Subsection 141.02(1)
Direct Attribution Method
Administrative Policy
GST/HST Memorandum 17-12 [17.12] "Input Tax Credit Allocation Methods for Financial Institutions for Purposes of Section 141.02" 23 July 2021
Hierarchy of methods
42. A meaningful ITC allocation method must be based:
- first, on tracking to the extent possible
- second, to the extent that...
Direct Input
Cases
Northbridge Commercial Insurance Corporation v. Canada (the King), 2025 FCA 83
Northbridge issued around 5,000 insurance policies each year to trucking companies operating in Canada and the US and claimed ITCs for 1/3 of the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 169 - Subsection 169(1) | it is appropriate to determine ITCs on the basis of global evidence rather than on a supply-by-supply basis | 299 |
| Tax Topics - Excise Tax Act - Schedules - Schedule VI - Part IX - Section 2 | zero-rating of insurance supplies under s. VI-IX-2 could be determined on a global basis for ITC purposes | 218 |
See Also
Royal Bank of Canada v. The King, 2024 TCC 125
When cardholders of credit cards issued by the appellant (RBC) used their cards for purchases from a foreign merchant, RBC would earn an...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 165 - Subsection 165(1.11) | issue should be stated "reasonably" | 131 |
| Tax Topics - Excise Tax Act - Section 141.02 - Subsection 141.02(21) | pre-approval of method for allocating inputs between foreign and domestic supplies did not stop CRA from assessing to deny zero-rating of the foreign supplies | 202 |
| Tax Topics - Excise Tax Act - Section 141.02 - Subsection 141.02(31) - Paragraph 141.02(31)(f) | s. 141.02(31)(f) is merely confirmatory of normal taxpayer onus | 98 |
| Tax Topics - Excise Tax Act - Schedules - Schedule VI - Part IX - Section 1 - Paragraph 1(a) | foreign interchange fees generated by Canadian credit card issuer related to the granting of credit rather than the making of a loan by it, and were not excluded under s. 1(a)(ii) | 445 |
| Tax Topics - Excise Tax Act - Section 169 - Subsection 169(1) | expenses of redeeming credit card loyalty points were an integral component of the issuer’s extension of credit, and not sufficiently connected to earning interchange fees | 181 |
| Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Recipient | merchant acquirer was the recipient of credit card interchange services even though it was a conduit to the merchant | 156 |
| Tax Topics - Statutory Interpretation - Exclusionary provisions | exclusionary provisions should be narrowly construed | 267 |
| Tax Topics - Excise Tax Act - Section 301 - Subsection 301(1.2) - Paragraph 301(1.2)(a) | taxpayer not precluded from raising an argument that the Minister was bound by an ITC method that it had described in detail in its pleadings | 175 |
Administrative Policy
GST/HST Memorandum 17-13 [17.13] "Application of Section 141.02 to Financial Institutions That Are Qualifying Institutions" 23 July 2021
Overhead expense is a direct input if it can be attributed even in part to making of particular supplies
26. A business input that might be...
GST/HST Memorandum 17-12 [17.12] "Input Tax Credit Allocation Methods for Financial Institutions for Purposes of Section 141.02" 23 July 2021
Direct input where FI partially leases out office building rather than using in its financial business
Example 5
Financial Institution E makes...
B-106 Input Tax Credit Allocation Methods for Financial Institutions for Purposes of Section 141.02 of the Excise Tax Act 26 August 2011
Data entry for supplies made to insurance company clients are direct inputs
Example 29
Insurance Company H requires data entry services in respect...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 141.02 - Subsection 141.02(1) - Specified Method | 552 | |
| Tax Topics - Excise Tax Act - Section 141.02 - Subsection 141.02(1) - Non-Attributable Input | 282 |
Excluded Input
Administrative Policy
GST/HST Memorandum 17-12 [17.12] "Input Tax Credit Allocation Methods for Financial Institutions for Purposes of Section 141.02" 23 July 2021
Example 2
- Contractor’s service to complete improvements to capital real property is an excluded input.
Exclusive Input
Administrative Policy
GST/HST Memorandum 17-13 [17.13] "Application of Section 141.02 to Financial Institutions That Are Qualifying Institutions" 23 July 2021
Appraisal received by bank regarding proposed mortgage loan is an exclusive input
Example 3
Bank C provides a mortgage loan to an individual who...
GST/HST Memorandum 17-12 [17.12] "Input Tax Credit Allocation Methods for Financial Institutions for Purposes of Section 141.02" 23 July 2021
S. 150(1) election renders inputs to services rendered by electing FI to another group FI exclusive inputs
Example 4
Financial Institution D is a...
Non-Attributable Input
Administrative Policy
GST/HST Memorandum 17-12 [17.12] "Input Tax Credit Allocation Methods for Financial Institutions for Purposes of Section 141.02" 23 July 2021
FIs have few non-attributable inputs
27. A financial institution generally has very few non-attributable inputs.
Example of (rare)...
B-106 Input Tax Credit Allocation Methods for Financial Institutions for Purposes of Section 141.02 of the Excise Tax Act 26 August 2011
Employee surveys re environmental practices, or employee assistance programs, are non-attributable inputs
Example 27
Financial Institution G makes...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 141.02 - Subsection 141.02(1) - Specified Method | 552 | |
| Tax Topics - Excise Tax Act - Section 141.02 - Subsection 141.02(1) - Direct Input | 96 |
Procurative Extent
See Also
Associated Newspapers Ltd v HM Revenue & Customs, [2017] EWCA Civ 54, [2017] BVC 10
The appellant (“ANL”) promoted circulation of its Sunday newspapers by first purchasing vouchers from retailers such as Marks & Spencer and...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 141.01 - Subsection 141.01(2) | acquisition made for free on-supply was part of overhead of a commercial activity | 162 |
Qualifying Institution
Administrative Policy
GST/HST Memorandum 17-11 [17.11] Determining Whether a Financial Institution is a Qualifying Institution for Purposes of Section 141.02 23 July 2021
Must be a bank, insurer or securities dealer
10. If a financial institution is not of a prescribed class at any time in a particular fiscal year,...
Residual Input Tax Amount
Administrative Policy
GST/HST Memorandum 17-11 [17.11] Determining Whether a Financial Institution is a Qualifying Institution for Purposes of Section 141.02 23 July 2021
SLFIs only account for federal tax in residual input tax amount
16 … [T]hese provisions [in para. (a) of the definition, in contrast to para....
Specified Method
Administrative Policy
B-106 Input Tax Credit Allocation Methods for Financial Institutions for Purposes of Section 141.02 of the Excise Tax Act 26 August 2011
Causal allocation
Causal allocation directly approximates to the extent possible the use of a particular input using a systematic approach and an...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 141.02 - Subsection 141.02(1) - Direct Input | 96 | |
| Tax Topics - Excise Tax Act - Section 141.02 - Subsection 141.02(1) - Non-Attributable Input | 282 |
Tax Credit Amount
Administrative Policy
GST/HST Memorandum 17-11 [17.11] Determining Whether a Financial Institution is a Qualifying Institution for Purposes of Section 141.02 23 July 2021
Purpose of paras. (a) and (b), and (c), of the definition
14. Paragraphs (a) and (b) of the definition of tax credit amount generally apply when a...
Subsection 141.02(4)
Administrative Policy
GST/HST Memorandum 17-11 [17.11] Determining Whether a Financial Institution is a Qualifying Institution for Purposes of Section 141.02 23 July 2021
Use of ss. 141.02(4) and (5)
41. Subsections 141.02(4) and (5) apply for the purpose of determining the tax credit amount and the tax credit rate...
Subsection 141.02(6)
Administrative Policy
26 September 2018 Interpretation 167875
- Most inputs are likely to be allocable as “exclusive” or “direct” inputs rather than being “non-attributable” inputs.
- Direct tracking...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 141.02 - Subsection 141.02(12) | use of tracking, causal allocations and cost pools in ITC determinations | 411 |
Subsection 141.02(8)
Administrative Policy
GST/HST Memorandum 17-13 [17.13] "Application of Section 141.02 to Financial Institutions That Are Qualifying Institutions" 23 July 2021
Paraphrase of s. 141.02(8)
48. … [U]nder subsection 141.02(8), the following rules apply:
- the extent to which the consumption or use of the...
Subsection 141.02(9)
Administrative Policy
GST/HST Memorandum 17-11 [17.11] Determining Whether a Financial Institution is a Qualifying Institution for Purposes of Section 141.02 23 July 2021
Overview of election
27. A financial institution that is not a qualifying institution may be eligible to make an election under subsection...
GST/HST Memorandum 17-12 [17.12] "Input Tax Credit Allocation Methods for Financial Institutions for Purposes of Section 141.02" 23 July 2021
Implications of s. 141.02(9) election
100. Where an election under subsection 141.02(9) is in effect for a particular fiscal year for a financial...
Subsection 141.02(12)
Administrative Policy
17 August 2020 GST/HST Interpretation 194307 - Eligibility for ITCs […] [by the Financial Institution] on inputs used by […][the subcontractors]
A listed financial institution (the “Financial Institution”) that was not a qualifying institution acquired technology inputs for its own use...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 141.02 - Subsection 141.02(17) | s. 141.02(17) precludes retroactive return amendments | 278 |
9 November 2020 GST/HST Interpretation 210124 - Appropriateness of proposed ITC allocation method
In the context of comments on whether a new ITC allocation method proposed by a financial institution for claiming its excluded, direct and...
26 September 2018 Interpretation 167875
Financial institution X, a publicly traded listed financial institution under s. 149(1)(a), is engaged both in making taxable supplies of and in...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 141.02 - Subsection 141.02(6) | tracking of inputs preferred/cost pool use cannot change results | 110 |
Subsection 141.02(17)
Administrative Policy
17 August 2020 GST/HST Interpretation 194307 - Eligibility for ITCs […] [by the Financial Institution] on inputs used by […][the subcontractors]
A listed financial institution (the “Financial Institution”) that was not a qualifying institution acquired technology inputs for its own use...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 141.02 - Subsection 141.02(12) | an input to a financial institution that was on-supplied by it on a GST-taxable basis at a loss should also be treated as acquired as a financial services input | 459 |
GST/HST Memorandum 17-12 [17.12] "Input Tax Credit Allocation Methods for Financial Institutions for Purposes of Section 141.02" 23 July 2021
FI precluded from using a different (causal) method in subsequent year
Example 15
Financial Institution O has allocated the cost of consulting...
Subsection 141.02(18)
Cases
Bank of Montreal v. Canada (Attorney General), 2021 FCA 189
In affirming the decision of Walker J below, Noël CJ stated (at para. 6):
[T]he Federal Court identified the correct standard of review and...
Bank of Montreal v. Canada (Attorney General), 2020 FC 1014, aff'd 2021 FCA 189
The Minister rejected (under s. 141.02(20)) the request of the registrant (the “Bank”) for approval of an “output method formula” ITC...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 141.01 - Subsection 141.01(5) | flexibility in choice of ITC allocation method for non-FIs | 116 |
| Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Financial Service - Paragraph (d) | borrowing and paying interest is the supply of a financial service | 144 |
| Tax Topics - Excise Tax Act - Schedules - Schedule VI - Part IX - Section 1 | interest expense of Canadian bank on foreign borrowings was a proxy for zero-rated supplies by it | 62 |
Subsection 141.02(19)
Paragraph 141.02(19)(b)
Subparagraph 141.02(19)(b)(ii)
Cases
Bank of America v. Canada (Attorney General), 2025 FCA 9
The Bank, which had decided to outsource all its Canadian tax department to EY, was told by the last departing tax employee that its relevant tax...
Bank of America v. Canada (Attorney General), 2023 FC 1496
The appellant (“BANA”), a Canadian subsidiary of Bank of America Corporation, reduced its Canadian tax department from four to one employee in...
Subsection 141.02(21)
See Also
Royal Bank of Canada v. The King, 2024 TCC 125
RBC was a qualifying institution which for its 2012 and some prior fiscal years had followed a method, which had been pre-approved pursuant to s....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 165 - Subsection 165(1.11) | issue should be stated "reasonably" | 131 |
| Tax Topics - Excise Tax Act - Section 141.02 - Subsection 141.02(31) - Paragraph 141.02(31)(f) | s. 141.02(31)(f) is merely confirmatory of normal taxpayer onus | 98 |
| Tax Topics - Excise Tax Act - Schedules - Schedule VI - Part IX - Section 1 - Paragraph 1(a) | foreign interchange fees generated by Canadian credit card issuer related to the granting of credit rather than the making of a loan by it, and were not excluded under s. 1(a)(ii) | 445 |
| Tax Topics - Excise Tax Act - Section 141.02 - Subsection 141.02(1) - Direct Input | expenses of redeeming credit card loyalty points were inextricably linked to the issuer’s extension of credit, and only remotely linked to its earning zero-rated interchange fees | 368 |
| Tax Topics - Excise Tax Act - Section 169 - Subsection 169(1) | expenses of redeeming credit card loyalty points were an integral component of the issuer’s extension of credit, and not sufficiently connected to earning interchange fees | 181 |
| Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Recipient | merchant acquirer was the recipient of credit card interchange services even though it was a conduit to the merchant | 156 |
| Tax Topics - Statutory Interpretation - Exclusionary provisions | exclusionary provisions should be narrowly construed | 267 |
| Tax Topics - Excise Tax Act - Section 301 - Subsection 301(1.2) - Paragraph 301(1.2)(a) | taxpayer not precluded from raising an argument that the Minister was bound by an ITC method that it had described in detail in its pleadings | 175 |
Subsection 141.02(24)
Administrative Policy
GST/HST Memorandum 17-11 [17.11] Determining Whether a Financial Institution is a Qualifying Institution for Purposes of Section 141.02 23 July 2021
Potential motivation for becoming a designated qualifying institution
36. [S. 141.02(24)] allows a financial institution that is not a qualifying...
Subsection 141.02(31)
Paragraph 141.02(31)(f)
See Also
Royal Bank of Canada v. The King, 2024 TCC 125
Before going on to find that the Minister’s pre-approval of an ITC calculation methodology under s. 141.02(20) did not preclude subsequent...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 165 - Subsection 165(1.11) | issue should be stated "reasonably" | 131 |
| Tax Topics - Excise Tax Act - Section 141.02 - Subsection 141.02(21) | pre-approval of method for allocating inputs between foreign and domestic supplies did not stop CRA from assessing to deny zero-rating of the foreign supplies | 202 |
| Tax Topics - Excise Tax Act - Schedules - Schedule VI - Part IX - Section 1 - Paragraph 1(a) | foreign interchange fees generated by Canadian credit card issuer related to the granting of credit rather than the making of a loan by it, and were not excluded under s. 1(a)(ii) | 445 |
| Tax Topics - Excise Tax Act - Section 141.02 - Subsection 141.02(1) - Direct Input | expenses of redeeming credit card loyalty points were inextricably linked to the issuer’s extension of credit, and only remotely linked to its earning zero-rated interchange fees | 368 |
| Tax Topics - Excise Tax Act - Section 169 - Subsection 169(1) | expenses of redeeming credit card loyalty points were an integral component of the issuer’s extension of credit, and not sufficiently connected to earning interchange fees | 181 |
| Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Recipient | merchant acquirer was the recipient of credit card interchange services even though it was a conduit to the merchant | 156 |
| Tax Topics - Statutory Interpretation - Exclusionary provisions | exclusionary provisions should be narrowly construed | 267 |
| Tax Topics - Excise Tax Act - Section 301 - Subsection 301(1.2) - Paragraph 301(1.2)(a) | taxpayer not precluded from raising an argument that the Minister was bound by an ITC method that it had described in detail in its pleadings | 175 |
Subsection 141.02(32)
Administrative Policy
GST/HST Memorandum 17-13 [17.13] "Application of Section 141.02 to Financial Institutions That Are Qualifying Institutions" 23 July 2021
Minister required to establish that changed method is fair and reasonable
40. Under subsection 141.02(32), the Minister may, by notice in writing,...