[2012] 1 F.C.R. D-1
Customs and Excise
Excise Tax Act
Appeal from Tax Court of Canada decision (T.C.C.) (2010 TCC 358) dismissing appeal from assessment of appellant relat-ing to goods and services tax—Appellant agri-tourism business interested in beekeeping, operating trails providing setting for engaging in outdoor activities—User having to purchase farm product through purchase of tickets to access trails—T.C.C. con-cluding Excise Tax Act, R.S.C., 1985, c. E-15, s. 138 applying, appellant mainly providing recreational, tourism service (taxable supply), sale of honey merely incidental (presumed part of first supply, thus becoming taxable)—T.C.C. taking into account disproportion between price of first ticket, real value of appellant’s honey, advertising campaigns highlighting recreational activities, infrastructure—Whether s. 138 applying herein—Separate transactions could have applied to appellant’s farm products, trails—Services offered by appellant not so closely integrated that services cannot be usefully separated—First condition of section 138 thus met—T.C.C. having to state legal standard guiding reasoning before analysing evidence—S. 138 referring to secondary element in sense of minor or non-essential—To fulfill second condition, not enough for supply or service to be secondary, must also be of small value in relation to principal activity—Comparison between nature, scope of activities available upon purchase of ticket suggesting apiary aspect of transaction secondary to recreational, touristic aspect—However, production costs for honey too significant to be considered small in comparison to price of first ticket—T.C.C. erring in not accepting those factors in analysis of s. 138 applicability—Facts sufficiently rebutting respondent’s assumption that farm products obtained incidentally to payment of admission fees—S. 138 not applicable in case at bar—Appeal allowed.
9056-2059 Québec Inc. v. Canada (A-286-10, 2011 FCA 296, Trudel J.A., judgment dated October 25, 2011, 19 pp.)