Chia-yi Chua

The appellant bank appealed GST/HST reassessments relating to its credit card and loyalty points programs.

The Tax Court of Canada held that the bank was not entitled to notional input tax credits for redemption payments made to a grocery retailer, as these were made in the course of providing exempt financial services rather than a commercial activity.

The Court also found that credit card processing services provided by third parties were excluded from the definition of financial services and were therefore taxable supplies.

The appeals were allowed in part only to give effect to certain agreed adjustments.

The appellant appealed a decision granting the equitable remedy of rectification to correct mistaken share redemptions that triggered unintended tax consequences.

The application judge found that the respondents had a continuing intention to carry out loan arrangements on a tax-neutral basis and that the share redemptions were a mistake.

The Court of Appeal dismissed the appeal, holding that under the binding authority of Juliar, the critical requirement for rectification is proof of a continuing specific intention to undertake a transaction on a particular tax basis, which the respondents had established.

Corporate applicants sought equitable rectification of directors’ resolutions relating to the redemption of preference shares in a corporate reorganization.

The redemption had triggered an unintended foreign exchange gain and resulting tax assessment due to a mistaken belief that earlier tax planning steps had been implemented.

The applicants argued the transactions were always intended to be tax‑neutral, while the respondent contended the request amounted to impermissible retroactive tax planning.

The court held that a common continuing intention that transactions occur on a tax‑neutral basis was sufficient even if the precise mechanism had not been determined at the time.

Rectification was granted to replace the share redemption with loan transactions consistent with the original tax‑neutral objective.

The Minister of Finance appealed a decision declaring that the respondent is exempt from paying retail sales tax on wooden pallets it rents to ship consumer goods.

The application judge found the pallets were exempt under s. 7(1)41 of the Retail Sales Tax Act because they were attached to or incorporated into tangible personal property for the purpose of sale, and were not returnable containers.

The Court of Appeal upheld the decision, finding that the transfer of pallets to customers constituted a sale for consideration, as the rental costs were built into the product price, and the final product sold was a palletized package.

The moving party sought leave to appeal an order dismissing its motions to strike, stay, or quash notices of application brought by three corporate taxpayers.

The responding parties raised preliminary objections that the order was final, not interlocutory, and that the motion for leave was out of time.

The Divisional Court held that the order was interlocutory because it dealt with procedure rather than substantive rights, and that the motion was timely because time ran from the date the order was settled.

On the merits, the court found no reason to doubt the correctness of the motions judge's decision that a Rule 14 application was an appropriate procedure for determining taxpayers' rights based on statutory interpretation.

The applications for leave to appeal were dismissed.

The Minister of Finance appealed a decision declaring that the locker rooms and coaches' rooms used by professional sports teams (the Blue Jays, Maple Leafs, and Raptors) during away games outside Ontario constituted 'permanent establishments' under the Employer Health Tax Act.

The Court of Appeal allowed the appeal, finding that the teams' use of away venues was too transitory to be considered a fixed place of business.

Furthermore, the sports equipment brought to these venues did not qualify as 'substantial machinery or equipment' under the Act.

The appellant corporation appealed the dismissal of its challenge to provincial corporation tax reassessments based on the thin capitalization rules.

The central issue was whether a mortgage debt to a non-resident shareholder had been incurred by a partnership or separately by the corporate partners, such that s. 18(4) of the Income Tax Act would apply.

The Court of Appeal accepted the respondent's position that the secured debt was the debt of the partners, with several liability limited to one-half each, and not a debt of the partnership.

Because that factual finding was supported by the evidence, appellate intervention was unwarranted and the thin capitalization rules applied.

The appellant appealed a judgment upholding a retail sales tax assessment imposed on payments made to terminate computer equipment leases after repudiation and default.

The court held the payments were negotiated settlement amounts made in the context of potential damages claims and simultaneous lease termination, not rental payments made under an ongoing lease.

Reading s. 2(1) and s. 2(6) of the Retail Sales Tax Act together, the court concluded sales tax is payable only on each rental payment while the lease remains in operation.

The assessment was vacated, the tax and interest paid were to be repaid, and no costs were ordered.