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Appeal dismissed; payment for optional term extension was a distinct taxable supply subject to GST/HST.
The appellant, BC Hydro, appealed the Minister's disallowance of an input tax credit (ITC) of $910,517 under the Excise Tax Act.
The ITC related to an $8.5 million payment made by BC Hydro to a supplier for an optional term extension in an amended electricity purchase agreement.
BC Hydro argued the payment was made as a consequence of a modification to the agreement and thus deemed to include GST/HST under section 182 of the ETA.
The Tax Court of Canada dismissed the appeal, finding that the payment was consideration for a distinct taxable supply (the optional term extension) under section 165 of the ETA, and therefore section 182 did not apply.
