Digests

CUSTOMS AND EXCISE

Excise Tax Act

Goods and services tax—Input tax credits—Appeals from Tax Court of Canada decisions (2009 TCC 25) holding appellants not entitled to input tax credits (ITCs) claimed pursuant to Excise Tax Act, R.S.C., 1985, c. E-15 (ETA), s. 174, with respect to moving allowances paid to employees—According to relocation policy, appellants, in addition to paying, reimbursing direct moving expenses incurred by relocated employees, paying employees moving allowance up to maximum of 15% of salary to compensate for incidental expenses—With exception of first $650 of allowance paid, use of allowances at complete discretion of employees, therefore taxable as benefit from employment pursuant to Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1 (ITA), s. 6(1)(b)—Appellants deducting allowances in computing their income pursuant to relevant provisions of ITA—Minister of National Revenue denying claimed ITCs—Tax Court Judge holding claimed ITCs barred by operation of ETA, s. 170(1)(b) since allowances in question intended for exclusive personal use, consumption of employees—Whether requirement set out in ETA, s. 170(1)(b) applying to claim for ITCs made pursuant to ETA, s. 174—Although ETA, ss. 170, 174 dealing with situations seemingly analogous, clear from distinct schemes under which they operate that intended to apply separately by reference to own conditions—Requirements set out in s. 170 thus not applying to claim under section 174—Not open for Tax Court Judge to disallow claim by reference to requirements other than those set out in ETA, s. 174—Requirements set out in ETA, s. 174(a)(iv) not met on facts herein given that supplies of property, services allowances intended to fund were for exclusive personal use of employees, thus not relating to appellants’ activities—Appeals dismissed

ExxonMobil Canada Ltd. v. Canada (A-114-09, A-113-09, 2010 FCA 1, Noël J.A, judgment dated January 5, 2010, 39 pp.)