Top 5 Must-Know Canadian GST/HST Cases of 2024

Canadian GST/HST Cases

The beginning of a new year provides an opportunity to reflect on key developments from the previous year. In 2024, several significant GST/HST rulings were issued by the Federal Court of Appeal and the Tax Court of Canada. These decisions offer valuable insights into GST/HST issues that could impact businesses and practitioners in 2025. Below, we summarize the top five GST/HST cases from 2024.

1. Notional Input Tax Credits on Loyalty Redemption Payments

President’s Choice Bank v. Canada, 2024 FCA 135

President’s Choice Bank reimbursed Loblaws for discounts provided to customers when they redeemed loyalty points at Loblaws stores. The Federal Court of Appeal (FCA) determined that these redemption payments were made both in the course of a commercial activity (driving customers to Loblaws) and a non-commercial activity (provision of financial services). Since the applicable test does not require an “exclusively” or “primarily” commercial activity, President’s Choice Bank was entitled to notional input tax credits for the redemption payments.

2. Input Tax Credit Entitlement Based on Legislative Conditions

Entrepôt Frigorifique International Inc. c. Le Roi, 2024 CCI 78

The taxpayer engaged employment staffing agencies for temporary workers, paid the GST on the services, and claimed input tax credits. Despite the agencies failing to remit the GST they collected, the Tax Court ruled that the taxpayer was entitled to the input tax credits because the invoices met the prescribed documentary requirements. The court also confirmed that there is no obligation under the Excise Tax Act to perform additional due diligence, such as verifying the physical establishment of a supplier, in the absence of a sham.

3. Commercial Efficacy and Single Supply: Aeroplan Miles Not Gift Certificates

The Toronto-Dominion Bank v. The King, 2024 TCC 50

TD Bank entered into an agreement to offer Aeroplan Miles to Visa cardholders. The Tax Court found that the main supply under the agreement was Aeroplan Miles, as their acquisition was integral to the marketing services and exclusive rights provided by Aeroplan. Additionally, Aeroplan Miles were deemed not to be gift certificates due to their lack of stated monetary value, non-transferability without a fee, and the requirement to accumulate more points for use.

This decision is currently under appeal at the Federal Court of Appeal.

4. Pre-Approved Methods and Input Tax Credit Audits

Royal Bank of Canada v. The King, 2024 TCC 125

The Royal Bank of Canada (RBC) used a pre-approved method to claim input tax credits on expenses related to earning interchange fees from non-residents and redeeming loyalty reward points. The Tax Court upheld the Minister’s right to audit the claims to ensure they were properly classified as exempt or zero-rated supplies. The court also concluded:

  • Foreign interchange services to non-residents are zero-rated financial services as they involve granting credit rather than lending money.
  • Expenses for loyalty point redemptions tied to transactions with non-resident merchants were part of an exempt supply (granting credit), not a taxable supply.

This decision is also under appeal at the Federal Court of Appeal.

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5. Zero-Rating of Insurance Policies Covering Risks Outside Canada

Northbridge Commercial Insurance Corporation v. The King, 2024 TCC 10

Northbridge issued fleet insurance policies to trucking companies operating in both Canada and the United States. The taxpayer argued that these policies were zero-rated to the extent they insured risks situated outside Canada. The Federal Court of Appeal agreed, stating that a policy is zero-rated for the portion covering risks ordinarily situated outside Canada. However, the Tax Court dismissed the taxpayer’s appeal due to insufficient evidence showing how each policy was priced in relation to these risks.

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