Jasmine Jolin

Following a referral back from the Federal Court of Appeal, the Tax Court of Canada reconsidered the appellant's appeal regarding input tax credits for fleet insurance policies.

The Court of Appeal had clarified the interpretation of zero-rated supplies under the Excise Tax Act.

However, the Tax Court found that the appellant had only provided global evidence at trial, lacking specific evidence on individual policies.

Without this evidence, the Court could not determine the extent to which any given policy was zero-rated.

Consequently, the appeals of the reassessments were dismissed.

The appellant, an insurer providing fleet insurance to trucking companies operating in Canada and the US, claimed input tax credits on the basis that portions of its supplies were zero-rated exported financial services.

The Minister denied the ITCs, assessing the supplies as entirely exempt.

The Tax Court of Canada dismissed the appeal, interpreting 'risks' in paragraph 2(d) of Part IX of Schedule VI to the Excise Tax Act as the objects of the insurance (the vehicles), not the perils insured against.

The Court held that apportionment between exempt and zero-rated supplies must occur on an object-by-object basis, and the appellant failed to provide specific evidence regarding individual policies and vehicles to support its global apportionment method.

The Court considered whether section 27 of the Crown Liability and Proceedings Act removes Crown immunity from discovery when the Crown is not a party.

It held that immunity can be displaced only by clear statutory language, and section 27 applies only to proceedings against the Crown.

Because neither the Crown nor the chief investigator was a party, the investigator could refuse discovery.

The appeal was allowed and the respondents’ discovery motion was dismissed with costs throughout.