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Whether a supply is taxable under the Excise Tax Act (“ETA”) can depend, in part, on how that supply is characterized. In normal commercial relations, businesses will often bundle many diverse services together – including both taxable and exempt services. Once bundled together, one must consider whether they remain multiple supplies, or whether they now constitute one single supply. If a single supply, one must then determine the character of that supply, which can impact whether it is taxable or exempt.

The courts’ approach to characterizing bundled supplies has evolved over the last few years. This was especially apparent in last year’s Federal Court of Canada (“FCA”) decision in Canadian Imperial Bank of Commerce v. Canada, 2021 FCA 96 (“CIBC 2021”), which was recently denied leave to appeal to the Supreme Court of Canada (“SCC”) — making it the law of the land.

The recent Tax Court of Canada (“TCC”) decision in Canadian Imperial Bank of Commerce v. The Queen, 2022 TCC 83 (“CIBC 2022”), is an example of how the TCC is now applying the FCA’s text-focused approach to other GST/HST characterization cases.

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2023 is shaping up to be quite a year for businesses operating in the real estate industry, with the Canada Revenue Agency (“CRA”) continuing aggressive industry audits (which have now made their way to court), and new tax rules for new housing assignments under the Excise Tax Act (“ETA”) and house flippers under the Income Tax Act (“ITA”)!

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Since the inception of the GST/HST in 1991, the Canada Revenue Agency (“CRA”) has taken what we consider to be a strict approach to the documentary/information requirements under section 169(4) of the Excise Tax Act (“ETA”), which must be met in order to claim input tax credits (“ITCs” and the “ITC Information Requirements”). This approach has likely lead to millions if not billions of ITC denials, leaving GST/HST registrants unable to recover GST/HST paid on their business inputs, and leaving the costs of their goods and services artificially too high – because of this unrecoverable GST/HST left embedded in the system.

In what we regard as potentially the most important case in decades, the Tax Court of Canada’s (“TCC”) decision in CFI Funding Trust (2022 TCC 60) underscores that CRA’s strict approach is overly technical and incorrect!

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First Nations individuals are granted special tax status under section 87 of the Indian Act (the “Act”) which effectively exempts them from taxation in respect of personal property “situated on a reserve” (the “s. 87 exemption”). This unique exemption transcends all taxing legislation in Canada, federal or provincial.


The courts’ interpretation of s. 87 has evolved over the years but, until now, it has only applied in the context of reserve property.


A recent decision of the British Columbia (“BC”) Court of Appeal (“BCCA”) has seemingly expanded the scope of s. 87 to off-reserve property – albeit in the context of a Band that no longer had a reserve.

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The effect of the Canada Revenue Agency’s (“CRA”) administrative policies on GST/HST audits is often misunderstood by taxpayers and CRA auditors alike. While policies carry some interpretive value, they do not supplant actual law in the form of legislation and regulations.

This sometimes makes relying on CRA administrative policy a risky proposition, particularly where the policy provides a benefit or relief against the legislation and regulations. This is because where CRA assesses a registrant for non-compliance with a beneficial policy, the Tax Court is bound to apply the legislation and regulations as-written, and cannot allow a CRA policy – even one that benefits the taxpayers – to take precedence over the law.

The decision in Dr. Kevin L. Davis Dentistry Professional Corporation v. The Queen, 2021 TCC 25 (“Dr. Davis Dentistry”) considered this very issue.

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