Words and Phrases - "warranty"

a
86
b
44
c
76
d
50
e
38
f
31
g
18
h
14
i
73
j
2
k
2
l
32
m
56
n
25
o
38
p
80
q
3
r
76
s
89
t
46
u
15
v
9
w
23
y
2

Le Groupe PPP Ltée v. The Queen, 2017 TCC 2, briefly aff'd 2018 FCA 123

Summary Under
Tax Topics - Excise Tax Act - Section 175.1
“warranties” funding the incremental cost of a new vehicle after complete loss of old vehicle likely were insurance policies and were not re quality, fitness or performance

The appellant (“PPP”) was a GST-registered corporation which offered motor vehicle replacement guarantees (the "warranties") through automobile dealers (the "dealers"). The dealer offered the warranty on PPP’s behalf on the sale of a motor vehicle. A customer of the dealer would already have a primary standard insurance policy, so that what the warranty covered, in the event of the destruction or theft of the purchased vehicle, was the deficiency between its depreciated book value (which was covered by the primary policy) and the cost of purchasing a new replacement vehicle. The new replacement vehicle would be purchased from the dealer, with PPP paying the dealer directly.

PPP unsuccessfully claimed input tax credits (“ITCs”) under ETA s. 175.1 respecting the payments made by it under warranties.

In appearing to find that the warranties were insurance policies (notwithstanding that PPP was not licensed as an insurer, which was required of it in order to issue insurance products), and after having quoted (at para. 45) a Quebec treatise on the law of insurance stating “guaranteeing a product against any risks whatever partakes of insurance; guaranteeing a product against risks arising from a defect in its manufacture partakes of a warranty,”) Tardif J stated (at paras. 84-85 , TaxInterpretations translation):

[I]t is public knowledge that conventional insurers…offer similar protection without the obligation to purchase the replacement vehicle from the same dealer.

The argument that there is a warranty by virtue of the sole fact that the obligation of the consumer to deal with the dealer who had sold the plan for his or her protection …is unconvincing.

In further finding that the PPP-provided warranties were not “in respect of the quality, fitness or performance” of the purchased vehicles, as also required in order for s. 175.1 to apply, Tardif J stated (at para. 90):

…[T]he quality, fitness or performance of a vehicle have nothing to do with theft or total loss. They essentially relate to the function and use of the vehicle.

Words and Phrases
insurance policy warranty
Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 169 - Subsection 169(1) payer of auto “warranty” claim did not benefit from the auto supply 277
Tax Topics - General Concepts - Illegality whether a product was an insurance policy did not turn on whether the provider was a properly licensed insurer 216