Capcorp Planning (2003) Inc. appealed an assessment of Ontario Sales Tax and a penalty levied by the Minister of Revenue for non-remittance of tax on premiums paid for its extended health care plans.
The central issue was whether these plans, identified as "unfunded benefits plans" under the Retail Sales Tax Act, were exempt from tax because the risks covered could not "otherwise be obtained by taking out a contract of insurance." The court found that the plans were indeed unfunded benefits plans and, based on uncontradicted evidence that purchasers could not obtain alternative health insurance due to pre-existing conditions or other impediments, concluded that the amounts paid were not taxable.
Consequently, the assessment was quashed.
The court also rejected the respondent's arguments regarding the penalty rationale and the due diligence defence.
