In a widely followed case, the Tax Court of Canada has dismissed a claim by a Schedule II bank (hereinafter referred to as “the Bank”) concerning its entitlement to Input Tax Credits (ITCs) for GST/HST it says was payable on expenses arising from the operation of a membership rewards program. The program in question was offered by the bank to some of its credit cardholders. The claim made by the bank was for an Input Tax Credit amount of a staggering $13.97 million.
The case was decided on June 27, 2023. The decision is of considerable consequence to banking and legal professionals given the sizeable Input Tax Credit amount that was claimed and the implications for similar cases in the future.
The Bank had argued that the operation of a membership rewards program for certain credit cardholders (hereinafter referred to as “MRP Cardholders”) led to expenses that should be covered by the GST/HST Input Tax Credits. The Tax Court of Canada, however, did not find merit in this argument and subsequently dismissed the appeal.
It is interesting to note that the resolution of this case sets a significant precedent, potentially influencing the interpretation and application of policies related to Input Tax Credits for GST/HST in the context of credit card rewards programs in the future.
More information on this case can be found in the detailed coverage provided by Stikeman Elliott LLP.