The RVDA of Canada says this week’s victory of the Canadian Automobile Dealers Association (CADA) in a major tax case will affect their dealer members who provide insurance products to their customers.
The victory comes in a case, supported by CADA’s Legal Action Fund, involving a dealer who had been assessed for HST on commissions received on insurance sales.
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. This is in contrast to the CRA’s position that HST does apply to insurance commissions received by dealers.
The case was heard by the Tax Court of Canada in early November 2018. 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, explained the RVDA in a release.
The RVDA of Canada says this ruling is extremely important for their dealer members who are facing similar audits. The organization says that while all tax cases are specific to their own individual facts, this ruling is highly significant.
The organization says they will continue to work with CRA officials to ensure clarity on this matter going forward and to ensure that future auditors are informed of the ruling.