Dockets: 2017-3925(GST)G  
2
017-3931(GST)G  
BETWEEN:  
PRESIDENT’S CHOICE BANK,  
and  
Appellant,  
HER MAJESTY THE QUEEN,  
Respondent.  
Appeals heard virtually on January 31 and February 1, 2, 9 and 14, 2022  
at Ottawa, Ontario  
Before: The Honourable Justice Robert J. Hogan  
Appearances:  
Counsel for the Appellant:  
Chia-yi Chua  
Anu Koshal  
Pierre-Gabriel Grégoire  
Counsel for the Respondent: Justine Malone  
Lindsay Tohn  
JUDGMENT  
The appeals from the reassessments made under the Excise Tax Act, notices  
of which are dated March 26, 2014 and June 23, 2015, are allowed in part only and  
on agreed terms, and the reassessments are referred back to the Minister of National  
Revenue for reconsideration and reassessment in accordance with the attached  
reasons for judgment.  
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The parties will have until September 19, 2022 to agree on costs, failing which  
they are directed to file their written submissions on costs no later than September  
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9, 2022. Such submissions should not exceed 10 pages.  
Signed at Magog, Québec, this 19th day of July 2022.  
“Robert J. Hogan”  
Hogan J.  
Citation: 2022 TCC 84  
Date: 20220719  
Dockets: 2017-3925(GST)G  
2
017-3931(GST)G  
BETWEEN:  
PRESIDENT’S CHOICE BANK,  
and  
Appellant,  
HER MAJESTY THE QUEEN,  
Respondent.  
REASONS FOR JUDGMENT  
Hogan J.  
I. INTRODUCTION  
President’s Choice Bank (“PC Bank”) appeals reassessments made by the  
Minister of National Revenue (the “Minister”) pursuant to the Excise Tax Act (the  
1
“
Act”). There are two appeals.  
The first appeal concerns the Notice of Reassessment dated March 26, 2014,  
which reassessed PC Bank’s net tax for the annual reporting period commencing  
2
December 31, 2008 and ending December 30, 2009 (the “2009 Appeal”). The  
second appeal concerns the Notice of Reassessment dated June 23, 2015, which  
reassessed PC Bank’s net tax for the annual reporting periods ending  
December 30, 2010, December 30, 2011 and December 30, 2012 (the “2010—2012  
3
Appeal”). There are three main issues addressed in the 2009 Appeal and the 2010—  
2
012 Appeal (collectively, the “PC Bank Appeals”).  
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Unless otherwise stated, all statutory references are to the Excise Tax Act, RSC 1985, c E-15.  
2
Exhibit A1: Partial Agreed Statement of Facts and Revised and Restated Description of the Issues Under Appeal  
signed by the Appellant on February 6, 2022 and by the Respondent on February 7, 2022), at para 32 [Exhibit A1  
PASF)]. See also Exhibit A3 (Pleadings Brief) at Tab 3, para 2 [Exhibit A3 (Pleadings Brief)].  
(
(
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Exhibit A1 (PASF), supra note 2 at para 38. Exhibit A3 (Pleadings Brief), supra note 2 at Tab 1 at para 2.  
Page: 2  
The first issue is whether PC Bank’s supply to the Canadian Imperial Bank of  
Commerce (“CIBC”) is an exempt “financial service” or a taxable supply (the “PCF  
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Supply Issue”). The PCF Supply Issue is common to the PC Bank Appeals. This  
issue is also raised in the appeal of Canadian Imperial Bank of Commerce v Her  
Majesty the Queen (the “CIBC Appeal”), which I released concurrently with this  
Judgment. The parties to the PC Bank Appeals and the CIBC Appeal agreed that the  
evidence in the CIBC Appeal be treated as evidence in relation to the PCF Supply  
5
Issue in the PC Bank Appeals. Therefore, the PC Bank Appeals in respect of that  
issue are dismissed in accordance with the CIBC Appeal, which I have attached as  
Appendix I.  
The second issue in the PC Bank Appeals is whether PC Bank is entitled to  
claim notional input tax credits (“NITCs”) pursuant to subsection 181(5) for  
payments it made to Loblaws Inc. (“Loblaws”) when clients redeemed loyalty points  
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at Loblaws stores (the “NITC Issue”). The parties agree that the NITC Issue turns  
on whether or not PC Bank pays the redemption amounts to Loblaws in the course  
of a “commercial activity” as defined in subsection 123(1).  
The third issue in the PC Bank Appeals is whether the services provided by  
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Total Systems Services Inc. (“TSYS”) and First Data Resources Inc. (“FDR”) to  
PC Bank for use in PC Bank’s credit card business are exempt supplies (the  
“FDR/TSYS Issue”).  
The material facts are set out below, followed by the analysis of the NITC  
Issue and the FDR/TSYS Issue.  
II. MATERIAL FACTS  
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The parties filed a partial agreed statement of facts (“PASF”). I have  
reproduced the relevant parts below for ease of reference:  
4
Exhibit A1 (PASF), supra note 2 at para 41. Exhibit A3 (Pleadings Brief), supra note 2 at Tab 1 para 40(a), Tab 3  
at para 40(a).  
5
Exhibit A1 (PASF), supra note 2 at paras 42-45.  
Exhibit A1 (PASF), supra note 2 at paras 51-52.  
Exhibit A1 (PASF), supra note 2 at paras 49-50.  
Exhibit A1 (PASF), supra note 2 at paras 47-48.  
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7
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Exhibit A1 (PASF), supra note 2.  
Page: 3  
President’s Choice Bank (“PC Bank”)  
. PC Bank is a Schedule I bank pursuant to the Bank Act, S.C. 1991, c. 46 that is,  
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and was at all material times, resident in Canada and registered under Part IX of  
the Excise Tax Act, R.S.C. 1985, c. E-15, as amended (the “Act”) for purposes of  
the goods and services tax (“GST”) and the harmonized sales tax (“HST”).  
2
. PC Bank is, and was at all material times, a listed financial institution for  
purposes of the Act. Effective December 31, 2009, PC Bank was a selected listed  
financial institution for purposes of the Act.  
3
. PC Bank is a wholly-owned subsidiary of Loblaw Financial Holdings Inc. and  
an indirect wholly-owned subsidiary of Loblaws Inc. (“Loblaws”). Loblaws is a  
wholly-owned subsidiary of Loblaw Companies Limited (“LCL”).  
PC Bank MasterCards  
4
. MasterCard International Incorporated operates the MasterCard Worldwide  
Network, which processes payment transactions made under its payment brands,  
including MasterCard credit cards. A typical MasterCard transaction is described  
in Appendix “A” to this Partial Agreed Statement of Facts.  
5
. Since 2011, PC Bank has been a licensee of MasterCard and an issuer of  
President’s Choice branded MasterCard credit cards (“PC MasterCards” or in the  
singular a “PC MasterCard”) to its customers (the “Cardholders”).  
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. Cardholders may use their PC MasterCards to make purchases at merchants that  
accept MasterCard-branded credit cards and to obtain cash advances.  
The Points Program  
7
(
. Prior to March 1, 2008, PC Bank owned and operated a loyalty points program  
the “Points Program”) which provided for the rewards of loyalty points (“PC  
Points”).  
8
. Effective March 1, 2008, PC Bank transferred the Points Program to President’s  
Choice Services Inc. (formerly President’s Choice Financial Inc.) (“PCSI”), an  
indirect subsidiary of Loblaws. To effect the transfer, PC Bank and PCSI entered  
into a Transfer Agreement, General Conveyance agreement, and Assignment  
Agreement each dated March 1, 2008. The Transfer Agreement was amended on  
July 31, 2008.  
9
. PC Bank and PCSI entered into a Loyalty Services Agreement (the “Services  
Agreement”) made effective March 1, 2008 and a Licence Agreement (“Licence  
Agreement”) dated July 31, 2008.  
Page: 4  
1
0. PC Bank, PCSI, and Loblaws entered into a Loyalty Expense Agreement (the  
“Expense Agreement”) made effective March 1, 2008.  
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1. The Licence Agreement, Services Agreement, and Expense Agreement were  
the subject of a rectification order granted by the Ontario Superior Court of Justice  
on August 16, 2016 (the “Rectification Order”).  
1
2. Pursuant to the Rectification Order, the Licence Agreement, Services  
Agreement, and Expense Agreement were rectified nunc pro tunc in the form  
attached to the Order.  
Cardholders as members of the Points Program  
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3. All Cardholders are automatically members of the Points Program. PC Bank  
issues PC Points to Cardholders whenever they use their PC MasterCard (points  
issued by PC Bank referred to herein as “PCB Points”).  
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4. All members of the Points Program are subject to the terms and conditions of  
the Points Program.  
1
5. At all material times, for purchases made on the PC MasterCard, Cardholders  
automatically earned:  
a. 20 PCB Points for every $1 spent using their PC MasterCard at a  
Loblaw-banner store where President’s Choice products are sold; and  
b. 10 PCB Points for every $1 spent using their PC MasterCard anywhere  
else.  
Issuance and Redemption of PC Points  
1
6. Pursuant to the Licence Agreement (as rectified), amongst other things:  
a. PCSI granted, for the duration of the term as set out therein, a non-  
exclusive, royalty-free license to PC Bank the right to issue PC Points to  
members of the PC Points loyalty program (as defined therein) who are PC  
Bank’s customers subject to the terms and conditions of the Licence  
Agreement and the Loyalty Terms and Conditions; and  
b. PC Bank acknowledged that, by virtue of being a Licensee, it will be  
liable for the redemption for all PCB Points.  
1
7. PC Points were redeemable at certain supermarkets within Canada owned or  
controlled by Loblaws or a subsidiary, or that were operated by Loblaws franchises  
under a trademark owned or controlled by Loblaws, and any other locations as may  
Page: 5  
be agreed to by Loblaws or PCSI, as applicable, or against any reward that may be  
offered as part of the Loyalty Program from time to time.  
1
8. Pursuant to the Expense Agreement (as rectified), amongst other things:  
a. for every $1.00 of purchases made by Cardholders using their PC  
MasterCard at Loblaw Stores where PC Bank issues PCB Points to the  
Cardholder, Loblaws will pay $0.0075 to PC Bank;  
b. for every $1.00 of notional value of PCB Points accumulated by a  
Cardholder using a PC MasterCard and redeemed by such Cardholder,  
Loblaws will pay $0.35 to PC Bank; and  
c. for every $1.00 of notional value of PCB Points accumulated by a  
Cardholder using a PC MasterCard and redeemed by such Cardholder, PC  
Bank will reimburse/pay Loblaw Inc. $1.00 (the “Redemption Payment”).  
First Data Resources LLC (“FDR”)  
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9. At all material times, FDR was a corporation not resident in Canada and not  
registered under Part IX of the Act for GST/HST purposes.  
2
(
0. PC Bank and FDR entered into a Service Agreement dated January 31, 2001  
the “FDR Agreement”), pursuant to which FDR made a single compound supply  
to PC Bank (the “FDR Supply”).  
2
1. The FDR Agreement was amended on January 1, 2002 (the “First FDR  
Amendment”) and March 1, 2003 (the “Second FDR Amendment”).  
2
2. Pursuant to the FDR Agreement and FDR Amendments, PC Bank paid FDR  
for the FDR Supply. FDR invoiced PC Bank for the FDR Supply. A sample invoice  
from FDR is available.  
2
3. FDR did not collect GST/HST in respect of the FDR Supply pursuant to the  
FDR Agreement. In its annual reporting period ending December 30, 2009, PC  
Bank did not self-assess GST/HST on the consideration paid to FDR pursuant to  
Division IV of the Act.  
Total Systems Services, Inc. (“TSYS”)  
2
4. TSYS is a global payment solutions provider that provides services to financial  
and nonfinancial institutions.  
2
5. At all material times, TSYS was a corporation not resident in Canada and not  
registered under Part IX of the Act for GST/HST purposes.  
Page: 6  
2
6. PC Bank and TSYS entered into a Processing Services Agreement dated  
December 10, 2009 (the “TSYS Agreement”).  
2
7. Pursuant to the TSYS Agreement, TSYS provided a single compound supply  
to PC Bank (the “TSYS Supply”). PC Bank paid TSYS for the TSYS Supply. A  
sample invoice from TSYS is available.  
2
8. PC Bank self-assessed and remitted GST/HST in respect of the TSYS Supply  
totaling $267,866, $703,411, and $934,234 in its annual reporting periods ending  
December 30, 2010, December 30, 2011, and December 30, 2012, respectively. PC  
Bank claimed and was allowed input tax credits of $4,840, $14,730, and $19,574  
in its annual reporting periods ending December 30, 2010, December 30, 2011, and  
December 30, 2012, respectively.  
Financial Statements  
2
9. KPMG LLP prepared an Auditors’ Report to the Shareholder in respect of PC  
Bank as at December 31, 2009 and 2008, dated January 28, 2010, as at December  
1, 2010 and 2009, dated February 22, 2011, and as at December 31, 2011 dated  
3
April 3, 2012 (the “Financial Statements”).  
The December 31, 2008 to December 14, 2009 Period  
3
0. PC Bank charged, collected, and remitted GST/HST on the CIBC Payments, as  
defined below, inter alia, by way of an invoice dated August 27, 2007 in respect of  
the 2003 to 2006 periods.  
Assessments Under Appeal  
2
009 Period  
3
1. On February 19, 2010, PC Bank filed a GST return for the annual reporting  
period ending December 30, 2009 (the “2009 Period”), which, amongst other  
things:  
a. did not claim any operational input tax credits (“ITCs”) pursuant to  
subsection 169(1) of the Act;  
b. did not claim any notional ITCs pursuant to subsection 181(5) of the Act;  
c. did not include any self-assessed GST/HST collectible on the  
consideration paid for the FDR Services pursuant to Division IV of the Act;  
and  
Page: 7  
d. did not include any self-assessed GST/HST collectible on the  
consideration paid for supplies from MCII, a non-resident, pursuant to  
Division IV of the Act.  
3
2. By way of a Notice of (Re)Assessment dated March 26, 2014 (the  
“2009 Reassessment”), the Minister of National Revenue (the “Minister”)  
reassessed PC Bank’s net tax, including an increase to tax payable under  
Division IV of the Act, for the annual reporting period commencing December 31,  
2
008 and ending December 30, 2009 (the “2009 Period”). The 2009 Reassessment,  
amongst other things:  
a. assessed PC Bank for tax payable under Division IV of the Act pursuant  
to paragraph 296(1)(b) of the Act on the consideration paid for the FDR  
Services;  
b. assessed PC Bank for tax payable under Division IV of the Act pursuant  
to paragraph 296(1)(b) of the Act on the consideration paid for the  
MasterCard Services; and  
c. increased PC Bank’s GST/HST collectible on the consideration paid for  
supplies made by PC Bank to the CIBC (the “CIBC Payments”).  
3
2
3. PC Bank filed a Notice of Objection dated June 23, 2014 to a portion of the  
009 Reassessment. The Notice of Objection raised, amongst other things, whether:  
a. the CIBC Payments were in respect of taxable or exempt supplies;  
b. the Minister properly assessed Division IV tax on the consideration paid  
for the services provided by MCII (the “MCII Service”);  
c. the Minister properly assessed Division IV tax on the consideration paid  
for the FDR Supply; and  
d. PC Bank is entitled to additional ITCs pursuant to subsection 296(2) of  
the Act.  
3
4. Subsequent to the commencement of the audit, PC Bank claimed operational  
ITCs totaling $88,674.09 and notional ITCs totaling $1,583,615.65.  
3
2
5. PC Bank filed an appeal to the Tax Court of Canada in respect of the  
009 Reassessment on October 4, 2017, being court file no. 2017-3925(GST)G (the  
“2009 Appeal”).  
Page: 8  
2
010—2012 Periods  
6. On June 24, 2013, PC Bank filed its Selected Listed Financial Institution  
3
GST/HST returns for the annual reporting periods ending December 30, 2010 (the  
2010 Period”), December 30, 2011 (the “2011 Period”), and December 30, 2012  
the “2012 Period”) (and collectively, the “2010—2012 Periods”). The returns for  
“
(
the 2010-2012 Periods, amongst other things:  
a. reported GST/HST collectible on a portion of the CIBC Payments;  
b. claimed ITCs regarding the CIBC Payments;  
c. did not claim any notional ITCs pursuant to subsection 181(5) of the Act;  
d. self-assessed GST/HST pursuant to Division IV of the Act in the amounts  
of $267,866, $703,411, and $934,234, respectively, in respect of the TSYS  
Supply; and  
e. did not include any self-assessed GST/HST collectible on the  
consideration paid for supplies from MCII, a non-resident, pursuant to  
Division IV of the Act (the above defined MCII Service).  
3
7. On June 30, 2014, PC Bank filed amended returns for the 2010-2012 Periods  
reporting notional ITCs of $2,496,144, $3,220,667, and $3,503,561, respectively.  
3
8. By way of Notices of (Re)Assessment dated June 23, 2015 (the “2010—2012  
Reassessments”), the Minister reassessed PC Bank’s net tax, including an increase  
to tax payable under Division IV of the Act, for the 2010—2012 Periods. The  
2
010—2012 Reassessments, amongst other things:  
a. increased PC Bank’s GST/HST collectible on the CIBC Payments;  
b. allowed notional ITCs of $45,101, $67,445, and $73,405, respectively;  
and  
c. assessed PC Bank for tax payable under Division IV of the Act pursuant  
to paragraph 296(1)(b) of the Act on the consideration paid for the MCII  
Service.  
3
9. PC Bank filed Notices of Objection dated September 18, 2015 to a portion of  
the 2010-2012 Reassessments. The Notices of Objection raised, amongst other  
things, whether:  
a. the CIBC Payments were in respect of taxable or exempt supplies;  
Page: 9  
b. the Minister properly assessed Division IV tax on the consideration paid  
for the MCII Service;  
c. PC Bank is entitled to additional notional ITCs;  
d. PC Bank is entitled to a refund of tax self-assessed in respect of the TSYS  
Supply on the basis that it was assessed in error;  
e. PC Bank is entitled to a rebate for tax paid in error to PCSI in the 2011  
Period only.  
4
2
0. PC Bank filed an appeal to the Tax Court of Canada in respect of the 2010—  
012 Reassessments on October 3, 2017, being court file no. 2017- 3931(GST)G  
(the “2010—2012 Appeal”).  
The defined terms used hereinafter have the meaning assigned to them in the  
PASF unless otherwise provided.  
III. THE NITC ISSUE  
The parties agree that the NITC Issue centres on whether the Redemption  
Payment was made by PC Bank “in the course of a commercial activity” pursuant to  
subsection 181(5). If PC Bank made the Redemption Payment in the course of an  
exempt “financial service”, then the Redemption Payment could not have been made  
“in the course of a commercial activity” because the “commercial activity”  
definition specifically excludes exempt supplies. PC Bank is only entitled to claim  
an NITC pursuant to subsection 181(5) if the Redemption Payment was made in the  
course of a “commercial activity” of PC Bank.  
Position of the Parties: The NITC Issue  
PC Bank’s position is that it made the Redemption Payments in the course of  
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its operation of the Loyalty Program, which it states is a commercial activity.  
According to PC Bank, the three payments set out in the Expense Agreement (as  
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1
rectified) are all related to its operation of the Loyalty Program. Therefore, PC  
Bank paid the Redemption Payment in the course of a commercial activity and is  
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entitled to claim NITCs under subsection 181(5). For PC Bank, there is no basis to  
conclude that the Redemption Payment was made in the course of a different activity  
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1
0
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2
Written Submissions of the Appellant re NITC Issue at paras 2-4.  
Written Submissions of the Appellant re NITC Issue at paras 3-4.  
Written Submissions of the Appellant re NITC Issue at paras 2-7; 83; January 31, 2022 Transcript, p 12,  
lines 1-10.  
Page: 10  
13  
i.e. the PC Bank MasterCard business). PC Bank acknowledges that the PC Bank  
14  
(
MasterCard activities on their own are exempt in nature.  
The Respondent’s position is that PC Bank issued PCB Points to Cardholders  
1
5
to entice them to acquire and then use their PC MasterCards. PC Bank was required  
to reimburse Loblaws by means of the Redemption Payment when PC Bank  
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customers redeemed the PCB Points in the Loblaws-affiliated stores. According to  
the Respondent, in this context, the Redemption Payments were made by PC Bank  
to Loblaws in the course of making exempt supplies of a “financial service” to  
1
7
Cardholders. Since a financial services business is excluded from the definition of  
a “commercial activity” in subsection 123(1), PC Bank is not entitled to claim NITCs  
for the redemption price paid in relation to the PCB Points under  
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subsection 181(5).  
Legislation  
Subsection 165(1) provides that GST is payable by recipients of taxable  
supplies:  
1
65 (1) Imposition of goods and services tax—Subject to this Part, every recipient  
of a taxable supply made in Canada shall pay to Her Majesty in right of Canada tax  
in respect of the supply calculated at the rate of 5% on the value of the consideration  
for the supply.  
Section 181 sets out special rules for the treatment of coupons redeemed on  
purchases. The relevant parts of section 181 read as follows:  
1
81 (1) Definitions – The definitions in this subsection apply in this section.  
“coupon” includes a voucher, receipt, ticket or other device but does not include a  
gift certificate or a barter unit (within the meaning of section 181.3).  
“tax fraction” of a coupon value or of the discount or exchange value of a coupon  
means  
1
1
3
4
Written Submissions of the Appellant re NITC Issue at paras 2-4.  
Written Submissions of the Appellant re NITC Issue at paras 2-4; January 31, 2022 Transcript, p 11, lines 26-28;  
and p 12, line 1.  
1
1
1
1
5
6
7
8
Written Submissions of the Respondent re NITC Issue at paras 1- 2.  
Written Submissions of the Respondent re NITC Issue at para 2.  
Written Submissions of the Respondent re NITC Issue at para 2; January 31, 2022 Transcript, p 17, lines 1-4.  
Written Submissions of the Respondent re NITC Issue at para 2.  
Page: 11  
(a) where the coupon is accepted in full or partial consideration for a supply made  
in a participating province, the fraction  
A/B  
where  
A is the total of the rate set out in subsection 165(1) and the tax rate for that  
participating province, and  
B is the total of 100% and the percentage determined for A; and  
(b) in any other case, the fraction  
C/D  
where  
C is the rate set out in subsection 165(1), and  
D is the total of 100% and the percentage determined for C.  
(2) Acceptance of reimbursable coupon – For the purposes of this Part, other than  
subsection 223(1), where at any time a registrant accepts, in full or partial  
consideration for a taxable supply of property or a service (other than a zero-rated  
supply), a coupon that entitles the recipient of the supply to a reduction of the price  
of the property or service equal to a fixed dollar amount specified in the coupon (in  
this subsection referred to as the “coupon value”) and the registrant can reasonably  
expect to be paid an amount for the redemption of the coupon by another person,  
the following rules apply:  
(a) the tax collectible by the registrant in respect of the supply shall be deemed to  
be the tax that would be collectible if the coupon were not accepted;  
(b) the registrant shall be deemed to have collected, at that time, a portion of the tax  
collectible equal to the tax fraction of the coupon value; and  
(c) the tax payable by the recipient in respect of the supply shall be deemed to be  
the amount determined by the formula  
A–B  
where  
A is the tax collectible by the registrant in respect of the supply, and B is the tax  
fraction of the coupon value.  
…
Page: 12  
(5) Redemption of coupon – For the purposes of this Part, where, in full or partial  
consideration for a taxable supply of property or a service, a supplier who is a  
registrant accepts a coupon that may be exchanged for the property or service or  
that entitles the recipient of the supply to a reduction of, or a discount on, the price  
of the property or service and a particular person at any time pays, in the course of  
a commercial activity of the particular person, an amount to the supplier for the  
redemption of the coupon, the following rules apply:  
(a) the amount shall be deemed not to be consideration for a supply;  
(b) the payment and receipt of the amount shall be deemed not to be a financial  
service; and  
(c) if the supply is not a zero-rated supply and the coupon entitled the recipient to  
a reduction of the price of the property or service equal to a fixed dollar amount  
specified in the coupon (in this paragraph referred to as the “coupon value”), the  
particular person, if a registrant (other than a registrant who is a prescribed  
registrant for the purposes of subsection 188(5)) at that time, may claim an input  
tax credit for the reporting period of the particular person that includes that time  
equal to the tax fraction of the coupon value, unless all or part of that coupon value  
is an amount of an adjustment, refund or credit to which subsection 232(3) applies.  
Subsection 181(2) applies to “coupons” that entitle the recipient of the supply  
to a reduction of the price of the property or service for a fixed dollar amount (“Fixed  
Value Coupon”). Under subsection 181(2), a Fixed Value Coupon redeemed by a  
customer in a store is treated like cash. This means that the GST/HST is not reduced  
on the purchase price.  
For subsection 181(2) to apply, certain conditions must be met. First, there  
must be a “registrant”. A “registrant” is defined in subsection 123(1) as a person  
who is GST-registered (e.g. a retailer). Second, the registrant must accept the  
“
coupon”. A “coupon”, which is defined in subsection 181(1), includes “a voucher,  
receipt, ticket or other device but does not include a gift certificate or a barter unit  
.” Third, this “coupon” must be accepted in full or partial consideration for a  
taxable supply of “property” or “a service”. Fourth, the supply cannot be a  
zero-rated supply”. A “zero-rated supply” is defined in subsection 123(1) as a  
supply included in Schedule VI. Fifth, there must be a “recipient” of the supply. A  
recipient” of a supply of property or a service is defined in subsection 123(1) to  
…
“
“
mean a person. Generally, a “recipient” of a supply means a person contractually  
obligated to pay for the supply, such as a customer. Sixth, the “coupon” is a Fixed  
Value Coupon. Lastly, the “registrant” can reasonably expect to be paid an amount  
for the redemption of the Fixed Value Coupon by another person.  
Page: 13  
If the conditions in subsection 181(2) are met, the deeming rules under that  
provision apply. Paragraph 181(2)(a) provides that the tax applies as if the coupon  
was not accepted. This means that GST/HST is added to the purchase price before  
the amount of the Fixed Value Coupon is deducted. Paragraph 181(2)(b) provides  
that the registrant is deemed to have collected a portion of the tax equal to the tax  
fraction of the value of the Fixed Value Coupon. Paragraph 181(2)(c) provides that  
the tax payable by the recipient (e.g. customer) in respect of the supply is deemed to  
be (1) the amount of the tax collectible by the registrant (e.g. retailer) in respect of  
the supply less (2) the “tax fraction” of the coupon value. Subsection 181(1) defines  
a “tax fraction”.  
To illustrate the operation of subsection 181(2), the Respondent provided the  
following useful example:  
3
8. Consider, for example, a customer who uses a reimbursable coupon for $1.00  
off of a $10 bottle of shampoo, before HST of 15%, at a retailer:  
Price of the shampoo  
HST at 15%  
$10.00  
$1.50  
Subtotal  
Less coupon  
Customer pays  
$11.50  
(1.00)  
$10.50  
3
$
9. In this example, the registrant (retailer) is deemed to have collected HST of  
1.50 pursuant to subsection 181(2). It must report and remit $1.50 of HST.  
4
0. Pursuant to paragraph 181(2)(c), however, the recipient (customer) cannot  
claim an ITC of $1.50. The recipient’s tax payable is deemed to be the tax  
collectible by the registrant (in this case, $1.50) less the tax fraction of the coupon  
value (in this case, $1.00/1.15 = $0.13). Therefore, the recipient may claim an ITC,  
if the purchase satisfies subsection 169(1) of the Act, in the amount of $1.37.19  
Subsection 181(5) entitles a particular person to an NITC for the tax fraction  
equal to the coupon value if certain conditions are met. First, a registrant (e.g. a  
retailer) must accept as full or partial consideration for a taxable supply of property  
or a service a “coupon” from a recipient (e.g. a customer). This coupon may either  
be exchanged for property or a service or entitles the recipient to a reduction of the  
price of the property or service. Second, a particular person (e.g. a manufacturer)  
pays an amount to the supplier (e.g. a retailer) for the redemption of the “coupon”.  
Third, this redemption payment is made in the course of a “commercial activity” of  
a particular person (e.g. the manufacturer). A “commercial activity” is defined in  
19  
Written Submissions of the Respondent re NITC Issue at paras 38-40.  
Page: 14  
subsection 123(1). Unlike subsection 181(2), subsection 181(5) may apply to  
“zero-rated supplies”.  
If the conditions in subsection 181(5) are met, the deeming rules under that  
provision apply. Paragraph 181(5)(a) provides that the redemption payment is  
deemed not to be consideration for a supply. Paragraph 181(5)(b) provides that the  
payment and receipt of the redemption payment shall be deemed not to be a financial  
service. Paragraph 181(5)(c) provides that the particular person (e.g. a  
manufacturer), who is a registrant, may claim an NITC equal to the tax fraction of  
2
0
the value of the Fixed Value Coupon. This paragraph only applies if the supply is  
not zero-rated and the coupon entitled the recipient (e.g. a customer) to a reduction  
of the price of the property or service equal to the value of the Fixed Value Coupon.  
As noted, one of the conditions that must be met for subsection 181(5) to apply  
is that the redemption payment made by the particular person to the supplier must  
be made “in the course of a commercial activity” of that particular person. The term  
of “commercial activity” is defined under subsection 123(1) as follows:  
1
23(1) Definitions  
…
“
commercial activity” of a person means  
(a) a business carried on by the person (other than a business carried on without a  
reasonable expectation of profit by an individual, a personal trust or a partnership,  
all of the members of which are individuals), except to the extent to which the  
business involves the making of exempt supplies by the person.  
…
“exempt supply” means a supply included in Schedule V.  
[Emphasis added.]  
An “exempt supply” is defined in Part VII of Schedule V to include:  
1
. A supply of a financial service . . . .  
20  
The registrant cannot be a prescribed registrant for the purposes of subsection 188(5).  
Page: 15  
A “financial service” is defined in subsection 123(1). Thus, the making of an  
exempt supply” of a “financial service” does not constitute a “commercial activity”  
“
and does not fall within the definition of a “taxable supply” for which NITCs would  
be available.  
Review of the Case Law  
To understand NITCs, one must begin with subsection 169(1). Generally,  
input tax credits under subsection 169(1) are available for GST paid in relation to  
the acquisition of property or services by a person to the extent that such property or  
services are acquired for consumption or use in the course of commercial activities  
2
1
of that person. In City of Calgary v Canada, the Supreme Court of Canada  
described the basic structure of the GST regime as follows:  
[
16] … The GST is designed to be a tax on consumption, and as such, the ETA  
contemplates three classes of goods and services: (1) taxable supplies; (2) exempt  
supplies; and (3) zero-rated supplies. Taxable supplies currently attract a goods and  
services tax of 5% (7% at the relevant time) each time they are sold. To the extent  
that the purchaser of a taxable supply uses that good or service in the production of  
other taxable supplies, that is, in the course of commercial activities, the purchaser  
is entitled to an ITC and can recover the tax it has paid from the government. This  
is to prevent the cascading of GST, and to allow the obligation to pay GST to flow  
through to the ultimate consumer. The other two classes of goods and services,  
exempt supplies and zero-rated supplies, do not attract GST from the ultimate  
consumer. Vendors of exempt supplies, while paying the GST on their purchases,  
are not entitled to ITCs. In consequence, GST is paid to the federal government at  
the penultimate stage in the production chain rather than by the ultimate consumer.  
There is limited case law on subsection 181(5). President’s Choice Bank v R  
22  
the “2009 Decision”) is the main case that addresses subsection 181(5) and  
(
whether or not in the context of that provision, an input was made “in the course of  
a commercial activity”. In that case, one of the issues before this Court was whether  
PC Bank was entitled to NITCs pursuant to subsections 181(2) and 181(5) in respect  
of reimbursements made by PC Bank to Loblaw on the redemption of PC Points  
2
3
during the 2001 and 2002 taxation periods. In addressing that issue, Lamarre J., as  
she then was, determined that in the context of subsection 181(5), “[i]t is at the time  
2
2
2
1
2
3
City of Calgary v Canada, 2012 SCC 20.  
President’s Choice Bank v R, 2009 TCC 170.  
2
009 Decision, supra note 22 at para 12.  
Page: 16  
of redemption of the coupon that we have to determine whether that coupon has a  
2
4
fixed dollar value.”  
Although Lamarre J found that the coupons had a fixed dollar value at the  
time of redemption, she held that PC Bank was not entitled to NITCs on PC Points  
2
5
awarded on President’s Choice Financial products and subsequently redeemed.  
This conclusion was based on the finding that the supply of the PC Points in  
accordance with the agreement in effect at that time, was part of the exempt  
supplies—financial services—offered by PC Bank through CIBC. These supplies  
2
6
were not subject to GST. Because financial services are exempt supplies, PC Bank  
2
7
did not make them in the course of a commercial activity. However, Lamarre J.  
stated that for PC Points awarded on taxable supplies, PC Bank would be entitled to  
2
8
NITCs when it pays for the redemption of those points.  
2
9
In Nestlé Canada Inc. v R, the Tax Court made some observations in respect  
of subsections 181(2) and (5). The main issue in that case was whether instant rebate  
coupons (“IRCs”) issued by the taxpayer, Nestlé Canada Inc. (“Nestlé”), fit within  
the requirements for a coupon set out in section 181 or whether the IRCs should be  
3
0
characterized as promotional allowances. If the IRCs qualified as coupons  
pursuant to subsection 181, “Nestlé would be entitled to its ITCs for any excess  
GST/HST paid by the consumer when that consumer purchased a Nestlé product at  
3
1
Costco [Wholesale Canada Ltd.].” In addressing whether the IRCs qualified as  
coupons, Lamarre J. made the following observations on the operation of  
subsections 181(2) and (5):  
[
38] Under subsection 181(2), Costco is required to collect GST/HST on the  
pre-discount price of the Nestlé products.  
[
39] Subsection 181(2) thus requires the customer to overpay GST/HST on the  
Nestlé products and then deems the customer to have paid only the GST/HST  
attributable to the post-discount price. The reason for implementing this practice  
was explained by counsel for the Respondent in his oral submissions, in which he  
referred the Court to the policy underlying the treatment of discount coupons. The  
object of the practice was to simplify the treatment of coupons for small grocers,  
2
2
2
2
2
2
3
3
4
5
6
7
8
9
0
1
2
2
2
2
2
009 Decision, supra note 22 at para 74.  
009 Decision, supra note 22 at para 77.  
009 Decision, supra note 22 at para 77.  
009 Decision, supra note 22 at para 77.  
009 Decision, supra note 22 at para 78.  
Nestlé Canada Inc. v R, 2017 TCC 33 [Nestlé Canada].  
Nestlé Canada, supra note 29 at para 20.  
Nestlé Canada, supra note 29 at para 20.  
Page: 17  
who, in the 1990s, did not have easy access to cash registers that, for the purpose  
of the application of the GST/HST, could distinguish between coupons for taxable  
supplies and coupons for non-taxable (or zero-rated) supplies.  
[
40] This excess GST/HST does not go to the government however. Instead,  
subsection 181(5) allows the provider of the coupon, here Nestlé, to obtain an input  
tax credit for the excess GST/HST paid by the Costco customer.  
[
41] The benefit represented by this additional input tax credit, received at the  
customer’s expense, is why Nestlé is claiming that its transactions fit within the  
section 181 coupon regime, instead of the section 232.1 promotional allowance  
regime.  
No further analysis was provided in respect of subsection 181(2) or (5)  
because Lamarre J. concluded that the IRCs were not coupons pursuant to  
3
2
section 181.  
Neither the 2009 Decision nor Nestlé Canada provides significant guidance  
for the NITC Issue in this appeal. In the context of other provisions of the Act,  
including subsection 169(1), the courts have considered on a number of occasions  
whether an input was made “in the course of” a “commercial activity”. The meaning  
of these phrases as described by the courts is outlined below.  
(i) The phrase “in the course of” has a wide meaning.  
3
3
The phrase “in the course of” has a wide meaning. Courts have concluded  
that an ITC is available if an item directly or indirectly contributes to the production  
of articles or the provision of services that are taxable. For example, in Midland  
3
4
Hutterian Brethren v R, at issue was whether the applicant could claim an ITC in  
respect of the cost of certain cloth purchased to make work clothing for use by its  
3
5
members in its commercial activity—farming operations. The Federal Court of  
Appeal found that the cloth contributed to the applicant’s commercial activities and  
3
6
bottom line. In arriving at this conclusion, the Federal Court of Appeal noted:  
[
23] … This Court has already interpreted these words to mean that, when a  
registrant incurs a GST expense in connection with its commercial activities, it is  
3
3
2
3
Nestlé Canada, supra note 29 at paras 32, 46.  
General Motors of Canada Ltd. v R, 2009 FCA 114 at para 44 [General Motors]. See also ONEnergy Inc. v R,  
2
018 FCA 54 at paras 23-24.  
3
4
Midland Hutterian Brethren v R, 2000 CarswellNat 2969, 2000 CarswellNat 4833, [2000] GSTC 109 (FCA)  
Midland Hutterian Brethren].  
[
3
5
Midland Hutterian Brethren, supra note 34 at paras 1-2.  
3
6
Midland Hutterian Brethren, supra note 34 at para 26.  
Page: 18  
entitled to an ITC. As Stone J.A. explained in Metropolitan Toronto Hockey League  
decision:  
The scheme of the Act allows a business to claim refund or credit of  
any tax paid on the purchase or services connected to its sale of  
taxable supplies. In this way the tax is ultimately paid only by the  
final non commercial purchaser of a taxable supply [emphasis  
added].  
[
24] When the phrase “connected to” was used by Justice Stone to explain the  
words in the statute, the meaning it conveyed was that the supplies must contribute  
to the production of articles or the provision of services that are taxable. It would  
not be enough to qualify as being connected to the business activity if something,  
like a cigarette, were merely consumed while engaged in the business activity, for  
that would not contribute to the commercial activity that will ultimately produce  
taxable supplies.  
[
25] There is no language in subsection 169(1) that requires the use in question to  
be exclusively commercial or that distinguishes between property acquired and  
used directly and property acquired and altered before its use in commercial  
activities. Once an item is found to be acquired and used in connection with the  
commercial activities of a GST registrant and that item directly or indirectly  
contributes to the production of articles or the provision of services that are taxable,  
then an ITC is available using the formula in that subsection. Any possible abuse is  
to be combatted by requiring evidence of intended use and an adjustment in the  
percentage of ITC allowed by the Minister.  
[Emphasis added.]  
Courts have found that there must be a “sufficient nexus or connection”  
between the input and the commercial activity. For example, in General Motors of  
3
7
Canada Ltd. v R, the Federal Court of Appeal upheld this Court’s conclusion that  
there was a “sufficient nexus or connection” between services provided by  
investment managers and the commercial activities of General Motors of Canada  
Ltd. (“GMCL”). In that decision, the Federal Court of Appeal noted that:  
[
1
44] The Tax Court Judge gave to the words “in the course of”, found in paragraph  
69(1)(c), a wide meaning given by this Court in The Queen v. Blanchard, 95  
D.T.C. 5479 (F.C.A.) and in M.N.R. v. Yonge Eglington Building Ltd., 74 D.T.C.  
180, at page 6184, where the words “in connection with”, or “incidental to”, or  
arising from” were suggested. She held that GMCL’s responsibilities to properly  
6
“
manage the Pension Plan assets were derived not only through the agreements but  
also through its duties as administrator under the OPBA and its duties to provide  
37  
General Motors, supra note 33.  
Page: 19  
pension benefits to its employees (her para. 65). She noted that pension benefits,  
like salaries, are part of the compensation package which is an integral component  
to the commercial activities of the corporation. She fully explains these  
considerations at paragraphs 66-67. At paragraph 67 she stated:  
…
The only logical, common sense conclusion is that all of the  
functions of GMCL, in relation to these pension assets, are for the  
sole benefit of its employees, both the salaried and hourly  
employees and, consequently, they are an essential component to  
GMCL’s business activities. Therefore, GMCL acquired the  
services of the Investment Managers for use in its commercial  
activities. As such, while GMCL does not directly utilize the  
services in making GST supplies in its operations, those services are  
part of its inputs toward its employee compensation program, which  
is a necessary adjunct of its infrastructure to making taxable sales.  
The expenses are not personal in nature. They are ancillary to the  
primary business activities of GMCL and meet the need of attracting  
and maintaining an adequate employee base to support its primary  
business operations. Therefore these expenses, although indirect  
expenses to GMCL’s business, qualify as expenses paid for in the  
consumption or use in the course of the commercial activities of  
GMCL. Subsection 169(1) does not require that managing a pension  
plan be the sole commercial activity of a person, only that the supply  
be consumed or used “in the course of commercial activities”. To  
divorce the services of the Investment Managers from the  
commercial activities of GMCL, in the manner that the Respondent  
would have me do, ignores not only the contractual and statutory  
obligations of GMCL but also the commercial realities of a  
competitive marketplace.  
[
Emphasis in original.]  
At issue in General Motors, was whether GMCL was eligible for ITCs under  
3
8
subsection 169(1) of the Act in respect of GST paid to investment managers.  
GMCL retained these investment managers in order to manage the investment funds  
held in the pension plans established by GMCL. Although it was GMCL that  
manufactured, assembled and sold vehicles, the services provided by the investment  
managers were found to be sufficiently connected to the commercial activities of  
GMCL.  
38  
General Motors, supra note 33 at para 2.  
Page: 20  
(
ii) The definition of “commercial activity” requires that a part of the  
business that consists of making exempt supplies be notionally  
severed.  
Courts have concluded that where there are multiple businesses or business  
objectives, any part of the business that consists of making exempt supplies must be  
3
9
notionally severed. For example, in 398722 Alberta Ltd. v R, the Federal Court of  
Appeal addressed whether the taxpayer was required to “pay GST on the fair market  
value of an apartment building acquired solely to obtain approval for a new hotel  
4
0
development … .” The Federal Court of Appeal found that the company was not  
entitled to ITCs and stated that:  
[
22] Any business may consist of a number of components, each of which is integral  
to the business as a whole. The definition of “commercial activity” recognizes that  
possibility but requires, for GST purposes, that any part of the business that consists  
of making exempt supplies be notionally severed. The statutory definition dictates  
that the business of the respondent is not a “commercial activity” in so far as it  
consists of the rental of the units of the four-plex. On that basis I agree with the  
Crown that the respondent is not entitled to an input tax credit to offset the GST  
payable on the self-supply of the four-plex.  
[Emphasis added.]  
The Federal Court of Appeal denied the taxpayer’s claim for ITCs in  
3
98722 Alberta Ltd. on the basis that the taxpayer was “fulfilling an obligation to  
4
1
meet another business objective”.  
4
2
In London Life Insurance Co. v R, the Federal Court of Appeal held that the  
taxpayer, whose business consisted of making exempt supplies, made a separate  
taxable supply to its landlord when it provided the landlord with leasehold  
improvements in return for leasehold improvement allowances. The Federal Court  
of Appeal noted that this conclusion was “consistent with the fact that under the  
leases, the improvements became the property of the landlords immediately upon  
4
3
installation.” Thus, the taxpayer’s business of supplying improved leasehold  
3
9
398722 Alberta Ltd. v. R, 2000 CarswellNat 837, 2000 CarswellNat 4798, [2000] GSTC 32 at para 22  
398722 Alberta Ltd.].  
[
4
0
3
98722 Alberta Ltd., supra note 39 at para 1.  
4
4
4
1
2
3
General Motors, supra note 33 at para 53.  
London Life Insurance Co. v R, [2000] FCJ No 2121 [London Life].  
London Life, supra note 42 at para 21.  
Page: 21  
premises to its landlord was separate from its normal business, which was the  
provision of exempt supplies.  
(iii) The words of a written contract should be considered in light of  
the factual matrix of the contract.  
4
4
In Creston Moly Corp. v Sattva Capital Corp., the Supreme Court of Canada  
reviewed the principles of contractual interpretation within the context of appeals  
from commercial arbitration decisions. The Supreme Court of Canada stated that:  
[
50] … [c]ontractual interpretation involves issues of mixed fact and law as it is an  
exercise in which the principles of contractual interpretation are applied to the  
words of the written contract, considered in light of the factual matrix of the  
contract.  
The Supreme Court of Canada also turned its attention to the role and the  
nature of the surrounding circumstances in contractual interpretation and the nature  
of the evidence considered:  
[
57] While the surrounding circumstances will be considered in interpreting the  
terms of a contract, they must never be allowed to overwhelm the words of that  
agreement (Hayes Forest Services, at para. 14; and Hall, at p. 30). The goal of  
examining such evidence is to deepen a decision-maker’s understanding of the  
mutual and objective intentions of the parties as expressed in the words of the  
contract. The interpretation of a written contractual provision must always be  
grounded in the text and read in light of the entire contract (Hall, at pp. 15 and  
3
0-32). While the surrounding circumstances are relied upon in the interpretive  
process, courts cannot use them to deviate from the text such that the court  
effectively creates a new agreement (Glaswegian Enterprises Inc. v. B.C. Tel  
Mobility Cellular Inc. (1997), 1997 4085 (BC CA), 101 B.C.A.C. 62).  
[
“
58] The nature of the evidence that can be relied upon under the rubric of  
surrounding circumstances” will necessarily vary from case to case. It does,  
however, have its limits. It should consist only of objective evidence of the  
background facts at the time of the execution of the contract (King, at paras. 66 and  
7
0), that is, knowledge that was or reasonably ought to have been within the  
knowledge of both parties at or before the date of contracting. Subject to these  
requirements and the parol evidence rule discussed below, this includes, in the  
words of Lord Hoffman, “absolutely anything which would have affected the way  
in which the language of the document would have been understood by a reasonable  
man” (Investors Compensation Scheme, at p. 114). Whether something was or  
44  
Creston Moly Corp. v. Sattva Capital Corp., 2014 SCC 53.  
Page: 22  
reasonably ought to have been within the common knowledge of the parties at the  
time of execution of the contract is a question of fact.  
…
[
59] It is necessary to say a word about consideration of the surrounding  
circumstances and the parol evidence rule. The parol evidence rule precludes  
admission of evidence outside the words of the written contract that would add to,  
subtract from, vary, or contradict a contract that has been wholly reduced to writing  
(King, at para. 35; and Hall, at p. 53). To this end, the rule precludes, among other  
things, evidence of the subjective intentions of the parties (Hall, at pp. 64-65; and  
Eli Lilly & Co. v. Novopharm Ltd., 1998  791 (SCC), [1998] 2 S.C.R. 129,  
at paras. 54-59, per Iacobucci J.). The purpose of the parol evidence rule is  
primarily to achieve finality and certainty in contractual obligations, and  
secondarily to hamper a party’s ability to use fabricated or unreliable evidence to  
attack a written contract (United Brotherhood of Carpenters and Joiners of  
America, Local 579 v. Bradco Construction Ltd., 1993 88 (SCC), [1993] 2  
S.C.R. 316, at pp. 341-342, per Sopinka J.).  
[
60] The parol evidence rule does not apply to preclude evidence of the surrounding  
circumstances. Such evidence is consistent with the objectives of finality and  
certainty because it is used as an interpretive aid for determining the meaning of  
the written words chosen by the parties, not to change or overrule the meaning of  
those words. The surrounding circumstances are facts known or facts that  
reasonably ought to have been known to both parties at or before the date of  
contracting; therefore, the concern of unreliability does not arise.  
[
61] Some authorities and commentators suggest that the parol evidence rule is an  
anachronism, or, at the very least, of limited application in view of the myriad of  
exceptions to it (see for example Gutierrez v. Tropic International Ltd. (2002), 2002  
45017 (ON CA), 63 O.R. (3d) 63 (C.A.), at paras. 19-20; and Hall, at pp.  
5
3-64). For the purposes of this appeal, it is sufficient to say that the parol evidence  
rule does not apply to preclude evidence of surrounding circumstances when  
interpreting the words of a written contract.  
[Emphasis added.]  
There is a limitation on the weight given to the surrounding circumstances in  
the interpretation of a contract. As stated by the Supreme Court of Canada, the parol  
evidence rule precludes the admission of evidence outside the words of the written  
contract that would contradict or subtract from a contract that has been wholly  
reduced to writing.  
Review of the Key Agreements  
Page: 23  
(1) Historical Overview of the Loyalty Program  
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Before 2008, PC Bank owned and operated the Points Program. PC Bank  
issued PC Points when PC Bank customers used payment vehicles such as the PC  
MasterCard and other President’s Choice Financial products (“PCF Products”)  
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offered through CIBC. CIBC paid PC Bank when such points were redeemed by  
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its customers for rewards in Loblaws stores.  
As the operator of the program, PC Bank paid $0.65 to Loblaws for every  
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$
1.00 of notional value of PC Points redeemed at a Loblaws store. If the amount  
was paid in respect of a PC Point issued by CIBC to its customers, CIBC paid  
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PC Bank $1.00 for each PC Point redeemed by a CIBC client. Loblaws also paid  
$
0.0075 to PC Bank for every $1.00 of sales where PC Points were awarded to a  
50  
Points Program member for purchases at Loblaws stores.  
On March 1, 2008, PC Bank sold its interest in the Points Program to PCSI.51  
PCSI acquired all of the assets required to allow it to become the owner,  
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administrator and operator of the Points Program (the “Loyalty Program”).  
Therefore, PC Bank was not operating the Loyalty Program during the tax periods  
at issue.  
Having divested itself of the Points Program, PC Bank entered into three  
agreements for the purpose of allowing it to issue points to the Cardholders. These  
agreements are the Loyalty Services Agreement, the Loyalty Expense Agreement  
and the Licence Agreement. These agreements were subject to various amendments,  
in some cases to correct alleged errors, as evidenced by an order of the Ontario  
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Superior Court of Justice granting rectification thereof. The three agreements are  
discussed below.  
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Exhibit A1 (PASF), supra note 2 at para 7. See also Exhibit A2: Transfer Agreement (dated March 1, 2008), Joint  
Book of Documents [JBOD] vol 1, Tab 4 at p 83.  
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Exhibit R1: Loyalty Expense Agreement (dated January 1, 2002) [Exhibit R1] at arts 2(a)-(b). Written  
Submissions of the Respondent re NITC Issue at paras 14-15.  
47  
Exhibit R2: Loyalty Services Agreement (dated November 1, 1997) [Exhibit R2]. Written Submissions of the  
Respondent re NITC Issue at paras 14-15.  
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Exhibit R1, supra note 46 at arts 2(a)-(b). Written Submissions of the Respondent re NITC Issue at paras 14-15.  
Exhibit R2, supra note 47. Written Submissions of the Respondent re NITC Issue at paras 14-15.  
Exhibit R1, supra note 46 at arts 2(a)-(b). Written Submissions of the Respondent re NITC Issue at paras 14-15.  
Exhibit A1 (PASF), supra note 2 at para 8.  
Exhibit A2: Transfer Agreement (dated March 1, 2008), JBOD, vol 1, Tab 4 at pp 84-86 at art 1.  
See Exhibit A2: Amendment No. 1 to Loyalty Services Agreement, JBOD, vol 1, Tab 10 at pp 136-137;  
Amendment No. 1 to Transfer Agreement, JBOD, vol 1, Tab 11 at pp 138-139; Amendment No. 1 to Loyalty  
Expense Agreement, JBOD, vol 1, Tab 12 at pp 140-143; Amendment No. 2 to Loyalty Services Agreement, JBOD,  
Page: 24  
The Licence Agreement  
Effective March 1, 2008, PC Bank obtained a non-exclusive royalty-free  
licence from PCSI granting it the right to issue PCB Points to Cardholders, subject  
to the terms and conditions of the Licence Agreement and of the Loyalty Program  
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owned, administered and operated by PCSI. The Licence Agreement was rectified  
(
the “Rectified Licence Agreement”). This rectification included the intentional  
55  
deletion of the fee structure article of that agreement.  
The Rectified Licence Agreement expressly states that PC Bank desires to  
continue to participate in the Loyalty Program and acquire the right to issue PCB  
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Points to its customers. As per article 2.1:  
Licensor [PCSI] hereby grants, for the duration of the Term, a non-exclusive,  
royalty-free license to Licensee [PC Bank] the right to issue PCB Loyalty Points to  
Members who are Licensee’s [PC Bank’s] customers subject to the terms and  
conditions of this Agreement and the Loyalty Terms and Conditions.57  
Under the Rectified Licence Agreement, PC Bank acknowledges that PCSI is  
the exclusive owner of the Loyalty Program, which includes the right to issue PCB  
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Points. It is PCSI that has the “full authority” to “control the character, nature,  
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features and redemption value of the [PCB Points] … .” In the Rectified Licence  
Agreement, PC Bank also acknowledges its liability for the redemption of all PCB  
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Points.  
The Rectified Loyalty Services Agreement  
The rectified Loyalty Services Agreement (the “Rectified Services  
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Agreement”) sets out PCSI’s obligation to offer the Loyalty Program to PC Bank.  
Article 2(a.1) provides that:  
vol 1, Tab 13 at pp 144-145; Amendment No. 1 to Licence Agreement, JBOD, vol 1, Tab 14 at pp 146-147. See also  
Order of the Ontario Superior Court of Justice, JBOD, vol 1, Tab 15 at pp 148-183.  
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Exhibit A2: Licence Agreement (dated July 31, 2008), JBOD, vol 1, Tab 9 at pp 129-135.  
Exhibit A2: Licence Agreement (rectified), JBOD, vol 1, Tab 15 at 152 at art 3.  
Exhibit 2: Licence Agreement (rectified), JBOD, vol 1, Tab 15 at p 150 at recitals.  
Exhibit A2: Licence Agreement (rectified), JBOD, vol 1, Tab 15 at p 152 at art 2.1.  
Exhibit A2: Licence Agreement (rectified), JBOD, vol 1, Tab 15 at p 152 at art 2.2.  
Exhibit A2: Licence Agreement (rectified), JBOD, vol 1, Tab 15 at p 152 at art 2.7.  
Exhibit A2: Licence Agreement (rectified), JBOD, vol 1, Tab 15 at p 152 at art 2.3.  
Exhibit A2: Loyalty Services Agreement (rectified), JBOD, vol 1, Tab 15 at p 159 at art 2(a).  
Page: 25  
Right to issue PCB Loyalty Points. Pursuant to the Licence Agreement, PC Bank  
has been granted non-exclusive, royalty-free licence to issue PCB Loyalty Points.  
The Rectified Services Agreement also stipulates that each PC Bank customer  
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is automatically eligible to be a member of the Loyalty Program. That agreement  
also provides, per article 2(f), that:  
…
Members may redeem Loyalty Points at any Participating Location...as may be  
agreed to by Loblaw or PCSI, as applicable. Subject to the Loyalty Terms and  
Conditions, Loyalty Points may be redeemed against the purchase of any Eligible  
Product at the rate of $1.00 retail per 1,000 Loyalty Points or such other rate as may  
be agreed to by Loblaw or PCSI, as applicable, and or against any reward that may  
be offered as part of the Loyalty Program from time to time, including, without  
limitation, rewards made available on the pcpoints.ca, at the rates disclosed with  
such offers.  
Article 3(a) sets out the awarding of PCB Points by PC Bank as follows:  
PC Bank is required to have certain of its products, services or PCF Payment  
Vehicles participate in the Loyalty Program. PC Bank may also award Loyalty  
Points as part of its marketing and customer acquisition and satisfaction strategy  
for any of its products or services.  
Article 5 sets out PCSI’s administrative responsibilities under the Rectified  
Services Agreement. Additionally, the administrative costs are the sole  
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responsibility of PCSI.  
The Rectified Loyalty Expense Agreement  
The rectified Loyalty Expense Agreement (the “Rectified Expense  
Agreement”) is an agreement made between PC Bank, PCSI and Loblaws. This  
agreement sets out the payments for Loblaws’ participation in the Loyalty  
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Program. These payments include payments on the award of PCB Points and  
payments in relation to the redemption of PCB Points.  
The payments related to the award of PCB Points are set out in article 2(a)  
and can be summarized as follows:  
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Exhibit A2: Loyalty Services Agreement (rectified), JBOD, vol 1, Tab 15 at p 163 at art 2(b).  
Exhibit A2: Loyalty Services Agreement (rectified), JBOD, vol 1, Tab 15 at p 165 at art 6(a).  
Exhibit A2: Loyalty Expense Agreement (rectified), JBOD, vol 1, Tab 15 at pp 178-179 at art 2.  
Page: 26  
i. Loblaw will pay PC Bank 0.75 cents for every $1.00 of sales where  
PCB Loyalty Points are awarded to members of the Loyalty Program  
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for purchases made by such members in the Loblaw stores.  
ii. Loblaw will pay 0.375 cents to PCSI for every $1.00 of sales where  
PCB Points are awarded to a member of the Loyalty Program for  
purchases made by such member in Loblaw stores using a Payment  
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Vehicle (other than a PCB Payment Vehicle).  
The payments related to the redemption of PCB Points are set out in  
article 2(b) and can be summarized as follows:  
i. Loblaw will pay $0.35 to PC Bank for every $1.00 of notional value of  
PCB Loyalty Points accumulated by a member using a PCB Payment  
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Vehicle and redeemed by such member.  
ii. PC Bank will reimburse/pay Loblaw $1.00 for every $1.00 of notional  
value of PCB Loyalty Points accumulated by a member using a PCB  
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Payment Vehicle and redeemed by such member.  
iii. Loblaw will pay $0.35 to PCSI for every $1.00 of notional value of  
Loyalty Points accumulated by a member using a Payment Vehicle  
69  
other than a PCB Payment Vehicle) and redeemed by such member.  
(
iv. PCSI will reimburse/pay Loblaw $1.00 for every $1.00 of notional  
value of Loyalty Points accumulated by a member using a Payment  
Vehicle (other than a PCB Payment Vehicle) and redeemed by such  
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member.  
Summary of the Agreements  
There are numerous points that stand out from my review of the above  
agreements.  
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Exhibit A2: Loyalty Expense Agreement (rectified), JBOD, vol 1, Tab 15 at p 179 at art 2(a)(i).  
Exhibit A2: Loyalty Expense Agreement (rectified), JBOD, vol 1, Tab 15 at pp 179-180 at art 2(a)(ii).  
Exhibit A2: Loyalty Expense Agreement (rectified), JBOD, vol 1, Tab 15 at p 180 at art 2(b)(i).  
Exhibit A2: Loyalty Expense Agreement (rectified), JBOD, vol 1, Tab 15 at p 180 at art 2(b)(ii).  
Exhibit A2: Loyalty Expense Agreement (rectified), JBOD, vol 1, Tab 15 at p 180 at art 2(b)(iii).  
Exhibit A2: Loyalty Expense Agreement (rectified), JBOD, vol 1, Tab 15 at p 180 at art 2(b)(iv).  
Page: 27  
First, PC Bank obtained the right to issue PCB Points to Cardholders to entice  
them to use their PC MasterCards frequently in order to accumulate PCB Points that  
could be used to acquire discounted or free goods from Loblaws.  
Second, PC Bank did so because the issuance of PCB Points was perceived as  
an attractive benefit for its Cardholders. In turn, this allowed PC Bank to grow its  
credit card business quickly.  
Third, PC Bank agreed to pay the redemption price for the cash value of the  
points because this was an obligation that it incurred as consideration for the issuance  
of the PCB Points.  
Fourth, the issuance of the PCB Points created a future liability to pay the  
redemption price for goods when the PCB Points were redeemed by Cardholders for  
rewards.  
All of the above establishes a direct link between the substantial income  
earned by PC Bank from its PC MasterCard business and the Redemption Payment  
made for the redemption of the PCB Points issued by PC Bank.  
Testimonial Evidence: The NITC Issue  
In respect of the NITC Issue, PC Bank called three witnesses: Ms. Sarah Ruth  
Davis, Mr. Ian Hanning and Mr. David Valenta.  
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Ms. Davis is now retired. Prior to her retirement she held various positions  
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related to LCL including Senior Vice President and Controller of the “enterprise”,  
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74  
Executive Vice President of Finance, Chief Financial Officer of LCL, and former  
President of LCL. She also served on the board of directors of PC Financial. Ms.  
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76  
Davis was the Chief Financial Officer of LCL during the relevant period.77  
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January 31, 2022 Transcript, p 25, line 24.  
January 31, 2022 Transcript, p 28, lines 16-25.  
January 31, 2022 Transcript, p 28, lines 26-28.  
January 31, 2022 Transcript, p 29, lines 1-3.  
January 31, 2022 Transcript, p 29, lines 14-16.  
January 31, 2022 Transcript, p 29, lines 20-22.  
Written Submissions of the Appellant re NITC Issue, para 18 (The relevant part reads: “Sarah Davis, the former  
President of LCL, was Chief Financial Officer of LCL during the relevant period. She was also a director of PC  
Bank at the time.”).  
Page: 28  
Mr. Hanning joined President’s Choice Financial as the Chief Financial  
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Officer in 2019. This is subsequent to the tax periods at issue in the PC Bank  
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Appeals. The record shows that Mr. Hanning had no personal involvement in the  
matters discussed here in the relevant years. Either way, in my opinion, there was  
nothing of note in Mr. Hanning’s testimony that requires comments from me.  
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Mr. Valenta was called as an adverse witness by the Appellant. At the time  
of the trial, Mr. Valenta was employed by the Canada Revenue Agency (“CRA”) as  
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a large case file manager. Prior to this, Mr. Valenta was a large file auditor with  
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83  
the CRA. Mr. Valenta was the auditor responsible for the PC Bank file. His  
testimony was short. He did not have anything relevant to say that was germane to  
the issue.  
Analysis of the NITC Issue  
The NITC Issue requires that I determine whether PC Bank made the  
Redemption Payment in the course of a commercial activity of PC Bank pursuant to  
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subsection 181(5). Subsection 181(5) should be interpreted following the modern  
approach to statutory interpretation, which requires considering the text, context and  
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purpose of that provision.  
The text of subsection 181(5) entitles a “particular person” (e.g. PC Bank) to  
claim NITCs for the tax fraction equal to the coupon value if certain conditions are  
met. First, a registrant (Loblaw) must accept as full or partial consideration for a  
taxable supply of property or a service a “coupon” (PCB Points) from a recipient  
(Cardholder). This coupon (PCB Points) may either be exchanged for property or a  
service (goods from Loblaws) or entitle the recipient (Cardholder) to a reduction on  
the price of the property or service. Second, a particular person (PC Bank) pays an  
amount to the supplier (Loblaw) for the redemption of the “coupon” (PCB Points).  
Third, this redemption payment is made in the course of a “commercial activity” of  
a particular person (PC Bank). A “commercial activity” is defined in subsection  
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February 1, 2022 Transcript, p 103, lines 5-6; and p 104, lines 13-14.  
February 1, 2022 Transcript, p 106, lines 24-28; and p 107, lines 1-6.  
February 2, 2022 Transcript, p 213, lines 11-13.  
February 2, 2022 Transcript, p. 213, lines 18-19; 23-25.  
February 2, 2022 Transcript, p 213, lines 26-28.  
February 2, 2022 Transcript, p 214, lines 1-3.  
Exhibit A1 (PASF), supra note 2 at paras 51-52.  
Canada Trustco Mortgage Co v R, 2005 SCC 54 at para 10.  
Page: 29  
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23(1). A business that consists of the making of exempt supplies of a “financial  
service” is carved out of the “commercial activity” definition.  
The purpose of subsection 181(5) is to allow an issuer of a coupon to receive  
the tax fraction of the coupon value where it makes a redemption payment to the  
supplier, so long as the issuer does so in the course of a commercial activity. The  
parties agree that in this case, the only aspect of subsection 181(5) that is not met is  
whether PC Bank makes the Redemption Payment in the course of a commercial  
activity.  
As discussed below, I endorse the Respondent’s theory, which is that PC Bank  
became liable to make the Redemption Payments to Loblaws in the course of its  
MasterCard business. PC Bank issued the PCB Points to Cardholders to reward them  
for making purchases using their PC MasterCard.86  
(i) The NITC Issue must be answered from the perspective of PC  
Bank.  
The question in dispute must be answered from the perspective of PC Bank,  
a distinct legal entity subject to the GST consequence with respect to its inputs,  
redemption expenses and supplies. This is clear from the part of subsection 181(5)  
that provides that “a particular person [PC Bank] at any time pays, in the course of  
a commercial activity of the particular person [PC Bank]”. The evidence must be  
examined to determine the reason or cause for the Redemption Payment. Stated  
differently, is the Redemption Payment linked to the making of exempt or taxable  
supplies by PC Bank?  
(
ii) The Redemption Payments are made in the course of PC Bank’s  
provision of an exempt supply of a financial service—the PC  
MasterCard business—to Cardholders.  
In my opinion, the Redemption Payments were made in the course of PC  
Bank’s MasterCard activity, which involves the provision of exempt supplies of  
financial services to Cardholders. PC Bank issued the PCB Points to generate  
revenue from its PC MasterCard portfolio. PC Bank earned significant revenue from  
interchange fees that pales in comparison to the minimal revenue it received from  
Loblaws. PC Bank is a highly regarded legal entity licensed to carry on certain  
86  
Written Submission of the Respondent re NITC Issue at paras 70, 74.  
Page: 30  
banking operations for profit. It is inconceivable to me that PC Bank made the  
Redemption Payments to lose money.  
PC Bank states that per the rectified agreements and viva voce evidence, PC  
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Bank made the Redemption Payment in the course of a commercial activity. This  
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activity was, “namely, its operation of the Loyalty Program with Loblaws.”  
However, the agreements are clear: PCSI, not PC Bank, owned and operated the  
Loyalty Program during the tax periods at issue.  
PC Bank has the right to issue PCB Points to its Cardholders pursuant to  
several agreements: the Rectified Licence Agreement, the Rectified Services  
Agreement, and the Rectified Expense Agreement (collectively, the “Rectified  
Agreements”). The Rectified Agreements allow PC Bank to offer PCB Points to  
Cardholders through PCSI’s Loyalty Program.  
PC Bank’s core business is banking, the provision of financial services. The  
Loblaw Companies Limited 2011 Annual Information Form (the “2011 Loblaw  
Report”) states that:  
[
PC Bank] makes available to consumers financial services under the President’s  
Choice Financial brand, including the President’s Choice Financial MasterCard®  
which are provided by the direct banking division of a major Canadian chartered  
…
bank and the PC points Loyalty Program. ...PC Bank offers the President’s Choice  
Financial MasterCard® throughout Canada.89  
Although the 2011 Loblaw Report predates the Rectified Agreements, these  
agreements do not change the fact that PC Bank’s general business is the provision  
of financial services to its customers.  
(iii) PC Bank has not established the nature of the alleged  
commercial activity.  
PC Bank has not identified the commercial activity for which it claims  
entitlement to NITCs. One of the principal arguments put forth by the Appellant is  
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based on the fee structure as outlined in the Rectified Expense Agreement. In  
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Written Submissions of the Appellant re NITC Issue at para 83.  
Written Submissions of the Appellant re NITC Issue at para 83.  
Exhibit A2: Loblaw Companies Limited Annual Information Form (2011), JBOD, vol 1, Tab 19 at p 250. January  
1, 2022 Transcript p 55, lines 20-28; p 56, lines 1-28; and p 57, lines 1-2 (confirmation by Ms. Davis that that is an  
3
accurate description of PC Bank’s business).  
90  
Written Submissions of the Appellant re NITC Issue at paras 96-102.  
Page: 31  
summary, in its written and oral submissions, PC Bank alleges that the $0.35  
payment that Loblaws is required to make to PC Bank when $1.00 worth of PCB  
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Points are redeemed is intertwined with the Redemption Payment. According to  
PC Bank:  
In the present case, there is no dispute that PC Bank’s operation of the Loyalty  
Program is a commercial activity. The Respondent acknowledges as much in  
confirming that the 0.75 cent payment from Loblaws to PC Bank when points are  
issued, and the $0.35 payment from Loblaws to PC Bank when points are  
redeemed, are consideration for taxable supplies – namely, the “provision of  
services to Loblaws Inc., in connection with the PC Loyalty program.”92  
[Emphasis added.]  
PC Bank’s business consists of earning money from a profitable credit card  
business. 93 Even from the consolidated reporting perspective (i.e. LCL), the  
reporting on the financial services segment (i.e. PC Bank) looks at how profitable  
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the PC Bank credit card business was. It earns substantially all of its net income  
from that activity. It is my view that PC Bank obtained the right to issue PCB Points  
to Cardholders for the purpose of enticing them to acquire the PC MasterCard in the  
first place and thereafter for the purpose of encouraging Cardholders to use their PC  
MasterCards. The 2011 Loblaw Report made the following comment about financial  
services:  
The Canadian bank card market is highly regulated and competitive. In the past  
year, the market has consolidated with two significant issuers selling their  
portfolios to major Canadian banks. As the market competition increases,  
customers expectations are being redefined, which include good value, exceptional  
service and programs that reward them for their loyalty. PC Bank as the issuer of  
President’s Choice Financial MasterCard® competes in this market. The unique  
value proposition of free groceries enables President’s Choice Financial  
MasterCard® to compete with the dominant players in the market.95  
It is common knowledge that the Canadian banks use loyalty programs to  
grow their credit card businesses. PC Bank issued PCB Points and paid the  
Redemption Payment for PCB Points redeemed by Cardholders in order to have a  
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Written Submissions of the Appellant re NITC Issue at paras 5, 102.  
Written Submissions of the Appellant re NITC Issue at para 89.  
January 31, 2022 Transcript, p 63, lines 27-28 to p 64, line 2.  
January 31, 2022 Transcript, p 63, lines 27-28 to p 64, line 2. Exhibit A2: 2011 Annual  
Report-Financial - Review, Loblaw Companies Limited, JBOD, vol 1, Tab 20 at p 289.  
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Exhibit A2: Loblaw Companies Limited Annual Information Form (2011), JBOD, vol 1, Tab 19 at p 254. January  
1, 2022 Transcript, p 57, lines 23-28 to p 58, line 12 (confirmation by Ms. Davis).  
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Page: 32  
competitive credit card offering. When Cardholders use their credit card, PC Bank  
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earns, inter alia, significant interchange fees and interest on unpaid balances. In  
Ms. Davis’s testimony, she acknowledged that the financial benefit to PC Bank is  
the interchange fees when the PC MasterCard is used. Ms. Davis confirmed that this  
is because the PC MasterCard is a no-fee credit card and that if cardholders are not  
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using their PC MasterCard, “there’s no money to be made”.  
In this context, why does PC Bank pay the redemption price for the PCB  
Points redeemed in Loblaws stores? It does so because the issuance of the PCB  
Points creates a future liability that becomes due and payable when a Cardholder  
chooses to redeem PCB Points for purchases at participating locations owned or  
controlled by Loblaws. There is a direct link between the PCB Points that are issued  
in conjunction with an exempt financial service supplied by PC Bank to Cardholders  
and an expense that is paid when the PCB Points are redeemed by Cardholders.  
PC Bank’s business practice in issuing PCB Points and paying for their  
redemption costs mirrors that of CIBC when CIBC issues loyalty points to its clients  
and pays the redemption costs of the loyalty points. Why does CIBC obtain the right  
to issue points? It does so to entice the clients to acquire PCF Products from it. Once  
CIBC issues the loyalty points, it incurs a future liability to pay for the redemption  
cost. I fail to see any material difference between these two situations. In both cases,  
when points are redeemed for rewards, Loblaws enjoys a benefit. There are more  
customers shopping in its stores buying goods. Loblaws receives payment for the  
goods that it sells. The fact that Loblaws benefits when points issued by CIBC and  
PC Bank are redeemed does not explain why PC Bank and CIBC issue the points in  
the first place. PC Bank issues the points and pays their redemption price for the  
same reason CIBC does, namely, to earn income from the supply of financial  
services.  
I have difficulty reconciling the Appellant’s argument with normal  
commercial and business practices. It is unimaginable for me that the Appellant  
would accept to pay $1.00 to earn $0.35. Why would the Appellant issue points to  
lose money? My analysis conforms to the approach adopted by Lamarre J. in the  
2
009 Decision. In that case, Lamarre J. looked at the supply made by PC Bank when  
it issued the loyalty points. She did so because the issuance of the points created a  
future liability to pay the redemption price of the points when a Loyalty Program  
9
8
member chose to redeem them. She found that PC Bank was not entitled to NITCs  
9
9
9
6
7
8
January 31, 2022 Transcript, p 60, lines 2-20 (confirmation by Ms. Davis).  
January 31, 2022 Transcript, p 60, lines 2-20 (cross-examination of Ms. Davis).  
2
009 Decision, supra note 22 at paras 74-76.  
Page: 33  
on loyalty points awarded on President’s Choice Financial products and  
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9
subsequently redeemed. This conclusion was based on the finding that the supply  
of the points in accordance with the agreement in effect at that time was part of the  
exempt supplies—financial services—offered by PC Bank through CIBC. These  
1
00  
supplies were not subject to GST. Because financial services are exempt supplies,  
1
01  
PC Bank did not make them in the course of a commercial activity.  
iv) NITCs cannot be claimed from a consolidated entity perspective.  
(
The Appellant essentially frames the NITC Issue from the perspective of  
LCL—the enterprise or consolidated perspective.102 Ms. Davis testified at length  
from this vantage point. For example, Ms. Davis emphasized that the main purpose  
of the Loyalty Program was to “drive more retail traffic” to Loblaws.103  
Ms. Davis emphasized that the PC Bank’s MasterCard revenue paled in  
1
04  
comparison to the revenue generated from the retail business. For example,  
Ms. Davis pointed out that in 2011, PC Bank earned approximately $250 million in  
interest from credit card loans and approximately $191 million in interchange  
income while LCL’s retail operations generated in the range of $31 to $32 billion of  
1
05  
revenue in the same period. For Ms. Davis, the proportion of revenue from PC  
Bank was a “very small portion” from a consolidated financials perspective.1  
06  
LCL is a public holding corporation that reports its results on a consolidated  
1
07  
basis. How income or revenue is generated at the legal entity level does not matter  
in the grand scheme of affairs, provided that the entity level results can be  
consolidated with that of a parent. That is why executives of a public holding  
corporation make decisions from this perspective.  
What happens at the legal entity level matters for a host of reasons. First, PC  
Bank is a highly regulated entity. As a bank, it is required to report to the competent  
banking authorities on a legal entity basis to protect its creditors and ensure  
9
1
1
1
1
9
2
2
2
009 Decision, supra note 22 at para 77.  
009 Decision, supra note 22 at para 77.  
009 Decision, supra note 22 at para 77.  
00  
01  
02  
03  
See for example February 9, 2022 Transcript, p 254, lines 14-21.  
January 31, 2022 Transcript, p 31, lines 20-24; p 33, lines 9-12; p 34, lines 6-8; p 39, lines 1-4; p 45, lines 22-28;  
p 46, lines 1-18; p 49, lines 1-7; and p 50, lines 9-13.  
1
1
04  
05  
January 31, 2022 Transcript, p 43, lines 24-28 to p 44, line 1; p 44, lines 24-28 to p 45, line 7.  
January 31, 2022 Transcript, p 43, lines 9-28 to p 44, line1. See also Exhibit A2: President’s Choice Bank  
Consolidated Statement of Comprehensive Income, JBOD, vol 1, Tab 3 at p 47.  
1
1
06  
07  
January 31, 2022 Transcript, p 43, lines 24-28 to p 44, line 1.  
January 31, 2022 Transcript, p 45, lines 9-194.  
Page: 34  
compliance with strict banking rules. Second, and more importantly, for the purpose  
of the present case, income tax and excise tax are levied on a legal entity basis. The  
reason for this is tied to the fact that Canada is a federation and the tax base is shared  
between the federal and provincial governments. For GST purposes, the legal entity,  
PC Bank, is required to report the GST that it collects and claims ITCs on its input,  
when allowed, on a legal entity basis.  
As noted earlier, the focus of subsection 181(5) is squarely on PC Bank. What  
caused PC Bank to make the Redemption Payment? After considering the  
testimonial evidence, my opinion remains the same. PC Bank issued the PCB Points  
to attract clients to subscribe for and, more importantly, thereafter use their PC  
MasterCards. This was done to grow PC Bank’s MasterCard operations. PC Bank  
made the Redemption Payment for the redeemed PCB Points as consideration for  
having issued the PCB Points in the first place.  
For a loyalty program to be successful, it must be attractive to all of the  
participants thereunder, otherwise it will likely fail. I will use the Loyalty Program  
to illustrate this point. There are three participants in the Loyalty Program. The  
members of the program are of vital importance. The program must be designed to  
entice a desired behaviour. If the rewards under the program were unattractive,  
potential customers would opt to acquire and use a credit card that offers rewards  
perceived to be more attractive. There are a great deal of attractive loyalty programs  
that PC Bank, PCSI and Loblaws undoubtedly had to take into account in designing  
the Loyalty Program at issue here. While LCL ensured that PCB Points could be  
redeemed at Loblaws stores, the program, in the eyes of the Loyalty Program  
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08  
members, was nonetheless perceived to be attractive. This is obvious based on the  
popularity of the PC Bank MasterCard.  
Ms. Davis, in her testimony, acknowledged that the PC MasterCard had to be  
attractive to be competitive with credit cards offered with loyalty program benefits  
1
09  
from other institutions. In this context, the Loyalty Program benefits had to be  
1
10  
attractive to allow PC Bank to grow its business. The Loyalty Program also had  
to take into account Loblaws’s intent. Loblaw benefited from the fact that  
Cardholders were incentivized to shop at Loblaws. 111 Loblaws was also fully  
reimbursed the value of the rewards paid out to Cardholders.  
1
1
1
1
08  
09  
10  
11  
January 31, 2022 Transcript, p 39, lines 9-28.  
January 31, 2022 Transcript, p 57, lines 23-28 to p 58, line 12.  
January 31, 2022 Transcript, p 57, lines 23-28 to p 58, line 12.  
January 31, 2022 Transcript, p 50, lines 9-13; p 39, lines 9-28.  
Page: 35  
The Loyalty Program was win-win-win for all participants. This is why it was  
successful. The Appellant agreed to issue PCB Points and pay the Redemption  
Payment of the PCB Points for the same reason that CIBC did when it issued points  
to entice its clients to acquire PCF Products. Like CIBC, PC Bank issued PCB Points  
and paid the redemption price of the points in the course of its credit card business  
consisting of the sale of exempt financial services. In that context, PC Bank is not  
entitled to claim NITCs.  
For all of these reasons, PC Bank’s appeal with respect to the NITC Issue is  
dismissed.  
IV. THE FDR/TSYS ISSUE  
This section addresses whether the services provided by FDR/TSYS to PC  
Bank are exempt financial services. The parties agree that the services provided by  
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FDR/TSYS, respectively, are a single compound supply. However, the parties  
differ on their characterization of these services under the Act.  
PC Bank did not self-assess GST/HST on the consideration paid to FDR in  
1
13  
respect of the FDR Supply.  
However, PC Bank self-assessed and remitted  
1
14  
GST/HST in respect of the TSYS Supply. After the 2010-2012 Reassessments  
were issued, PC Bank claimed that it paid the tax in respect of the TSYS Supply in  
1
15  
error.  
Position of the Parties: The FDR/TSYS Issue  
PC Bank’s position is that the services provided by FDR/TSYS are exempt  
1
16  
financial services. According to PC Bank, the “essential character of the supply”  
provided by the FDR/TSYS is complex credit card processing and portfolio  
management services for PC Bank’s credit card business. 117 The FDR/TSYS  
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18  
services are integral to the operation of PC Bank’s credit card business. PC Bank  
1
1
1
1
1
12  
13  
14  
15  
16  
Exhibit A1 (PASF), supra note 2 at paras 20, 27.  
Exhibit A1 (PASF), supra note 2 at para 23.  
Exhibit A1 (PASF), supra note 2 at paras 28, 36.  
Exhibit A1 (PASF), supra note 2 at para 39(d).  
Written Submissions of the Appellant re FDR/TSYS Issue at paras 7, 138; January 31, 2022 Transcript, p 13,  
lines 20-27.  
1
1
17  
18  
Written Submissions of the Appellant re FDR/TSYS Issue at para 143.  
Written Submissions of the Appellant re FDR/TSYS Issue at paras 7, 123, 137, 155, 161, 164.  
Page: 36  
submits that the FDR/TSYS supplies are included by paragraphs (d), (i) and (l) of  
the “financial service” definition in subsection 123(1).  
PC Bank states that paragraph (d) applies because the supply made by  
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19  
FDR/TSYS was, inter alia, the processing of credit card transactions. PC Bank  
also relies on paragraph (i), which covers any services provided under an agreement  
relating to payments for which a credit card voucher has been issued, provided once  
1
20  
again that such a service is not described in an Exclusionary Paragraph. PC Bank  
also indicates that paragraph (l) applies because, in general terms, that paragraph  
applies to supplies that consist of “the arranging for” the lending or payment of  
money subject to the application of the Exclusions.121  
The Respondent submits that the FDR/TSYS services are taxable supplies.122  
According to the Respondent, FDR/TSYS assist PC Bank in the administration of  
its credit card business by providing PC Bank with electronic systems that assisted  
PC Bank in the management of the data collected and used in the course of its  
1
23  
business. Therefore, the predominant element of these services does not fit within  
paragraphs (a), (d), (i) or (l) of the “financial service” definition in subsection  
124  
1
23(1). In the alternative, in the event that I conclude otherwise, the Respondent  
states that exclusionary paragraphs (r.3), (r.4), (r.5) and/or (t) of the “financial  
service” definition in subsection 123(1) apply such that FDR/TSYS supplies are  
1
25  
taxable supplies subject to GST/HST.  
Legislation  
The relevant paragraphs of the “financial service” definition in  
subsection 123(1) of the Act are set out below:  
“financial service” means  
1
1
1
1
19  
20  
21  
22  
Written Submissions of the Appellant re FDR/TSYS Issue at paras 131-132.  
Written Submissions of the Appellant re FDR/TSYS Issue at para 127-128.  
Written Submissions of the Appellant re FDR/TSYS Issue at paras 133-136.  
Written Submissions of the Respondent re FDR/TSYS Issue at para 2; January 31, 2022 Transcript, p 20,  
lines 13-20.  
1
23  
Written Submissions of the Respondent re FDR/TSYS Issue at paras 1-4; January 31, 2022 Transcript, p 19, lines  
8-28 to p. 20, line 10.  
1
1
1
24  
Written Submissions of the Respondent re FDR/TSYS Issue at para 2.  
25  
Written Submissions of the Respondent re FDR/TSYS Issue at para 3; January 31, 2022 Transcript, p 19,  
lines 26-28 to p 20, line 1.  
Page: 37  
(a) the exchange, payment, issue, receipt or transfer of money, whether effected by  
the exchange of currency, by crediting or debiting accounts or otherwise,  
…
(d) the issue, granting, allotment, acceptance, endorsement, renewal, processing,  
variation, transfer of ownership or repayment of a financial instrument,  
…
(i) any service provided pursuant to the terms and conditions of any agreement  
relating to payments of amounts for which a credit card voucher or charge card  
voucher has been issued,  
…
(l) the agreeing to provide, or the arranging for, a service that is  
(i) referred to in any of paragraphs (a) to (i), and  
(ii) not referred to in any of paragraphs (n) to (t) …  
(r.3) a service (other than a prescribed service) of managing credit that is in respect  
of credit cards, charge cards, credit accounts, charge accounts, loan accounts or  
accounts in respect of any advance and is provided to a person granting, or  
potentially granting, credit in respect of those cards or accounts, including a service  
provided to the person of  
(i) checking, evaluating or authorizing credit,  
(ii) making decisions on behalf of the person in relation to a grant, or an  
application for a grant, of credit,  
(iii) creating or maintaining records for the person in relation to a grant, or an  
application for a grant, of credit or in relation to the cards or accounts, or  
(iv) monitoring another person’s payment record or dealing with payments  
made, or to be made, by the other person,  
(r.4) a service (other than a prescribed service) that is preparatory to the provision  
or the potential provision of a service referred to in any of paragraphs (a) to (i) and  
l), or that is provided in conjunction with a service referred to in any of those  
paragraphs, and that is  
(
(i) a service of collecting, collating or providing information, or  
Page: 38  
(ii) a market research, product design, document preparation, document  
processing, customer assistance, promotional or advertising service or a similar  
service,  
(r.5) property (other than a financial instrument or prescribed property) that is  
delivered or made available to a person in conjunction with the rendering by the  
person of a service referred to in any of paragraphs (a) to (i) and (l),  
…
(t) a prescribed service.  
[Emphasis added.]  
Paragraph (t) of the “financial service” definition excludes a “prescribed  
service”.  
A prescribed service is described in section 4 of the Financial Services and  
Financial Institutions (GST/HST) Regulations (SOR/91-26) (the “Regulations”) as  
follows:  
4
(1) In this section,  
“
instrument” means money, an account, a credit card voucher, a charge card  
voucher or a financial instrument;  
“
person at risk”, in respect of an instrument in relation to which a service referred  
to in subsection (2) is provided, means a person who is financially at risk by virtue  
of the acquisition, ownership or issuance by that person of the instrument or by  
virtue of a guarantee, an acceptance or an indemnity in respect of the instrument,  
but does not include a person who becomes so at risk in the course of, and only by  
virtue of, authorizing a transaction, or supplying a clearing or settlement service, in  
respect of the instrument.  
(
2) Subject to subsection (3), the following services, other than a service described  
in section 3, are prescribed for the purposes of paragraph (t) of the definition  
financial service” in subsection 123(1) of the Act:  
“
(a) the transfer, collection or processing of information, and  
(b) any administrative service, including an administrative service in relation  
to the payment or receipt of dividends, interest, principal, claims, benefits or  
other amounts, other than solely the making of the payment or the taking of the  
receipt.  
Page: 39  
(3) A service referred to in subsection (2) is not a prescribed service for the purposes  
of paragraph (t) of the definition “financial service” in subsection 123(1) of the Act  
where the service is supplied with respect to an instrument by  
(a) a person at risk, …  
As noted in the attached CIBC reasons for judgment, the definition of a  
financial service is complex.  
Subsection 123(1) of the Act defines a “financial service”. This definition  
consists of a list of services that may come within that term. These paragraphs are  
paragraphs (a) to (m) (the “Inclusions” or the “Inclusionary Paragraphs”). The  
“financial service” definition also lists services that are excluded from that  
definition. These paragraphs are paragraphs (n) to (t) (the “Exclusions” or  
“Exclusionary Paragraphs”).  
At this juncture, I observe that the Exclusionary Paragraphs overlap to some  
degree. For example, paragraph (t), excludes a “prescribed service” from the  
definition of a “financial service”. However, paragraph (t) is broad enough to also  
cover a service the predominant elements of which falls within paragraph (r.3).  
Paragraph (r.3) excludes from the “financial service” definition certain activities  
related to managing credit that are administrative in nature.  
For efficiency purposes, I will assume that the predominant elements of the  
supply here fall initially within one of the three Inclusionary Paragraphs—  
paragraphs (d), (i) or (l)—relied on by PC Bank. It is undisputed that, if a supply that  
falls within the scope of an Inclusionary Paragraph also falls within the scope of an  
Exclusionary Paragraph, then that supply will be excluded from the “financial  
service” definition. If I determine that none of the Exclusionary Paragraphs relied  
on by the Respondent apply, then I will return to this matter and specifically address  
whether the FDR/TSYS supply falls within the Inclusionary Paragraphs relied on by  
PC Bank.  
Review of the Case Law  
There are numerous cases that address whether or not a single compound  
supply falls within the “financial service” definition in subsection 123(1). The legal  
test applied to make that determination is generally a two-step test. First, the  
predominant elements of the supply are identified based on an interpretation of the  
contracts between the parties. Second, whether or not the predominant elements fall  
Page: 40  
within the statutory definition of “financial service” is determined based on the  
words of the Act.  
In Global Cash Access (Canada) Inc. v R,126 the Federal Court of Appeal  
addressed whether the single supply at issue in that case met the “financial service”  
definition. To do so, the Court set out a two-step test:  
[
“
26] To determine whether that single supply falls within the statutory definition of  
financial service”, the questions to be asked are these: (1) Based on an  
interpretation of the contracts between the Casinos and Global, what did the  
Casinos provide to Global to earn the commissions payable by Global? (2) Does  
that service fall within the statutory definition of “financial service”?  
At issue in Global Cash was whether the commissions paid by the corporate  
taxpayer (“Global”) to two corporations that operated casinos (the “Casinos”) were  
1
27  
consideration for a “financial service” supplied by the Casinos. Global argued that  
the commissions were exempt from GST because they were paid as consideration  
1
28  
for a “financial service” .  
Global’s business included providing casino patrons access to cash through  
dedicated computer terminals owned and installed by Global in the Casinos. Global  
gained access to the Casinos through contracts, the preamble of the which stated that  
Global would become a supplier of Funds Access Services within the Casinos, and  
1
29  
that the Casinos would receive a commission for each completed transaction. The  
1
30  
contracts also provided for a transaction volume incentive. The Federal Court of  
Appeal held that Global paid the Casinos a commission for all of the steps that it  
took to complete the transactions, which constituted a single supply of a service. The  
supply fell within paragraph (g) of the “financial service” definition and did not fall  
1
31  
within any of the Exclusionary Paragraphs.  
In Great-West Life Assurance Co. v R, 132 the Federal Court of Appeal  
expanded on the two-step test set out in Global Cash. The Court noted that the  
1
1
1
1
1
1
1
26  
27  
28  
29  
30  
31  
32  
2
013 FCA 269 [Global Cash].  
Global Cash, supra note 126 at para 2.  
Global Cash, supra note 126 at para 2.  
Global Cash, supra note 126 at para 8.  
Global Cash, supra note 126 at para 9.  
Global Cash, supra note 126 at para 35.  
2
016 FCA 316 [Great-West].  
Page: 41  
difficult part of the two-step test is the second part.133 This is because of the  
following:  
[
48] … It requires a determination as to whether the supply is included in the  
definition of “financial service.” As part of this exercise, it is necessary to determine  
the predominant elements of the supply if it is a single compound supply. It is only  
the predominant elements that are taken into account in applying the inclusions and  
exclusions in the “financial service” definition.  
The Court also confirmed that the test for determining the predominant  
elements of the supply requires identifying the “parts of the service that resulted in  
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the payment of the benefits”. At issue in Great-West was whether fees paid by the  
corporate taxpayer—Great-West Life Assurance Company (“Great-West”)—to  
Emergis Inc. and Telus Health Solutions (collectively “Emergis”) were fees paid  
for a “financial service”. The fees were paid in connection with group health benefits  
offered by Great-West to employers. The services provided by Emergis related to  
“
receiving and adjudicating benefits claims from employees, and arranging for the  
135  
benefits to be received on a real-time basis.” These services were generally  
delivered electronically through a program that enabled the claims to be adjudicated  
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quickly. Emergis also entered into agreements with pharmacies, which allowed  
prescriptions to be filled with the understanding that payments would follow.1  
37  
The Federal Court of Appeal explained that there is a two-step process to  
determine whether a supply is a “financial service”: “The first question is simply to  
determine what services were provided for the consideration received. At this stage,  
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the services should include all services and not just the predominant elements.”  
For step two, “it is necessary to determine the predominant elements of the supply  
if it is a single compound supply. It is only the predominant elements that are taken  
into account in applying the Inclusions and Exclusions in the ‘financial service’  
1
39  
definition.” The Federal Court of Appeal found that the Tax Court judge’s reasons  
suggested that the judge correctly “determined that the predominant elements of the  
1
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supply were the parts of the service that resulted in the payment of the benefits.”  
1
1
1
1
1
1
1
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33  
34  
35  
36  
37  
38  
39  
40  
Great-West, supra note 132 at para 48.  
Great-West, supra note 132 at para 50.  
Great-West, supra note 132 at para 9.  
Great-West, supra note 132 at para 9.  
Great-West, supra note 132 at para 10.  
Great-West, supra note 132 at para 47.  
Great-West, supra note 132 at para 48.  
Great-West, supra note 132 at paras 50-51.  
Page: 42  
Accordingly, Emergis provided a taxable supply of an “administrative service” to  
Great-West.  
More recently in Canadian Imperial Bank of Commerce v Canada,141 the  
Federal Court of Appeal addressed CIBC’s application for a rebate under section 261  
of the Act for GST paid on the supply made by Aeroplan to CIBC. There was no  
dispute between the parties that Aeroplan made a single supply to CIBC. At issue  
was “what in particular was supplied as the single supply.” Because CIBC was the  
person liable to pay consideration under the agreements with Aeroplan, the  
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42  
characterization of the supply was made from the perspective of CIBC. The Court  
noted that, just like in Global Cash, the “agreement under which the consideration  
for the supply was paid by CIBC should play a dominant role in determining what  
was acquired for the amounts that were paid.”143  
In Canadian Imperial Bank of Commerce v The Queen,144 at issue was  
whether CIBC paid GST in error on fees charged to it by Visa because Visa made  
an exempt supply of a “financial service”. The Tax Court judge held that Visa made  
a taxable supply of an “administrative service” and that Visa was not “a person at  
1
45  
risk”. The Federal Court of Appeal reversed the Tax Court judge on the basis that  
he “committed a reversible error by making contradictory and irreconcilable findings  
1
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concerning the nature and impact of the Visa supply.” The Federal Court of  
Appeal held that Visa made an exempt supply of a financial service and did not need  
to consider the alternative “person at risk” argument.  
Review of the Key Agreements  
(i) Service Agreement (the “FDR Agreement”)  
FDR provided services to PC Bank beginning after January 31, 2001 until  
1
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December 10, 2009. The FDR Agreement sets out the services that were made  
available by FDR to PC Bank. These services are found in a lengthy and detailed list  
1
48  
in Exhibit A of the FDR Agreement. As stipulated in that agreement, the types of  
1
1
1
1
1
1
1
41  
42  
43  
44  
45  
46  
47  
2
021 FCA 96 [CIBC (Aeroplan)].  
CIBC (Aeroplan), supra note 141 at paras 33 and 34.  
CIBC (Aeroplan), supra note 141 at paras 57-58.  
2
As those terms are defined in section 4 of the Regulations.  
CIBC (Visa), supra note 144 at para 4.  
021 FCA 10 [CIBC (Visa)].  
Written Submissions of the Appellant re. FDR/TSYS Issue at para. 48. Exhibit 1 (PASF), supra note 2 at  
paras 20-23.  
148  
Exhibit A2: FDR Agreement, Exhibit A, JBOD, vol 2, Tab 21 at p 404-413 at art 2.  
Page: 43  
services offered by FDR are grouped into two main categories: “General Services”  
and “Ancillary Services”.  
Section II of Exhibit A of the FDR Agreement sets out the General Services  
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49  
performed by FDR as follows:  
II. General Services  
A. FDR will provide Customer with an on-line terminal facility (not the  
terminals themselves), on-line access to Transaction Card processing software,  
adequate computer time and other mechanical Transaction Card services as  
more specifically described in the [user manuals].  
B. Reports will be made available to Customer at Customer’s request from time  
to time in accordance with FDR’s Information Delivery Platform (IDP). FDR  
will shut off specific reports within five (5) business days of receiving such a  
request to do so from Customer and will not bill Customer for reports generated  
after such date.  
C. Specific Services are defined in Sections IV, V and VI [of Exhibit A].  
Section III of Exhibit A of the FDR Agreement sets out in great detail the  
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50  
Ancillary Services provided by FDR. These Ancillary Services include:  
a) fraud management and detection services in conjunction with its proprietary  
software;  
b) services (human statistical analysis or reports) and products (software  
integrated into the FDR system) for use in connection with the Appellant’s  
risk management of its accounts;  
c) the Evolve application and licence, which Ms. Daksa Mody (“Ms. Mody”)  
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51  
explained to be a FDR system interface;  
d) the InfoSight software, which Ms. Mody also described as another FDR  
1
52  
system interface; and  
1
1
1
49  
50  
51  
Exhibit A2: FDR Agreement, Exhibits A, JBOD, vol 2, Tab 21 at p 441 at s II.  
Exhibit A2: FDR Agreement, Exhibit A: JBOD, vol 2, Tab 21 at pp 441-455.  
February 1, 2022 Transcript, p. 203, lines 8-21. Exhibit A2: FDR Agreement, Exhibit A, Schedule A-1, JBOD,  
vol 2, Tab 21 at p 479.  
152  
February 1, 2022 Transcript, p. 203, line 22 to p 204, line 3.  
Page: 44  
e) FDR ROW/ROWnet Services, which will be provided by FDR or through the  
Appellant’s permitted access to licensed software and related  
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53  
documentation.  
Section IV of Exhibit A of the FDR Agreement sets out processing fee  
1
54  
definitions and prices. For example, under the definition “Auto PIN Change”,  
each time a PC MasterCard holder uses the automated telephone system to change  
1
55  
his or her PIN, FDR would bill PC Bank $0.79.  
Section V of Exhibit A of the FDR Agreement sets out credit-related  
processing services as well as their definitions and prices per item.156  
Section VI of Exhibit A of the FDR Agreement sets out the processing  
services provided by FDR and related definitions and prices per item. For example,  
1
57  
a two-cent fee is charged each time a PIN-based transaction is processed by FDR.  
PC Bank replaced FDR with TSYS to provide a similar service that was  
1
58  
Ms. Mody testified that there was no material  
previously offered by FDR.  
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59  
difference between the services provided by TSYS and FDR. This is apparent  
from a review of the recitals to the TSYS Agreement, which are discussed below.  
(ii) Processing Services Agreement (the “TSYS Agreement”)  
TSYS provided services to PC Bank beginning after December 10, 2009,  
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60  
pursuant to the TSYS Agreement. The recitals to the TSYS Agreement state as  
follows:  
RECITALS:  
A. PC Bank is currently engaged in the business of advancing credit to credit card  
holders, financing and managing the related accounts and receivables, and related  
financial services and may be engaged in other financial services in the future;  
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1
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1
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53  
54  
55  
56  
57  
58  
59  
60  
Exhibit A2: FDR Agreement, JBOD, vol 2, Tab 21 at pp 453-455.  
Exhibit A2: “FDR Agreement, Exhibit A”, JBOD, vol 2, Tab 21 at pp 455-474.  
Exhibit A2: “FDR Agreement, Exhibit A”, Tab 21, JBD vol. 2 at pp. 456.  
Exhibit A2: FDR Agreement, JBOD, vol 2, Tab 21 at pp 475-476.  
Exhibit A2: FDR Agreement, JBOD, vol 2, Tab 21 at p 476.  
Written Submissions of the Appellant re. FDR/TSYS Issue at para 48.  
February 1, 2022 Transcript, p 187, lines 21-26.  
Written Submissions of the Appellant re FDR/TSYS Issue at para 48; Exhibit 1 (PASF), supra note 2 at  
paras 26-28.  
Page: 45  
B. TSYS is engaged in the business of providing a broad range of innovative issuing  
and acquiring payment technologies, including credit card processing and account  
maintenance services;  
C. PC Bank has selected TSYS, and TSYS has agreed to provide for the processing  
of credit card and other payment transactions of Cardholders and related account  
maintenance services, on an integrated basis, in accordance with the terms and  
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61  
conditions of this Agreement.  
[Emphasis added.]  
The underlined words capture the essence of the TSYS supply. In short, TSYS  
is a supplier of “issuing and acquiring payment technologies”. It agreed to provide  
PC Bank “the processing of credit card and other payment transactions… and related  
1
62  
account maintenance services, on an integrated basis … .”  
Article 4 and Schedule 4.1 govern the core services provided under the TSYS  
Agreement. The services supplied by TSYS include “all processing and account  
1
63  
maintenance services”.  
The TSYS Agreement defines the “core processing services” as a variety of  
services that are performed by the TSYS system, including:  
a) The acceptance and processing of credit card authorization requests;  
b) Processing of new client applications through the TSYS system based on terms  
and conditions set out by PC Bank;  
c) Processing the information relating to cardholder account transactions; and  
d) Storage of data on the TSYS system.164  
Schedule 4.1 of the TSYS Agreement sets out the processing services  
provided by TSYS to PC Bank. They are divided as follows: core processing  
services, optional processing services, miscellaneous services, and ancillary  
services.  
1
1
1
1
61  
62  
63  
64  
Exhibit A2: TSYS Agreement, JBOD, vol 3, Tab 26 at p 798-879.  
Exhibit A2: TSYS Agreement, JBOD, vol 3, Tab 26 at p 798.  
Exhibit A2: TSYS Agreement, JBOD, vol 3, Tab 26 at p 811.  
Exhibit A2: TSYS Agreement, JBOD, vol 3, Tab 27 at pp 951-979.  
Page: 46  
The core processing services supplied by TSYS to PC Bank include  
authorizing transactions in accordance with “the authorization control options  
selected by PC Bank within the TSYS System”;165 assessing and evaluating “new  
1
66  
account application[s] according to the options selected by PC Bank”; receiving,  
1
67  
processing and posting PC Bank customers’ transaction activity; maintaining  
1
68  
customer data and providing PC Bank access to that data; and, as directed by PC  
1
69  
Bank, generating, distributing and transmitting TSYS standard reports.  
The optional processing services supplied by TSYS to PC Bank include a  
portfolio management service, which “provides an automated behaviour score based  
on each Cardholder’s activity, Cardholder Account performance and associated  
1
70  
171  
a management system, which “integrates  
risk”;  
fraud protection services;  
applications, automates and streamlines business processes, and provides real-time  
1
72  
173  
management operations … ”; and training and testing services.  
The miscellaneous services supplied by TSYS to PC Bank are “incidental” to  
the core and optional processing services, and they “include customized  
programming, consulting services, and custom Developments to the TSYS  
1
74  
system”.  
Finally, the ancillary services supplied by TSYS to PC Bank include a data  
1
75  
176  
a dedicated TSYS relationship manager; and the  
protection program;  
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maintaining and administering of relevant telecommunications systems.  
Testimonial Evidence  
In respect of the FDR/TSYS Issue, the Appellant called Ms. Mody as a  
witness. Ms. Mody is Vice President Customer Support COE, PC Bank (part of  
1
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LCL). She joined PC Bank in 2005, first as a Director of Operations Strategy and  
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66  
67  
68  
69  
70  
71  
72  
73  
74  
75  
76  
77  
78  
Exhibit A2: TSYS Agreement, JBOD, vol 3, Tab 27 at p 951 at art 1(a).  
Exhibit A2: TSYS Agreement, JBOD, vol 3, Tab 27at p 952 at art 1(b).  
Exhibit A2: TSYS Agreement, JBOD, vol 3, Tab 27 at p. 953 at art 1(c).  
Exhibit A2: TSYS Agreement, JBOD, vol 3, Tab 27 at p 962 at art 1(j).  
Exhibit A2: TSYS Agreement, JBOD, vol 3, Tab 27 at p 967 at art 1(k).  
Exhibit A2: TSYS Agreement, JBOD, vol 3, Tab 27 at p 968 at art 1.1(a).  
Exhibit A2: TSYS Agreement, JBOD, vol 3, Tab 27 at pp 969-971.  
Exhibit A2: TSYS Agreement, JBOD, vol 3, Tab 27 at pp 972-973.  
Exhibit A2: TSYS Agreement, JBOD, vol 3, Tab 27 at pp 977-979.  
Exhibit A2: TSYS Agreement, JBOD, vol 3, Tab 27 at pp 979-981.  
Exhibit A2: TSYS Agreement, JBOD, vol 3, Tab 27 at pp 982-984.  
Exhibit A2: TSYS Agreement, JBOD, vol 3, Tab 27 at pp 984-985.  
Exhibit A2: TSYS Agreement, JBOD, vol 3, Tab 27 at p 985.  
February 1, 2022 Transcript, p 146, lines 8-9.  
Page: 47  
Vendor Management.179 Between 2006 and 2014, Ms. Mody held the roles of Vice  
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President of Operations and Vice President of Solutions Delivery. She held the  
latter roles during the relevant periods.  
The Respondent did not call any witnesses.  
Analysis of the FDR/TSYS Issue  
The parties agree that the FDR/TSYS supply consists of a single compound  
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supply. I share the parties’ view on this point.  
The parties also agree on the framework that applies for the purpose of  
determining whether a supply is an exempt supply of a “financial service” or a  
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taxable supply.  
The first step consists in determining “what services were  
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83  
provided for the consideration received”. The second step consists in establishing  
the “predominant elements” of the supply. In determining whether a single  
compound supply is a financial service or not, only the predominant elements of the  
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supply must be considered.  
(i) Step 1: Elements of the supply  
I will begin my analysis of the elements of the FDR/TSYS supply with an  
overview of the process under which PC Bank makes credit card loans to its  
customers.  
A typical credit card loan made by PC Bank involves numerous parties. These  
include a Cardholder using his or her PC MasterCard to pay for goods or services  
with a merchant; the merchant presented with the PC MasterCard for payment of  
goods and services; an acquirer acting as an intermediary between MasterCard and  
1
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79  
80  
February 1, 2022 Transcript, p 147, lines 1-11.  
February 1, 2022 Transcript, p 147, lines 12-26. Written Submissions of the Appellant re FDR/TSYS Issue at  
para 51.  
1
1
81  
82  
Exhibit A1 (PASF), supra note 2 at paras 20, 27.  
Written Submissions of the Appellant re FDR/TSYS Issue at paras 114-117; Written Submissions of the  
Respondent re FDR/TSYS Issue at paras 63-65.  
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83  
Global Cash, supra note 126 at para 26; Great-West, supra note 132 at para 47; CIBC (Visa), supra note 144 at  
para 32.  
184  
Global Cash, supra note 126 at para 26; Great –West, supra note 132 at para 48; CIBC (Visa), supra note 144 at  
para 32.  
Page: 48  
the merchant; and a processor (either FDR or TSYS depending on the relevant  
1
85  
period).  
The case law provides that the interpretation of the relevant agreements is key  
1
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to establishing the elements of the supply. Under the FDR Agreement, the general  
services provided by FDR to PC Bank include:187  
an on-line terminal facility (not the terminal themselves), on-line access to  
Transaction Card processing software, adequate computer time and other  
mechanical Transaction Card services…  
Under the TSYS Agreement, the recitals set out the general services offered  
by TSYS to PC Bank. In short, TSYS is a supplier of “issuing and acquiring payment  
technologies”. It agreed to provide PC Bank “the processing of credit card and other  
payment transactions … and related account maintenance services, on an integrated  
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basis … ”  
FDR/TSYS used automated systems to check and authorize credit in respect  
of the particular transaction based on the protocol and the terms and conditions set  
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by PC Bank. An authorization of a credit card loan typically takes place in  
190  
milliseconds”.  
“
Ms. Mody stated that the authorization process is automated because it must  
be frictionless for Cardholders. If there are delays, a Cardholder may seek to use a  
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different means of payment.  
To avoid fraud, the automated system is able to identify unusual transactions.  
For example, if a card is used for payment on the same day in Canada and in a foreign  
country, this may indicate that the card has been stolen.192 Similarly, the automated  
process can identify large purchases that are made quickly on the card and that do  
not correspond to a Cardholder’s normal spending pattern. In both cases, the  
authorization process may be slowed down to allow for further verification; the  
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86  
87  
88  
89  
90  
91  
92  
February 1, 2022 Transcript, p 148, line 22 to p 150, line 7.  
Global Cash, supra note 126 at paras 25-30; CIBC Aeroplan, supra note 141 at paras 57-61.  
Exhibit A2: FDR Agreement, Exhibit A, JBOD, vol 2, Tab 21 at p 441.  
Exhibit A2: TSYS Agreement, JBOD, vol 3, Tab 26 at p 798.  
February 1, 2022 Transcript, p 151, lines 2-9.  
February 1, 2022 Transcript, p 149, line 21.  
February 1, 2022 Transcript, p 171, lines 15-28.  
February 1, 2022 Transcript, p 155, line 23 to p. 156, line 26.  
Page: 49  
Cardholder may be called by someone from FDR/TSYS to verify the flagged  
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transactions.  
In all cases, FDR/TSYS, through the use of the automated systems and  
follow-up security and authorization procedures, are applying security protocols  
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established by PC Bank. In short, they provide the service as agent for PC Bank  
using the automated security protocol approved by PC Bank.195 The automated  
systems also verify other critical information, such as whether the request for a credit  
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card loan is within the Cardholder’s credit card limit.  
Like the billing scheme of the FDR Agreement, the TSYS Agreement’s  
billing scheme was on a per-item basis. As Ms. Mody explained, “… each  
component of a decision that TSYS makes for us generally has a separate billing  
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element associated with it.” Ms. Mody went on to explain that PC Bank was not  
charged one fee for TSYS services, but each item processed by TSYS was billed  
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separately to PC Bank.  
Ms. Mody described TSYS as “this neural network that takes information,  
transactions, customer behaviour, et cetera, and processes that information, working  
with PC Bank strategies. And they … help us manage our portfolio both from a risk  
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perspective and a growth perspective.” By this I understood that the TSYS system  
processed the request for authorization in real time to enable the Cardholder to  
purchase goods and services by means of a credit card loan and performed related  
administrative and credit management services within the parameters set by PC  
Bank. Undoubtedly, PC Bank could not conduct its business without the benefit of  
an automated credit card authorization and processing system.  
(ii) Step 2: The predominant elements of the supply  
I believe that the predominant element of the FDR/TSYS supply is the  
automated services provided by the FDR/TSYS system for and on behalf of PC  
1
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1
1
1
1
1
93  
94  
95  
96  
97  
98  
99  
February 1, 2022 Transcript, p 156, line 27 to p. 157, line 13.  
February 1, 2022 Transcript, p 154, lines 12-19.  
February 1, 2022 Transcript, p 159, lines 15-25.  
February 1, 2022 Transcript, p 169, line 19 to p 170, line 3.  
February 1, 2022 Transcript, p 181, lines 1-12.  
February 1, 2022 Transcript, p 181, lines 13-15.  
February 1, 2022 Transcript, p 151, lines 17-26.  
Page: 50  
Bank. This is the Respondent’s alternative argument. In my opinion, the  
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predominant element of this supply is described in Exclusionary Paragraph (r.3).  
The June 10 Technical Notes describe the scope of application of  
paragraph (r.3) as follows:  
New para. (r.3) is added to the definition to clarify that the definition “financial  
service” does not include a service of managing credit in respect of credit or charge  
cards, or in respect of credit accounts, charge accounts, loans accounts or accounts  
in respect of any advance, where the service is provided to a person granting, or  
prospectively granting, credit in respect of those cards or accounts. A service of  
managing credit includes a service provided to the person of:  
•
•
checking, evaluating or authorizing credit;  
making decisions on behalf of the person relating to a grant, or an application  
for a grant, of credit;  
•
creating or maintaining records for the person relating to a grant, or an  
application for a grant, of credit or in relation to the cards or accounts; or  
•
monitoring another person’s payment record, or dealing with payments made,  
201  
or to be made, by the other person.  
[Emphasis added.]  
The June 10 Technical Notes mirror, to a large extent, the final text of  
Exclusionary Paragraph (r.3).  
The language of paragraph (r.3) indicates that “managing credit” is broader in  
scope than what may be commonly understood by that expression. In a narrow sense,  
credit management refers to the process of granting credit to borrowers based on  
agreed-upon terms and conditions, recovering payment and ensuring that borrowers  
abide by the terms and conditions of their loans. The Appellant bases its argument  
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02  
on this narrow definition of “managing credit”.  
The services described in paragraph (r.3) are defined to include checking or  
authorizing credit; making decisions on behalf of the person in relation to a grant, or  
application for a grant, of credit; creating or maintaining records in connection with  
2
2
2
00  
01  
02  
Written Submissions of the Respondent re. FDR/TSYS Issue at paras 133-135.  
Written Submissions of the Respondent re FDR/TSYS Issue at para 60.  
Written Submissions of the Appellant re FDR/TSYS Issue at paras 143-144.  
Page: 51  
the foregoing (in the instant case, the records are stored in digital format); and  
monitoring another person’s payment record. Thus, the term “managing credit” for  
the purpose of paragraph (r.3) is broad.  
The Appellant argues that the FDR/TSYS supply falls outside of  
paragraph (r.3) on the basis that the “essential character of the supply provided by  
FDR and TSYS … is complex credit card processing and portfolio management”,  
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not “credit management”. In short, according to the Appellant, PC Bank could not  
conduct its business without the services offered by FDR/TSYS. Ms. Mody testified  
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04  
that without TSYS, PC Bank’s credit card business could not operate. While that  
is true, whether a service is essential or not or integral or not to a money-lending  
business is not a characteristic that precludes the application of paragraph (r.3).  
As noted above, the purpose of paragraph (r.3) is to exclude credit  
management services, described in a broad sense, from the “financial service”  
definition. Proper credit management is the lifeblood of all money-lending  
businesses. Poor credit management can lead to large loan losses and potential  
business failure.  
The main service offered by FDR/TSYS was the automated management and  
authorization of credit in real time, on behalf of PC Bank, based on the parameters  
and protocols established by PC Bank. These protocols included measures designed  
to detect credit fraud and to ensure that the terms and conditions under which PC  
Bank wishes to grant a credit card loan to a Cardholder are satisfied. All of this is  
done to avoid loan losses for PC Bank.  
The Appellant, in its written and oral submissions, relies a great deal on CIBC  
(Visa). In my opinion, the Appellant overlooks the fact that the Federal Court of  
Appeal was dealing principally with Exclusionary Paragraph (t), which excludes  
so-called “administrative services”. In addition, there are significant differences  
between the characteristics of services supplied by Visa in that decision and the  
FDR/TSYS supply in the instant case.  
In CIBC (Visa), at issue was whether CIBC paid GST in error on fees charged  
to it by Visa because Visa made an exempt supply of a “financial service”. The Tax  
Court judge held that Visa made a taxable supply of an “administrative service” and  
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05  
that Visa was not “a person at risk”. As I explained earlier, the Federal Court of  
2
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03  
04  
05  
Written Submissions of the Appellant re. FDR/TSYS Issue at paras 121-123, 137 and 143.  
February 1, 2022 Transcript, p 151, lines 10-15.  
As those terms are defined in section 4 of the Regulations.  
Page: 52  
Appeal reversed the decision of the Tax Court judge on the basis that he “committed  
a reversible error by making contradictory and irreconcilable findings concerning  
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06  
the nature and impact of the Visa supply.” As explained by the Federal Court of  
Appeal:  
[
56] … On one hand, he found (at paragraphs 92 and 95 of his reasons) that Visa’s  
services “form an essential part of the ability for CIBC to offer credit card based  
services to their clients,” and that they “[give] CIBC customers the ability to  
purchase goods and services anywhere in the world without CIBC having to  
individually contact each merchant to set up payment arrangements with them.” He  
added that “[i]f CIBC was forced to create such a payment network on its own,  
even if technically feasible, this network would invariably be much less widely  
accepted than the one offered by Visa.”  
[
57] On the other hand, in concluding (at paragraph 116) that the services provided  
by Visa were, like those considered in GWL TCC, “quintessentially administrative  
in nature,” the Tax Court judge stated that “[a]t its most basic level […], the benefit  
that Visa offered CIBC was cost saving and logistical simplification.”  
In deciding that the Visa credit card service was not analogous to the service  
provided by Emergis in Great-West, the Federal Court of Appeal reasoned as  
follows:  
[
63] In the face of this evidence and the evidence concerning the operation of the  
Visa payment system, I would find, consistent with the Tax Court judge’s findings  
at paragraphs 92 and 95 of his reasons, that Visa’s services “form an essential part  
of the ability for CIBC to offer credit card based services to their clients,” that they  
“[give] CIBC customers the ability to purchase goods and services anywhere in the  
world without CIBC having to individually contact each merchant to set up  
payment arrangements with them,” and that “[i]f CIBC was forced to create such a  
payment network on its own, even if technically feasible, this network would  
invariably be much less widely accepted than the one offered by Visa.” To this I  
would add that Visa’s services relieve CIBC and other issuers of the need to  
investigate and analyze the risk profile and solvency of the merchants that accept  
credit cards in payment for goods and services. To describe the benefit that CIBC  
obtained from Visa’s services as merely “cost saving and logistical simplification,”  
and on that basis to describe the services as “quintessentially administrative,” does  
not, in my view, adequately recognize the reality of the benefit that CIBC derived.  
[
64] Nor can it properly be said, in my view, that the Visa payment network differs  
from that provided by Emergis in GWL TCC only in scale and not in substance. In  
GWL TCC, the Tax Court was able to find that the supply by Emergis did not alter  
206  
CIBC (Visa), supra note 144 at para 4.  
Page: 53  
the substance of what was being done. As the evidence cited above makes clear,  
that is not the case here.  
[
65] These findings mean that all that is left as the basis for the Tax Court judge’s  
conclusion on “administrative service” is his finding that, like the system operated  
by Emergis, the Visa network operated “with minimal decision making involved.”  
But in my view, this factor is not capable on its own of supporting the conclusion  
that the Visa supply was an “administrative service,” particularly when Visa sets  
all of the rules of the payment network and maintains decision-making authority in  
the application of those rules.2  
07  
[Emphasis added.]  
The Federal Court of Appeal held that Visa made an exempt supply of a  
financial service and did not need to consider the alternative “person at risk”  
argument.  
The Appellant claims that paragraph (r.3) is inapplicable because this Court  
held in CIBC Visa that the services provided by Visa did not include “the  
2
08  
responsibility for authorizing the credit”. Credit card loan approvals were the  
responsibility of CIBC, the issuer of the card.  
Although not expressly stated, the Appellant appears to suggest that the same  
observation applies here because PC Bank, and not FDR or TSYS, is the one that  
establishes the terms and conditions and the circumstances under which credit card  
loans are made to Cardholders.  
I see nothing in the text of paragraph (r.3) that suggests that a service that  
consists of processing authorization requests via an automated system as agent for  
the issuer of a credit card is excluded under paragraph (r.3). In fact, the text and  
purpose of the provision suggest otherwise.  
Undoubtedly Parliament was aware of the fact that responsibility for credit  
management is an essential function for a moneylender. This authority is not the type  
that would be delegated to a third party as a principal unless the third party assumed  
the credit risk. To do so would create a misalignment between the lender, who  
assumes a risk by making the loan, and the third party, who does not bear such a risk  
in these circumstances. Therefore, in order for paragraph (r.3) to have meaning, I  
believe that the scope of paragraph (r.3) covers all services related to credit  
2
2
07  
08  
CIBC (Visa), supra note 144 at paras 63-65.  
Written Submissions of the Appellant re FDR/TSYS Issue at para 142.  
Page: 54  
management, including those undertaken by a third party on behalf of the issuer of  
a credit card.  
In my opinion, Parliament used exclusionary language in paragraph (r.3)  
because the Inclusionary Paragraphs, particularly paragraph (l), were interpreted  
expansively prior to the 2010 amendments.  
Outsourcing to third parties by financial service providers often takes place to  
achieve greater efficiency and cost savings. If the predominant elements of the  
outsourced service are described in an Exclusionary Paragraph, the consequence is  
that the supply is a taxable supply and the financial service provider that consumes  
the input in the making of exempt supplies of financial services must, at least  
initially, bear the GST as an expense. I surmise that PC Bank considered that the  
cost and efficiency savings attributable to the outsourcing of services to FDR and  
then to TSYS was of greater value than the GST that PC Bank self-assessed on the  
TSYS supply.  
Ms. Mody suggested that the substance or essence of the FDR/TSYS supply  
2
09  
could best be described as the brains of PC Bank’s credit management function.  
I
disagree. Unlike Visa, FDR/TSYS did not set the rules of the payment network and  
maintain decision-making authority in respect thereof; PC Bank did so by setting the  
parameters and protocols under which credit card transactions would be authorized  
by FDR and TSYS on its behalf. Nonetheless, it remains that the authorization of  
credit card loans by FDR/TSYS on behalf of PC Bank falls within the description of  
credit management services specifically included by Parliament under Exclusionary  
Paragraph (r.3). Data processing and record keeping services are also described in  
that paragraph.  
As a final observation on Ms. Mody’s testimony, I note that her statements  
regarding the importance of the FDR/TSYS services are inconsistent with the  
services as described in the key agreements. PC Bank set the terms and conditions  
under which it would allow credit card loans to be approved on its behalf. In these  
circumstances, I am inclined to place greater weight on my interpretation of the key  
agreements rather than on Ms. Mody’s somewhat embellished testimony.  
The FDR/TSYS services are significantly different than the attributes of the  
Visa services as noted by the Federal Court of Appeal in CIBC (Visa). CIBC (Visa)  
differs from the present appeals because Visa was not acting as agent for CIBC when  
209  
February 1, 2022 Transcript, p 151, lines 17-26.  
Page: 55  
it provided its services to CIBC. CIBC did not have the right to direct or control how  
Visa would provide services to it. In the present appeals, the evidence shows that the  
opposite is true. PC Bank sets the terms and conditions pursuant to which  
FDR/TSYS authorizes credit card loans on PC Bank’s behalf. Stated differently,  
Visa operated the Visa payment system based on the rules that it established; issuers  
2
10  
of Visa credit cards were obligated to follow these rules. This is not the case for  
the services prescribed by FDR/TSYS.  
CIBC (Visa) also differs from the present appeals because, although the  
Federal Court of Appeal did not have to decide whether Visa was a “person at risk”  
given that the service Visa supplied was not an “administrative service”, the  
evidence showed that Visa incurred significant payment obligations on its own  
behalf. As the Federal Court of Appeal explained, Visa was exposed to a variety of  
significant risks, including settlement risk, sovereign risk, foreign exchange risk, and  
2
11  
merchant risk. While CIBC bore fraud risk responsibility, Visa regularly analyzed  
and responded to fraudulent transactions and CIBC was required “to follow  
Visa-specified anti-fraud requirements and controls.”212  
In comparison to Visa, FDR/TSYS bore very little risk. The Appellant argued  
that TSYS “is liable for the full value of the contract—$80 million—in the event  
2
13  
that any of the data that it processes, stores, and analyses is leaked.” This is a  
standard indemnity that one would expect to be included in contracts where  
confidential information may be disclosed. It is worth noting that the indemnity that  
TSYS provided to PC Bank is included in a section of the TSYS Agreement that sets  
2
14  
out the limits to TSYS’s liability. The indemnity for breach of confidential  
information is limited to the value of the contracts or $80 million even though the  
loss suffered by PC Bank may very well be significantly greater.  
While the above factors are irrelevant to the determination as to whether  
Exclusionary Paragraph (r.3) applies to the FDR/TSYS services, I am inclined to  
believe that the FDR/TSYS services are also excluded from the definition of a  
“financial service” by virtue of paragraph (t). Needless to say, this is relevant only  
if I am wrong regarding the application of paragraph (r.3).  
2
2
2
2
2
10  
11  
12  
13  
14  
CIBC (Visa), supra, note 144 at para 14.  
CIBC (Visa), supra, note 144 at paras 19 and 23.  
CIBC (Visa), supra, note 144 at para 25.  
Written Submissions of the Appellant re FDR/TSYS Issue at para 174.  
Exhibit A2: TSYS Agreement, JBOD, vol 3, Tab 26 at p 854.  
Page: 56  
For all of these reasons, PC Bank’s appeals as they relate to the FDR/TSYS  
Issues are dismissed.  
V. SUMMARY  
In summary, PC Bank’s appeals are allowed in part only. The reassessments  
are returned to the Minister for reconsideration and reassessment to allow solely the  
followings adjustments:  
-
-
-
PC Bank is entitled to a reduction of the GST/HST assessed by the  
Minister, the whole in accordance with the Consent to the Order  
attached hereto as Appendix III.  
PC Bank is entitled to additional operational ITCs of $88,674 in the  
2
009 Period pursuant to subsection 169(1) of the Act in accordance  
with the parties’ agreement as set out in paragraph 53 of the PASF.  
PC Bank is entitled to a rebate for tax paid in error in the 2011 Period  
under subsection 296(2.1) of the Act in the amount of $556,1363.01, in  
accordance with the parties’ agreement as set out in paragraph 54 of the  
PASF.  
Signed at Magog, Québec, this 19th day of July 2022.  
“Robert J. Hogan”  
Hogan J.  
Appendix I  
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Appendix II  
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Appendix III  
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Appendix IV  
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CITATION:  
2022 TCC 84  
COURT FILE NOS.:  
2017-3925(GST)G  
2
017-3931(GST)G  
STYLE OF CAUSE:  
PRESIDENT’S CHOICE BANK v HER  
MAJESTY THE QUEEN  
PLACE OF HEARING:  
DATE OF HEARING:  
Ottawa, Ontario  
January 31 and February 1, 2, 9 and 14,  
2
022  
REASONS FOR JUDGMENT BY: The Honourable Justice Robert J. Hogan  
DATE OF JUDGMENT:  
APPEARANCES:  
July 19, 2022  
Counsel for the Appellant:  
Chia-yi Chua  
Anu Koshal  
Pierre-Gabriel Grégoire  
Counsel for the Respondent: Justine Malone  
Lindsay Tohn  
COUNSEL OF RECORD:  
For the Appellant:  
Name:  
Firm:  
Wendy Brousseau  
Chia-yi Chua  
McCarthy Tétrault LLP  
6
6 Wellington Street West, Suite 5300  
TD Bank Tower  
Page: 2  
Box 48  
Toronto, Ontario  
M5K 1E6  
For the Respondent:  
François Daigle  
Deputy Attorney General of Canada  
Ottawa, Canada  


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