. D’Arcy J found that the Annual Resort Fees were consideration for a service rather than intangible personal property, stating (paras. 237-8):

The Appellant does not provide any rights in consideration of the Annual Resort Fee. … What it supplies is the agreement to use the Annual Resort Fees to fund its operations. … This…is the supply of something other than property.

The Annual Resort Fees were "not part of the ongoing consideration the Members....pay to maintain their membership in the Appellant" given inter alia that the memberships were supplied by a different entities (the "Developers" who also had acquired occupancy rights to the Vacation Homes and had sold the Resort Points giving members the rights to book stays at the homes).

The taxpayer sold vouchers to retailers at a discount of approximately 9% from their face value, and agreed with the retailers to accept the vouchers at face value from the retailers minus a discount of 10%. In the meantime, the retailers would distribute or sell the vouchers to the public, and accept the vouchers at face value from the public in exchange for goods.

The taxpayer was found to be providing a service to the retailers for which consideration was given in the form of the 10% discount from the amount which it otherwise would have been required to pay on redemption by it of the vouchers. Accordingly, on each redemption of vouchers by the retailers, VAT was payable by the taxpayer at a rate of 15% on the amount of the discount.