On an appeal concerning GST treatment of municipal transit capital expenditures, the Court addressed whether the municipality made one exempt supply or separate exempt and taxable supplies under the Excise Tax Act.
The municipality argued that acquiring and constructing transit facilities constituted a distinct taxable supply to the province, supporting entitlement to input tax credits.
The Court held that the alleged facilities service was preparatory and integral to the single exempt supply of municipal transit services to the public, and that provincial funding and accountability terms did not create a separate supply of goods, services, or benefit to the province.
The statutory framework and funding agreements were characterized as cost-sharing and administration mechanisms rather than consideration for a distinct taxable supply.
The appeal was dismissed and input tax credits were denied beyond the statutory rebate scheme for exempt-supply activities.
