CRA not appealing Tax Court ruling that insurance commissions are HST-exempt
As announced, CADA in partnership with our provincial associations, supported a major case before the Federal Tax Court that culminated in a favourable dealer ruling on November 15thof this year. The purpose of this bulletin is to announce that CRA has chosen not to appeal this case to the Federal Court of Appeal. As a result of the Tax Court’s ruling and the CRA’s decision not to appeal, dealers affected should expect to receive their adjustments in due course. Importantly, dealers should continue to treat insurance commissions as HST-exempt going forward.
Over the past two years CADA’s outside legal counsel, Thorsteinssons LLP, has been assisting a number of member dealers who have been assessed for HST on insurance commissions received. CADA’s position has been, and continues to be, that the insurance commissions received by dealers are HST-exempt as fees received for “arranging for” a financial service. CADA is pleased with the outcome of the court case.
The original case supported by CADA was Applewood Holdings Inc., a dealer in the Humberview Group. This case was heard by the Tax Court of Canada in early November and a judgement rendered on November 15, 2018 agreeing that the insurance commissions were HST-exempt and allowed Applewood’s appeal. The CRA has decided not to appeal the decision to the Federal Court of Appeal, and the CRA should begin to process the affected files to reverse the adjustments.
CADA is very grateful for the efforts of all those who participated in the appeal process. Dealers with questions can consult CADA's website or contact Huw Williams in CADA’s Ottawa office at huw at cada.ca or 1-800-465-3054.