Listen to this story
RICHMOND, British Columbia — The Canadian Automobile Dealers Association (CADA) announced this week that it has won a major tax case involving harmonized sales tax (HST) and insurance, the RV Dealers Association of Canada reported.
The case findings will have an impact on RVDA dealer members that provide insurance products to customers. CADA is the national association representing franchised new car dealers in Canada.
CADA’s Legal Action Fund supported a dealer case before Federal Tax Court which involved a dealer who had been assessed for HST on insurance commissions received.
CADA’s legal position is that the insurance commissions received by their dealers are HST-exempt similar to the fees received for “arranging for” a financial service. In contrast, the Canada Revenue Agency’s (CRA) position has been that HST applies to insurance commissions received by dealers.
Specifically, CADA supported the case involving a dealer, Applewood Holdings. The case was heard by the Tax Court of Canada in early November. In mid November, the tax court released its judgment agreeing that the insurance commissions were HST-exempt.
Importantly, CRA had until mid-December 2018 to appeal the decision to the Federal Court of Appeal.
This week the RVDA of Canada has been in contact with CADA, as the association announced that CRA has chosen not to appeal the Applewood case to the Federal Court of Appeal.
While each tax case is fact specific, this important and highly significant ruling by the Federal Tax Court should provide clarity for CRA actions on insurance for RVDA dealers facing similar audits, the release noted.
The RVDA of Canada will now continue to work with CRA officials to ensure clarity on this file and to make sure that auditors are well informed.
SOURCE: RV Dealers Association of Canada bulletin