Canadian Imperial Bank of Commerce v. The King

Canadian Imperial Bank of Commerce v. The King Court (s) Database Tax Court of Canada Judgments Date 2024-12-18 Neutral citation 2024 TCC 160 File numbers 2014-4581(GST)G Judges and Taxing Officers Don R. Sommerfeldt Subjects Part IX of the Excise Tax Act (GST) Decision Content Docket: 2014-4581(GST)G BETWEEN: CANADIAN IMPERIAL BANK OF COMMERCE, Appellant, and HIS MAJESTY THE KING, Respondent. Appeals heard on January 29‑30, 2024 and February 5, 2024 at Toronto, Ontario Before: The Honourable Justice Don R. Sommerfeldt Appearances: Counsel for the Appellant: Al Meghji Carly Fidler Roger Smith Leandra Gupta Counsel for the Respondent: Craig Maw Janice Liu Jesse Toma JUDGMENT Having considered the evidence and the submissions presented by the parties, and in accordance with the attached Reasons for Judgment (the “Reasons”), IT IS ADJUDGED THAT: The Appeals from the reassessments made under the Excise Tax Act (the “ETA”) in respect of the Appellant’s reporting periods ending on October 31, 2006 and October 31, 2007 are allowed, and those reassessments are referred back to the Minister of National Revenue for reconsideration and reassessment on the basis that the Appellant is not liable for the penalties that were assessed. The Appeal from the reassessment made under the ETA in respect of the Appellant’s reporting period ending October 31, 2008 is dismissed. No costs are awarded to either party. Signed at Ottawa, Canada, this 18th day of December 2024. [1] “Don R. Sommerfeldt” Sommerfeldt J. Citation: 2024 TCC 160 Date: 20241218 Docket: 2014-4581(GST)G BETWEEN: CANADIAN IMPERIAL BANK OF COMMERCE, Appellant, and HIS MAJESTY THE KING, Respondent. REASONS FOR JUDGMENT Sommerfeldt J. I. INTRODUCTION [1] These Reasons pertain to the Appeals instituted by the Canadian Imperial Bank of Commerce (“CIBC”), pursuant to section 306 of the Excise Tax Act (the “ETA”),[2] in respect of three reassessments (the “Reassessments”), each dated June 24, 2016, for three annual reporting periods (the “Reporting Periods”), ending on October 31, 2006, October 31, 2007 and October 31, 2008, respectively. II. BACKGROUND [2] At the commencement of the trial, the parties filed a Partial Agreed Statement of Facts (the “PASF”),[3] which I have summarized in these Reasons. [3] At the commencement of the trial, the parties also filed a four‑volume Joint Book of Documents (the “JBD”).[4] [4] At all material times: (a)CIBC was a Schedule I bank pursuant to the Bank Act;[5] (b)CIBC was registered under Part IX of the ETA; and (c)CIBC was a financial institution, a listed financial institution and a selected listed financial institution (as each of those terms is defined in the ETA).[6] [5] CIBC has three main lines of business, one of which is retail and business banking. Among other things, CIBC provides services in respect of money lending, deposit taking, credit cards, investment and related activities.[7] [6] During the Reporting Periods, Visa Canada Corporation (or a predecessor) and affiliates (collectively, “Visa Canada”) operated a credit card payment system (the “Visa Payment System”).[8] As a credit card issuing bank (an “Issuer”) under the Visa Payment System, CIBC was a direct Visa‑member for the purposes of that system. As such, CIBC had a business identification number (a “BIN”) under the system.[9] [7] CIBC issued credit cards (“Visa Cards”), under the Visa Payment System, to its customers (hereafter referred to as “Cardholders”). At all material times, CIBC issued Visa Cards to only Canadian residents with a Canadian address.[10] [8] Global Payments Direct, Inc. (“GPDI”) (formerly known as National Data Payment Systems, Inc.), a corporation incorporated under the laws of New York State, had its headquarters in Atlanta, Georgia. During the Reporting Periods, GPDI was a non‑resident person.[11] GPDI earned revenue by providing transaction processing and payment services to merchants, in exchange for which the merchants paid merchant discount fees to it.[12] [9] Before March 20, 2001, CIBC carried on an acquirer business.[13] Pursuant to a number of merchant agreements, CIBC provided processing and payment services to various merchants located in Canada.[14] [10] Effective March 20, 2001, GPDI acquired CIBC’s merchant acquiring business and its merchant agreements, and began to provide processing and payment services to the applicable merchants in Canada.[15] [11] As GPDI was not a direct Visa‑member, to access the Visa Payment System, it required a financial institution sponsor, which was a direct Visa‑member.[16] Consequently, it was a condition of the sale of CIBC’s merchant agreements and acquirer business that CIBC would enter into a BIN sponsorship arrangement with GPDI,[17] which it did. To this end, CIBC filed the appropriate documents with Visa Canada.[18] [12] Pursuant to a Marketing Alliance Agreement, dated March 20, 2001, between CIBC and GPDI, CIBC permitted GPDI to use CIBC’s BIN for the purpose of providing its processing and payment services to merchants in respect of Visa Card transactions.[19] Pursuant to a private arrangement between CIBC and GPDI, GPDI agreed to pay interchange fees to CIBC as consideration for the authorization and payment services (“interchange services”) that CIBC provided to GPDI.[20] [13] After March 20, 2001, GPDI carried on the acquirer business previously carried on by CIBC. In addition, GPDI negotiated and entered into new merchant agreements with other merchants in Canada.[21] [14] The PASF sets out an example, which illustrates the general steps that were involved in a CIBC Visa Card purchase transaction during the Reporting Periods. In the example, the total purchase price (inclusive of any applicable taxes), payable by the holder of a CIBC Visa Card (the “Cardholder”) to a merchant, is $100.00 in Canadian currency. The steps are: (a)The Cardholder presented the CIBC Visa Card to the merchant in payment for goods or services totalling $100.00 (tax included). (b)The merchant’s point‑of‑sale device read and transmitted, to GPDI, the Cardholder’s CIBC Visa Card account number, the date of the transaction, the amount of the transaction (the “Amount”) (i.e., $100.00) and a name or other identifier of the merchant. (c)GPDI combined the Cardholder account and transaction information into an authorization request and transmitted the authorization request to Visa Canada using CIBC’s BIN. (d)Visa Canada routed the authorization request to CIBC, as the Issuer, for review. (e)CIBC checked the status of the Cardholder’s account, including the available credit limit, and returned an approval message or a decline message to Visa Canada. (f)Visa Canada routed the approval or decline message to GPDI through GPDI’s access to CIBC’s BIN. (g)GPDI transmitted the approval or decline message to the merchant’s point‑of‑sale device. (h)If CIBC (as Issuer) approved the transaction, the merchant proceeded to conclude the transaction with the Cardholder. (i)At the end of the day, the merchant transmitted to GPDI a record of the completed transaction (the “Transaction Record”), which included information, such as the date of the transaction, the Amount (i.e., $100.00) and a name or other identifier of the merchant. (j)GPDI formatted the Transaction Record into a clearing record and combined all such records into a single daily batch file to send to Visa Canada, using CIBC’s BIN. (k)Visa Canada sorted the clearing records and provided CIBC with the clearing records for the transactions for which CIBC was the Issuer. Visa Canada calculated and advised CIBC of the net settlement amount payable by CIBC in respect of the transactions, being an amount equal to the Amount (e.g., $100.00) for each transaction, net of the applicable default interchange fee (e.g., $1.50) payable by the merchant acquirer, GPDI, for each transaction. (l)CIBC forwarded funds to Visa Canada’s designated settlement bank for deposit to Visa Canada’s settlement account in the amount of the net settlement amount (i.e., $98.50). (m)Visa Canada directed its settlement bank to transfer funds ($98.50) to CIBC’s designated settlement account, as CIBC was the Visa‑member for GPDI. (n)CIBC paid the funds to GPDI. (o)The merchant was paid the Amount (i.e., $100.00). (p)GPDI invoiced the merchant for the merchant discount fee (e.g., $2.00) for its services to the merchant. Merchants were generally invoiced on a monthly basis. (q)CIBC, as the Issuer, posted the transaction to the Cardholder’s Visa Card account with CIBC. CIBC subsequently provided the Cardholder with a statement of account detailing the Amount for each transaction posted to the Cardholder’s account during the period covered by the statement and specifying a balance due date. (r)The Cardholder paid CIBC the balance shown on the account statement. If the Cardholder did not pay the balance shown on the account statement in full by the specified due date, the Cardholder was charged interested by CIBC.[22] [15] In the above example, GPDI’s net revenue would be $0.50, representing the merchant discount fee of $2.00, less the interchange fee of $1.50. In preparing its financial statements, CIBC would report the interchange fee of $1.50 as revenue.[23] [16] The amounts of the interchange fees paid by GPDI to CIBC for the Reporting Periods, as consideration for the interchange services, were: (a)$121,151,660 for the 2006 taxation year; (b)$127,942,924 for the 2007 taxation year; and (c)$142,836,438 for the 2008 taxation year.[24] [17] For the purposes of these Appeals, all of the relevant Visa Card transactions occurred at merchant locations in Canada.[25] [18] A merchant which contracted with GPDI for Visa‑related processing and payment services was required to maintain a bank account with CIBC, as its designated financial institution for its credit‑card receivables.[26] [19] At the trial, Rachel Brandes, Visa’s vice‑president, finance and chief financial officer, testified as a witness called by the Crown. She stated that CIBC (as a Visa member issuer and a Visa member acquirer of record) and GPDI (as CIBC’s agent processor and a non‑Visa licensee) were both required to comply with the Visa rules. Under those rules, with limited exceptions: (a)Canadian issuers were prohibited from issuing credit cards or marketing Cardholders outside of Canada; (b)Canadian acquirers were limited to providing acquiring services to merchants inside Canada; and (c)in the context of the Visa Payment System and CIBC’s participation therein, GPDI, as CIBC’s agent processor, could not acquire merchant business outside of Canada.[27] [20] On March 20, 2001, GPDI entered into a credit facility (the “Credit Facility”) with CIBC’s New York agency.[28] On November 19, 2001, GPDI entered into an amended and restated Credit Facility with a syndicate of US banks, which included CIBC’s New York agency and seven or more other well‑known banks. This Credit Facility had two components: (a) a revolving line of credit of up to $100,000,000 provided by the syndicate of US banks (the “Tranche A Facility”), and (b) a revolving line of credit of up to $75,000,000 provided by CIBC’s New York agency (the “Tranche B Facility”).[29] [21] On November 18, 2005, the Credit Facility was amended to terminate the Tranche A Facility, and to make CIBC Inc. the provider of the Tranche B Facility.[30] On November 16, 2006, the Credit Facility was amended to reduce the Tranche B Facility to $25,000,000.[31] Throughout the Reporting Periods, CIBC was the administrative agent of the Credit Facility.[32] [22] During the Reporting Periods, the Tranche B Facility was utilized twice, as follows: (a)the amount of $1,161,226.54 was utilized on June 30, 2006, and repaid on July 4, 2006; and (b)the amount of $54,279.87 was utilized on August 31, 2006, and repaid on September 1, 2006.[33] [23] In its business, CIBC made both taxable (including zero‑rated) supplies and exempt supplies. For the purpose of making those supplies, CIBC acquired business inputs, and incurred the goods and services tax (“GST”) or the harmonized sales tax (“HST”) in respect of those inputs.[34] [24] For a business input that was used in making both taxable and exempt supplies, CIBC prorated the GST/HST in respect of that input, so as to determine the proportion of that GST/HST that related to the taxable supplies. To estimate the portion of the use of the input that related to taxable supplies, CIBC determined the percentage that the revenue from its taxable supplies was of its total revenue from all supplies (i.e., both taxable (including zero‑rated) and exempt supplies).[35] [25] In filing its returns under the ETA for the Reporting Periods, CIBC took the position that its supplies of interchange services to GPDI were zero‑rated supplies,[36] and thus, taxable supplies. Therefore, CIBC included the above interchange fees in calculating the amount of its revenue from its taxable supplies. This increased the amount of the input tax credits (“ITCs”) claimed by CIBC. [26] The Minister of National Revenue (the “Minister”), as represented by the Canada Revenue Agency (the “CRA”), disagreed with CIBC’s position, and reassessed on the basis that the supplies of the interchange services were exempt supplies. For the purpose of determining the percentage that CIBC’s revenue from its taxable supplies was of its total revenue from all supplies, the CRA treated the interchange fees as revenue from CIBC’s exempt supplies, rather than as revenue from its taxable supplies.[37] III. ISSUES [27] The broad issue in these Appeals is whether the supplies of the interchange services that gave rise to the interchange fees were zero‑rated supplies or exempt supplies. That broad issue, in turn, invokes a more precise issue: Do any of the five exceptions in section 1 of Part IX of Schedule VI to the ETA apply to the interchange services supplied by CIBC to GPDI? IV. ANALYSIS A. Statutory Provisions [28] Subsection 169(1) of the ETA provides that an ITC is available where a registrant incurs GST/HST, upon acquiring a property or a service, but only to “the extent (expressed as a percentage) to which the [registrant] acquired … the property or service … for consumption, use or supply in the course of commercial activities of the [registrant] [emphasis added].”[38] As well, where a registrant acquires a property or a service for use in improving capital property of the registrant, and incurs GST/HST, an ITC may be available, but only to “the extent (expressed as a percentage) to which the [registrant] was using the capital property in the course of commercial activities of the [registrant] immediately after the capital property or a portion thereof was last acquired … by the [registrant] [emphasis added]”.[39] [29] The definition of commercial activity in subsection 123(1) of the ETA specifically excludes the making of exempt supplies. Therefore, if the supplies by CIBC of the interchange services were exempt supplies, it would not be appropriate, for the purpose of the prorata calculation described in paragraphs 24 and 26 above, to include the interchange fees in CIBC’s revenue from its taxable supplies. [30] Subsection 123(1) of the ETA defines an exempt supply as a supply included in Schedule V to the ETA, and a zero‑rated supply as a supply included in Schedule VI to the ETA. [31] Section 1 of Part VII of Schedule V to the ETA provides that an exempt supply includes a supply of a financial service that is not included in Part IX of Schedule VI to the ETA. [32] Section 1 of Part IX of Schedule VI to the ETA provides that a supply of a financial service (other than a supply that is included in section 2 of Part IX of Schedule VI to the ETA[40]) made by a financial institution to a non‑resident person is a zero‑rated supply, unless any of five stated exceptions is applicable. Section VI‑IX‑1 of the ETA reads as follows: 1. A supply of a financial service (other than a supply that is included in section 2) made by a financial institution to a non‑resident person, except where the service relates to (a) a debt that arises from (i) the deposit of funds in Canada, where the instrument issued as evidence of the deposit is a negotiable instrument, or (ii) the lending of money that is primarily for use in Canada; (b) a debt for all or part of the consideration for a supply of real property that is situated in Canada; (c) a debt for all or part of the consideration for a supply of personal property that is for use primarily in Canada; (d) a debt for all or part of the consideration for a supply of a service that is to be performed primarily in Canada; or (e) a financial instrument (other than an insurance policy or a precious metal) acquired, otherwise than directly from a non‑resident issuer, by the financial institution acting as a principal. [33] Subsection 123(1) of the ETA defines the term financial service. The relevant portions of that definition are: “financial service” means (a) the exchange, payment, issue, receipt or transfer of money, whether effected by the exchange of currency, by crediting or debiting accounts or otherwise, … (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)…. B. Acknowledgments by the Crown [34] The Crown now acknowledges that: (a)the interchange services were financial services;[41] and (b)during the Reporting Periods, GPDI was a non‑resident person, for the purposes of section VI‑IX‑1 of the ETA.[42] [35] When the Crown, in February 2016, filed its initial Reply (the “2016 Reply”) in respect of these Appeals, it had a particular theory of the case, which was based on certain assumptions of fact made by the Minister and pleaded by the Crown in the 2016 Reply. On three subsequent occasions (once in October 2018 and twice in January 2020), which each occurred shortly before the trial of the Appeals was scheduled to begin, the Crown changed its theory of the case, necessitating adjournments of the trial and the drafting of amended pleadings. [36] In its amended pleadings (i.e., the Amended Reply to the Fresh as Amended Notice of Appeal (the “2019 Reply”), which was filed on April 1, 2019, and the Fresh as Amended Reply to the Fresh as Amended Notice of Appeal (the “2020 Reply”), which was filed on January 31, 2020), to support its evolving theories of the case, the Crown pleaded a number of additional facts, that had not been assumed by the Minister when assessing, reassessing or confirming, and that had not been pleaded by the Crown in the 2016 Reply. Consequently, the Crown bears the burden of proof in respect of those additional facts.[43] [37] The CRA did not make the acknowledgments set out in paragraph 34 above until sometime in the course of the examinations for discovery and the satisfaction of its undertakings. C. Positions of the Parties (1) Section VI‑IX‑1 and its Exceptions [38] CIBC’s position is that the supplies of the interchange services made by CIBC to GPDI, during the Reporting Periods, came within section VI‑IX‑1 of the ETA, and that none of the five exceptions in that section were applicable. [39] The Crown takes the position that, although CIBC supplied the interchange services to a non‑resident person, those services came within one or more of three particular exceptions carved out of section VI‑IX‑1 of the ETA. Those three exceptions (“carve‑outs”) are set out in subparagraph (a)(ii) and paragraphs (c) and (d) of section VI‑IX‑1. (2) Alleged Debts [40] The carve‑outs in section VI‑IX‑1 of the ETA refer to financial services that relate to debts described in the five paragraphs in that section. As noted above, the Crown is relying on only three of the carve‑outs. The Crown has identified five debts, which it described in the 2020 Reply, and which it claims came within one or more of the three designated carve‑outs. In its written submissions, CIBC has labelled and described each of those debts, as follows:[44] (a)Debt #1, which was the debt owed by a Cardholder to CIBC, having arisen from the Cardholder’s use of a Visa Card to purchase a property or a service, which, the Crown says, constituted the lending of money by CIBC to the Cardholder.[45] (b)Debt #2, which was the debt owed by GPDI to CIBC by reason of GPDI’s having used the Credit Facility.[46] (c)Alleged Debt #3, which was the debt allegedly owed by CIBC to GPDI as a result of CIBC’s obligation to pay the net settlement amount to GPDI, pursuant to the Marketing Alliance Agreement.[47] (d)Alleged Debt #4, which was the debt allegedly owed by GPDI to the merchant as a result of GPDI’s obligation to pay the settlement amount to the merchant, pursuant to the applicable merchant agreement.[48] (e)Alleged Debt #5, which was the debt allegedly owed by CIBC to Visa Canada in respect of CIBC’s obligation under the Visa rules to pay Visa Canada in the event that GPDI defaulted on its obligations to the merchant.[49] [41] In these Reasons, I will focus on Debt #1. D. Principles of Statutory Interpretation [42] In Canada Trustco, the Supreme Court of Canada, in confirming the applicable principles of statutory interpretation, stated the following: The interpretation of a statutory provision must be made according to a textual, contextual and purposive analysis to find a meaning that is harmonious with the Act as a whole. When the words of a provision are precise and unequivocal, the ordinary meaning of the words play a dominant role in the interpretive process. On the other hand, where the words can support more than one reasonable meaning, the ordinary meaning of the words plays a lesser role.[50] The above comment was made in respect of the Income Tax Act (the “ITA”),[51] but it is equally applicable to the ETA. [43] In my analysis of section VI‑IX‑1 of the ETA, I will begin by discussing the text of that provision, particularly subparagraph (a)(ii) thereof. I will then turn to a consideration of that provision’s context and purpose. E. Textual Discussion (1) Meaning of relates to [44] Each of the carve‑outs relied on by the Crown describes a particular type of debt. The initial portion of section VI‑IX‑1 of the ETA, which precedes the enumeration of the five types of debt that are carved out, indicates that, for a supply of a financial service to be carved out, the particular service must relate to one of the specified types of debt. Thus, one of the questions to be considered is the breadth of the phrase relates to, and variations thereof, such as relate to, related to, relating to and in relation to. [45] In Slattery,[52] the Supreme Court of Canada considered the scope of the phrases in respect of and relating to, which, in that case, were used in subsection 241(3) of the ITA. Subsection 241(1) of the ITA prohibited government officials and representatives from disclosing taxpayer information, and subsection 241(2) provided that government officials and representatives could not be compelled, in connection with any legal proceedings, to disclose taxpayer information. Subsection 241(3) stated that subsections 241(1) and (2) “do not apply in respect of … any legal proceedings relating to the administration or enforcement of” the ITA and other named or referenced statutes. [46] Justice Iacobucci made the following comments about the broad scope of those two connecting phrases: The connecting phrases used by Parliament in s. 241(3) are very broad. The confidentiality provisions are stated not to apply in respect of proceedings relating to the administration or enforcement of the Income Tax Act. The phrase “in respect of” was considered by this Court in Nowegijick v. The Queen, [1983] 1 S.C.R. 29, at p. 39: The words “in respect of” are, in my opinion, words of the widest possible scope. They import such meanings as “in relation to”, “with reference to” or “in connection with”. The phrase “in respect of” is probably the widest of any expression intended to convey some connection between two related subject matters. [Emphasis added.] [The statement in the preceding set of brackets was inserted by Justice Iacobucci.] In my view, these comments are equally applicable to the phrase “relating to”. The Pocket Oxford Dictionary (1984) defines the word “relation” as follows: . . . what one person or thing has to do with another, way in which one stands or is related to another, kind of connection or correspondence or contrast or feeling that prevails between persons or things; . . . So, both the connecting phrases of s. 241(3) suggest that a wide rather than narrow view should be taken when considering whether a proposed disclosure is in respect of proceedings relating to the administration or enforcement of the Income Tax Act. This breadth of meaning is confirmed when one examines the French version of the section. The French version of s. 241(3) reads as follows: 241. . . . (3) Les paragraphes (1) et (2) ne s’appliquent ni aux poursuites au criminel, sur acte d’accusation ou sur déclaration sommaire de culpabilité, engagées par le dépot d’une dénonciation, en vertu d’une loi fédérale, ni aux poursuites ayant trait à l’application ou à l’exécution de la présente loi … [Emphasis added.] [The statement in the preceding set of brackets was inserted by Justice Iacobucci.] The phrase “ayant trait à” is defined in the Larousse dictionary Dictionnaire de la langue française (1989) as: “Avoir trait à : avoir un rapport avec”. The dictionary Le Robert Méthodique (1988) defines the phrase as: “Avoir trait à: Se rapporter à … V. Rapport”. And the same dictionary defines the word “rapport” as meaning “Lien, relation”. Consequently, the French version of s. 241(3) is as broad as the English version.[53] [47] The French version of section VI‑IX‑1 of the ETA reads as follows: 1. La fourniture d’un service financier, à l’exception d’une fourniture figurant à l’article 2, effectuée par une institution financière au profit d’une personne non résidante, sauf s’il est lié à ce qui suit: a) une dette qui découle: (i) soit du dépôt de fonds au Canada, si l’effet faisant foi du dépôt est négociable, (ii) soit du prêt d’argent à utiliser principalement au Canada; b) une dette pour tout ou partie de la contrepartie de la fourniture d’un immeuble situé au Canada; c) une dette pour tout ou partie de la contrepartie de la fourniture d’un bien meuble à utiliser principalement au Canada; d) une dette pour tout ou partie de la contrepartie de la fourniture d’un service à exécuter principalement au Canada; e) un effet financier, sauf une police d’assurance ou un métal précieux, acquis, autrement que directement d’un émetteur non-résident, par l’institution financière agissant à titre de mandant. [48] The connecting phrase used in the French version of section VI‑IX‑1 is est lié à. The word lié is the past participle of the verb lier, which means, not only to bind, to tie up, but also to link up, to join up.[54] The words lier and lien are derived from the same Latin root, ligare,[55] meaning to tie or bind something together.[56] Notably, in the above quotation from Slattery, Justice Iacobucci indicated that the French words rapport, lien and relation have a similar meaning, that the phrases avoir un rapport avec and avoir trait à have a similar meaning, and that the French phrase ayant trait à and the English phrase relating to have an equivalent meaning.[57] [49] Accordingly, it is my view that the phrases relates to and est lié à, which are used in the English and French versions respectively of section VI‑IX‑1, have an equally broad meaning. [50] In Stantec, Justice Campbell Miller noted that, in Slattery, the Supreme Court, taking an “expansive approach”, had suggested that the phrase in relation to “implies a wide, rather than narrow, view in connecting two matters.”[58] He went on to say the following about the nexus or connection between the two matters: … the connection need not be one of a primary nor substantial nor directly related nature. The concept of “in relation to” is not one of prominence let alone exclusivity.[59] [51] In Miedzi Copper, Justice Paris stated that Justice Miller’s comments in Stantec concerning the phrase in relation to are also applicable to the phrase related to.[60] [52] In Mac’s Convenience Stores, Justice Hogan explored the meaning of the phrase relate to, as it appears in subsection 185(1) of the ETA. In simplified terms, subsection 185(1) “allows a registrant that ‘is neither a listed financial institution nor a person who is a financial institution because of paragraph 149(1)(b)’ … to claim ITCs for property or services consumed or used by it ‘in the course of making supplies of financial services that relate to commercial activities of the registrant’ [emphasis in the original].”[61] [53] Justice Hogan stated the following about the meaning of the word relate and the phrases in relation to and, by extension, relate to: 49. The ordinary meaning of the word “relate” favours the appellant’s position. For example, The Canadian Oxford Dictionary defines the word “relate” as follows: Relate, verb 3. (usu. foll. by to, with) bring into relation with (with one another); establish a connection between (cannot relate your opinion to my own experience). 50. In Nowegijick v. The Queen, the SCC held that the phrase “in respect of” has the widest possible scope. Interestingly, in coming to this conclusion the SCC stated … that the words import such meanings as “in relation to”, “with reference to” or “in connection with”. The SCC, in Slattery, discussed the definition of “in respect of” and “relating to” in the context of subsection 241(3) of the … ITA. The SCC held that the comments in Nowegijick on “in respect of” are equally applicable to the phrase “relating to”…. [Justice Hogan then quoted a brief passage from the Slattery case, which is part of the quotation from that case set out above.] In light of those cases, a registrant needs only to establish that there is some connection between the making of a supply of a financial service in respect of which ITCs are claimed and the registrant’s other commercial activities. The financial services do not have to be found to be ancillary or incidental to the appellant’s other activities in order to qualify for the favourable treatment provided for in subsection 185(1). The threshold is much lower than that suggested by the respondent.[62] [Footnotes omitted.] [54] Thus, in the context of CIBC’s Appeals, Mac’s Convenience Stores suggests that, for a carve‑out in section VI‑IX‑1 of the ETA to be applicable, there only needs to be “some connection” between the interchange services and the debt described in the carve‑out, and the interchange services do not need to be ancillary or incidental to the debt. The Slattery, Stantec and Miedzi Copper cases indicate that the phrases relating to, in relationship to, and, by extension, relates to, are to be given a wide or broad interpretation, and that a narrow view is to be avoided. Hence, in the context of section VI‑IX‑1 of the ETA, the connection between the interchange services and the particular debt need not be of a primary, substantial or directly related nature. [55] As noted above, paragraph 26 of the Partial Agreed Statement of Facts (defined above as the “PASF”) provides an example to illustrate the general steps that were involved in a CIBC Visa Card purchase transaction during the Reporting Periods. The example itemizes 18 separate steps, beginning with step (a), i.e., a Cardholder presenting a CIBC Visa Card to a merchant in payment of the price of goods or services, and ending with steps (q) and (r), i.e., CIBC posting the transaction to the Cardholder’s account and providing a statement of account to the Cardholder, after which, as the final step, the Cardholder pays the balance in full or becomes liable for interest in respect of any unpaid balance.[63] [56] Between the first and the last of the above steps, there are other intermediate, intertwined steps, involving CIBC, the Cardholder, the merchant, GPDI and Visa Canada. The PASF goes on, in paragraph 29, to state: During the reporting periods under appeal, CIBC, as an Issuer, was entitled to an interchange fee from GPDI as consideration for the authorization and payment services provided to GPDI for each Visa Card purchase transaction under the Marketing Alliance Agreement between CIBC and GPDI. [Emphasis added.] Thus, the interchange fees, and, in turn, the interchange services, had a direct link or connection to the Visa Card purchase transactions. [57] In a letter dated October 8, 2019, from counsel for CIBC to counsel for the Crown (which will be discussed further below), it was stated that “GPDI was entitled to all of the merchant discount fees and would bear all of the corresponding interchange fees in respect of VISA Card transactions, with no exception being made for CIBC VISA Card transactions (i.e., where CIBC was the relevant Issuer).”[64] Given that the 18 steps in respect of a Visa Card purchase transaction were intertwined, it follows that the interchange services had a connection to, or a relationship with, each of those steps. As will be discussed below, those steps led to the creation of one or more categories of debt (see paragraph 40 above). Accordingly, it is my view that the interchange services supplied by CIBC to GPDI related to the debts that arose from the credit card transactions that are the subject of these Appeals. (2) Meaning of debt [58] Rather than having a single meaning, the word debt is capable of a variety of meanings. In a legal context, a concise definition that has been used by several courts has its roots in Stroud’s Judicial Dictionary, where debt was defined as “a sum payable in respect of a liquidated money demand, recoverable by action.”[65] [59] The Federal Court of Appeal provided a succinct definition of the word debt and offered useful guidance in Barejo Holdings, [66] which was an appeal from a decision of this Court, but not an appeal from the decision with which I will begin. [60] In Barejo (TCC #1), after conducting an extensive analysis of relevant jurisprudence and a treatise on creditor‑debtor law,[67] Justice Boyle summarized the essential characteristics of debt as follows: Having reviewed the Canadian jurisprudence on the meaning of debt and indebtedness, and having reviewed the use of debt and debt‑related terms in the provisions of the Act, the Court concludes that the core essential characteristics of debt generally for purposes of the Act are: (i) an amount or credit is advanced by one party to another party; (ii) an amount is to be paid or repaid by that other party upon demand or at some point in the future set out in the agreement in satisfaction of the other party’s obligation in respect of the advance; (iii) the amount described in (ii) is fixed or determinable or will be ascertainable when payment is due; and (iv) there is an implicit, stipulated, or calculable interest rate (which can include zero).[68] [61] In Barejo (FCA), which was an appeal from Barejo (TCC#2), the Federal Court of Appeal modified the second of the above characteristics and said that the fourth is not essential. It set out three conditions, as follows: When regard is had to the text, context and purpose of paragraph 94.1(1)(a) [of the ITA], a debt arises for purposes of this provision when an amount or credit is advanced by one party to another party; an amount is to be paid or repaid by that other party at some point in the future in satisfaction of the advance and this amount is fixed or determinable or will be ascertainable when payment is due.[69] [62] Based on the discussion below of the meaning of loan, the advance contemplated by the above quotation may be an advance by the soon‑to‑be‑creditor to a third‑party to whom the soon‑to‑be debtor has some obligation. [63] Hence, I am of the view that, when a Cardholder used a CIBC Visa Card in respect of a transaction, the Cardholder became indebted to CIBC. In other words, a debt arose. (3) Meaning of lending of money (a) Jurisprudence [64] The first carve‑out in section VI‑IX‑1 of the ETA refers to “a debt that arises from … the lending of money….”[70] Like the word debt, the verb lend has more than one meaning. For instance, the Oxford Dictionary of English defines lend as: lend … grant to (someone) the use of (something) on the understanding that it will be returned…. allow (a person or organization) the use of (a sum of money) under an agreement to pay it back later, typically with interest….[71] [65] Similarly, Black’s Law Dictionary defines the verb lend as: lend … 1. To allow the temporary use of (something), sometimes in exchange for compensation, on condition that the thing or its equivalent be returned. 2. To provide (money) temporarily on condition of repayment, usu. with interest.[72] Black’s also indicates that the verbs loan and lend are synonymous.[73] [66] Some cases have held that, to be a loan, there must be an actual advance of money by the lender to the borrower. For instance, in Faraggi, Justice Rip (as he then was) stated, “A loan requires an actual transfer of property from the lender to the borrower, with the obligation of the borrower to return a like quantity of funds.”[74] In essence, this is the position taken by CIBC. Indeed, its counsel submitted “that there is a distinction between the lending of money and the granting of credit.”[75] [67] On the other hand, the Crown takes a broader view of the verbs lend and loan. Citing the Gillette Canada case,[76] the Crown submitted that “The payment of the money by the lender can go to a third party for the account of the debtor.”[77] [68] In Gillette Canada, Justice Rip stated: For the purposes of the appeal at bar, a loan requires the creation of a debt with the understanding that the debt will be repaid. There is no requirement that money actually be exchanged where a new advance is made in order to extinguish a previous debt.[78] [69] In Autobus Thomas, a case that dealt with the former Large Corporations Tax under Part I.3 of the Income Tax Act, Justice Dussault considered a situation in which a bus dealer used bank financing to pay, to various bus manufacturers, the price of buses purchased by the dealer from the manufacturers. The dealer’s bank paid the purchase price directly to the manufacturers, without any money changing hands between the bank and the dealer. The dealer argued that the money paid by the bank to the manufacturers did not, under the Civil Code of Québec, constitute a loan by the bank to the dealer, because no money was handed over from the bank to the dealer. In finding that the bank had loaned money to the dealer, Justice Dussault stated: 36. It is true that the Bank did not transfer or hand over any money to the appellant but simply paid an amount owed by the appellant directly to the manufacturer. Whether this was a delegation or merely an indication of payment is not really important. It can most certainly be described in the circumstances as a loan or advance by the Bank to the appellant…. 38. … I consider the payment made by the Bank to the manufacturer Navistar on the appellant’s behalf to be in substance a loan to the appellant…. 39. I therefore conclude that the amounts paid by the Bank to the manufacturer Navistar and other manufacturers on the appellant’s behalf that are not covered by a conditional sale contract result from loans by the Bank to the appellant and must therefore be included in its capital under paragraph 181.2(3)(c) of the [Income Tax] Act to the extent that these amounts are owed to the Bank at the end of a given taxation year.[79] [70] On appeal, in upholding Justice Dussault’s decision, the Federal Court of Appeal stated: According to counsel for the appellant, no money was handed over from one party to the other―a requirement for the formation of a loan contract under the Civil Code―so the overall transaction could not possibly be identified as a loan. However, the point is that money was indeed handed over within the meaning of the Civil Code; the bank used the loaned money to pay the invoices in performance of the order from its client. The absence of direct, physical handing over of money is now commonplace in the case of many commercial loans, as much at civil law as at common law.[80] [Emphasis added.] [71] In the context of credit card transactions, the Alberta Court of Queen’s Bench (as it then was) stated: Each time the Defendant [i.e., the cardholder] used the card she got a loan from the Plaintiff [i.e., the bank]. She “paid” the merchant with the card. Of course that does not put money in the merchant’s till. In due course the Plaintiff pays the merchant. The merchant’s price to the Defendant is the loan by the Plaintiff to the Defendant. The loan is advanced directly to the merchant but it is a loan to the credit of the Defendant. The contract expressly covers that in paragraph 2(b). The card holder uses the card “to obtain advances of money from the [Plaintiff] by means of payment by the [Plaintiff] to a merchant honouring the Mastercard of the price of purchases or services.[81] [72] In President’s Choice Bank, although Justice Hogan was dealing with issues different from the issues in these Appeals, he made several comments about the credit card business carried on by President’s Choice Bank (“PC Bank”). While those comments are not determinative of the issues in these Appeals, the comments do illustrate that, at least in some circumstances, a credit card business involves the lending of money. Excerpts from some of those comments are set out below: 5. The third issue in the PC Bank Appeals is whether the services provided by 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…. 73. PC Bank’s business consists of earning money from a profitable credit card business…. 89. … 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…. 128. 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. 129. 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 the merchant; and a processor (either FDR or TSYS depending on the relevant period)…. 132. … An authorization of a credit card loan typically takes place in “milliseconds”…. 135. In all cases, FDR/TSYS, through the use of the automated systems and follow-up security and authorization procedures, are applying security protocols established by PC Bank…. The automated systems also verify other critical information, such as whether the request for a credit card loan is within the Cardholder’s credit card limit…. 137. … 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…. 143. … Ms. Mody testified 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). 144. … Proper credit management is the lifeblood of all money‑lending businesses…. 145. … These protocols [which had been established by PC Bank] 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…. 150. … [This comment refers to the 2021 CIBC Visa case:] Credit card loan approvals were the responsibility of CIBC, the issuer of the card. 151. 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. 156. … 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…. 157. … PC Bank set the terms and conditions under which it would allow credit card loans to be approved on its behalf…. 158. … PC Bank sets the terms and conditions pursuant to which FDR/TSYS authorizes credit card loans on PC Bank’s behalf….[82] [Emphasis added; footnotes omitted.] [73] The above‑quoted comments obviously apply to the facts of the President’s Choice Bank case, and not to the facts of these Appeals. Nevertheless, those comments acknowledge that, in some situations, credit card transactions constitute money lending, specifically the making of loans by the card issuer to the cardholder. [74] As noted above, the verb lend has both a narrow meaning (requiring an actual payment of money by the lender to the borrower) and a broad meaning (recognizing that a loan arises when the lender, at the request of the borrower, pays money to a third party in satisfaction of an obligation owed by the borrower to the third party). For the purposes of these Appeals, I prefer the broad meaning, as it is consistent with the contractual agreement between CIBC and its cardholders, and with the manner in which CIBC reported the credit card transactions in its annual reports. (b) Cardholder Agreement and Credit Card Guide [75] The definitions portion of the CIBC Visa Cardholder Agreement (the “Cardholder Agreement”) defines the term Transaction as meaning “any use of a Card or Card number to purchase goods or services or make other charges to your Visa Account as well as Cash Advances, Convenience Cheques and Balance Transfers.” The second paragraph of the Cardholder Agreement states: When any Cardholder makes a Transaction using the Visa Account, we are loaning the Primary Cardholder the amount of the Transaction. The Primary Cardholder must repay us the Balance in accordance with this Agreement.[83] [Emphasis added.] [76] In the portion of the Cardholder Agreement that deals with a cardholder’s credit limit, the agreement states that, if a cardholder has a CIBC Visa Infinite Card, the cardholder may (provided that certain conditions are met) spend over his or her credit limit; however, any excess spending does not increase the credit limit. The agreement then goes on to state, “Your borrowing capacity is not increased and remains at your credit limit [emphasis added]….”[84] [77] Counsel for the Crown put into evidence a printout of a document downloaded from CIBC’s website. The document is titled “Your credit card guide” (the “Guide”), and appears to be an introductory explanation of credit cards. The Guide poses the question, “What’s a credit card and how does it work?” The Guide then provides this answer: A credit card lets you borrow money from the bank to spend on your everyday purchases. At the end of each monthly billing cycle, you’ll get a credit card statement (your bill) with the amount you owe (your balance).[85] [Emphasis added.] [78] During cross‑examination, Dino Nardone, CIBC’s director of finance supporting commercial banking, said that to him the terminology “borrow” was different and that he was “[n]ot sure exactly why the bank would have phrased it [i.e., the Guide] that way,” because the bank did not physically give to Cardholders money to make transactions. To him, “it’s always been about the granting of credit.”[86] [79] With all due respect, I prefer to put greater weight on the Guide than on Mr. Nardone’s statement. It is likely that, before being posted on CIBC’s website, the Guide would have gone through several levels of drafting, scrutiny and review as part of the process of being approved for public display. In addition, the Guide is consistent with the Cardholder Agreement. [80] By reason of the above‑quoted contractual provisions and the Guide, I am of the view that, when a Cardholder used a CIBC Visa Card in respect of a transaction, CIBC loaned to the Cardholder, and the Cardholder borrowed from CIBC, the monetary amount of the transaction. (c) Annual Reports [81] The CIBC Annual Accountability Reports (each, an “Annual Report”) for 2006, 2007 and 2008 confirm that CIBC considered credit card transactions to be loans. For instance, the 2006 Annual Report contained the following provisions: (a)In the table providing a reconciliation of non‑GAAP to GAAP measures, there were three entries for 2006 under the heading “Managed Loans (net of allowance)”: (i) residential mortgages, (ii) credit card, and (iii) business and government.[87] (b)In the Condensed Consolidated Balance Sheet, under the heading “Loans”, there were five entries: (i) residential mortgages, (ii) personal, (iii), credit card, (iv) business and government, and (v) allowance for credit losses.[88] (c)In discussing CIBC’s assets, the report stated, “Increases in residential mortgages and credit card loans due to business growth (net of securitizations) were partially offset by decreases in business and government loans [emphasis added].”[89] (d)In a table showing the priorities and measures in respect of CIBC’s retail markets, one of the areas of business was described as “Cards”, and the measures were listed as market share, loan losses, and growth in balances.[90] (e)Under the heading “Management of Credit Risk”, the report stated, “Credit risk arises from our direct lending activities, and, to a lesser extent, from our trading, investment and hedging activities.” The report then defined credit risk as “the risk of financial loss due to a borrower or counterparty failing to meet its obligations in accordance with agreed terms.” The credit-risk portion of the report went on to discuss consumer loans, and stated, “Consumer loans, which comprise residential mortgages, credit cards and personal loans … are managed through statistical techniques … [emphasis added].” In addition, the subsequent paragraph of the report showed CIBC’s credit card portfolio as coming within the category of consumer loans.[91] (f)In discussing CIBC’s allowance (as established by management) for credit losses, under the subheading “Consumer Loans”, the report stated, “Management evaluates homogeneous consumer loan portfolios (including residential mortgages, personal loans, credit card loans and certain small business loan portfolios) for specific allowances … [emphasis added].”[92] (g)In discussing CIBC’s lending business, the report stated, “Lending activities involve the origination of multiple types of loans, including personal, business, government, credit card and mortgages for the generation of interest as well as fee income [emphasis added].”[93] (h)Under the heading “Impaired loans”, Note 1 to CIBC’s 2006 Consolidated Financial Statements (which were included in the 2006 Annual Report) stated, “Credit card loans are not classified as impaired but are instead fully written off when payments are contractually 180 days in arrears.”[94] [82] CIBC’s 2007 Annual Report stated that, on November 1, 2007, a new capital management framework became effective. That new framework may have been one of the reasons for which certain portions of the 2007 Annual Report had a different layout and appearance than the 2006 Annual Report. Nevertheless, the 2007 Annual Report contained several provisions that confirmed that CIBC treated credit card transactions as loans: (a)A table titled “Managed loans (net of allowance)” had two entries for 2007: (i) residential mortgages, and (ii) credit card.[95] (b)In a table showing the priorities and measures in respect of CIBC’s retail markets, one of the areas of business was described as “Cards”, and the measures were listed as growth in balances, market share, and loan losses.[96] (c)In a table titled “Review of Consolidated Balance Sheet”, under the heading “Loans”, there were five entries: (i) residential mortgages, (ii) personal, (iii), credit card, (iv) business and government, and (v) allowance for credit losses.[97] (d)In discussing CIBC’s assets, the report stated, “Loans were up … due to volume growth in residential mortgages … and volume growth in the cards portfolio [emphasis added].”[98] (e)Under the heading “Specific allowance” and the subheading “Consumer loans”, the report stated, “Consumer loan portfolios include residential mortgages, personal and credit card loans, and certain small business loan portfolios, which consist of large numbers of homogeneous balances of relatively small amounts [emphasis added].”[99] (f)Under the heading “Impairment of financial assets”, Note 1 to CIBC’s 2007 Consolidated Financial Statements (which were included in the 2007 Annual Report) stated, “Credit card loans are not classified as impaired but are instead fully written off when payments are contractually 180 days in arrears [emphasis added].”[100] (g)Under the heading “Fair Value of Financial Instruments”, Note 2 to CIBC’s 2007 Consolidated Financial Statements (which were included in the 2007 Annual Report), included four entries under “Loans”: (i) residential mortgages, (ii) personal, (iii) credit card, and (iv) business and government.[101] [83] The 2008 Annual Report contained several provisions that confirmed that CIBC treated credit card transactions as loans: (a)A table titled “Managed loans (net of allowance)” had two entries for 2008: (i) residential mortgages, and (ii) credit card.[102] (b)In a table showing the priorities and measures in respect of CIBC’s retail markets, one of the areas of business was described as “Cards”, and the measures were listed as growth in balances, market share, and loan losses.[103] (c)In a table titled “Review of Consolidated Balance Sheet”, under the heading “Loans”, there were five entries: (i) residential mortgages, (ii) personal, (iii), credit card, (iv) business and government, and (v) allowance for credit losses.[104] (d)In discussing CIBC’s assets, the report stated, “Loans were up … due to volume growth in business and government loans, consumer loans and credit cards [emphasis added].”[105] (e)In discussing CIBC’s loan portfolio, the report stated “Consumer loans (comprising residential mortgages, credit cards and personal loans, including student loans) constitute 73.6% (2007: 75.7%) of the portfolio, and business and government loans (including acceptances) 26.4% (2007: 24.3%) [emphasis added].”[106] (f)Under the heading “Specific allowance” and the subheading “Consumer loans”, the report stated, “Consumer loan portfolios include residential mortgages, personal and credit card loans, and certain small business loan portfolios, which consist of large numbers of homogeneous balances of relatively small amounts [emphasis added].”[107] (g)Under the heading “Impairment of financial assets”, Note 1 to CIBC’s 2008 Consolidated Financial Statements (which were included in the 2008 Annual Report) stated, “Credit card loans are not classified as impaired but are instead fully written off when payments are contractually 180 days in arrears [emphasis added].”[108] (h)In a table setting out “categories of the drawn exposure to credit risk”, there were four entries under “Loans”: (i) residential mortgages, (ii) personal loans, (iii) credit card loans, and (iv) business and government loans.[109] (i)In a table titled “Average Balance Sheet, Net Interest Income and Margin,” there were three entries under “Loans” in the “Domestic assets” section: (i) residential mortgages, (ii) personal and credit card, and (iii) business and government.[110] (j)In a table titled “Impaired Loans before General Allowance”, under the heading “Allowance for credit losses”, the four entries making up “total allowance - consumer loans” were: (i) residential mortgages, (ii) student, (iii) credit card, and (iv) personal.[111] [84] The above review of the 2006, 2007 and 2008 Annual Reports confirms that CIBC considered its credit card transactions to constitute loans made by it to the Cardholders. (d) Notices of Objection [85] CIBC filed Notices of Objection, in respect of the Reassessments, with the Minister.[112] Attached to each Notice of Objection was a lengthy memorandum that formed part of the particular Notice of Objection. In refuting the Minister’s position that a credit card transaction created “a debt for … the consideration for a supply of” personal property or a service (as contemplated by paragraphs (c) and (d) of section VI‑IX‑1), each memorandum made the following statement: Rather, the debt that is created is for the repayment of an amount of a loan of money from the Issuer (as money lender) to the Cardholder (as borrower).[113] [86] The above statement is consistent with my view, as expressed above. However, given that the memoranda were written several years after the Reporting Periods and in the context of a dispute with the Minister, I do not put as much weight on them as I put on the Cardholder Agreement, the Guide and the Annual Reports. Nevertheless, the above statement in each memorandum supports the conclusion that I have reached. (e) Recent RBC Case [87] On September 26, 2024, after the trial of these Appeals had concluded, Justice Smith released his decision in a case involving, among other things, a claim by the Royal Bank of Canada (“RBC”) for ITCs pertaining to interchange fees paid by non-resident merchant acquirers in respect of transactions with holders of credit cards issued by RBC.[114] In allowing RBC’s appeal, Justice Smith held that, because, when facilitating a credit card transaction between an RBC credit cardholder and a merchant, RBC paid money to the applicable merchant acquirer, rather than transferring or advancing money to the cardholder, there was not a loan by RBC to the cardholder.[115] [88] The facts in the RBC appeal were somewhat different from the facts in these Appeals. For instance, in RBC the merchants in question were non-residents,[116] whereas in these Appeals the merchants were located in Canada.[117] In RBC it appears that the transaction locations in question were outside Canada,[118] whereas in these Appeals “all of the relevant Visa Card transactions occurred at merchant locations in Canada.”[119] In RBC the respective banks of the various merchants were the merchant acquirers,[120] whereas in these Appeals GPDI was the acquirer.[121] In RBC the merchant acquirers deposited only a discounted amount (i.e., the transaction amount less a discount fee) to the respective merchants’ bank accounts,[122] whereas in these Appeals GPDI paid the full transaction amount to each merchant and then billed the merchant later, generally on a monthly basis, for the merchant discount fee.[123] In RBC there was no indication that RBC treated its customers’ credit card transactions as loans, whereas in these Appeals it is abundantly clear that, in the 2006, 2007 and 2008 Annual Reports (including the financial statements set out therein), CIBC reported its customers’ credit card transactions as loans, and CIBC acknowledged that its “[l]ending activities involve[d] the origination of multiple types of loans, including personal, business, government, credit card and mortgages for the generation of interest as well as fee income [emphasis added].”[124] [89] On August 4, 2006, Global Payments Inc. (“Global”), which I understand to be the parent of GPDI,[125] filed its Annual Report, Form 10‑K (the “2006 10‑K”), for the period ending May 31, 2006,[126] with the US Securities and Exchange Commission. In that document, Global stated that its primary competitor in Canada was Moneris Solutions (“Moneris”), which was a joint venture between RBC and the Bank of Montreal. There was no evidence as to whether Moneris and Global/GPDI had similar operating systems. Therefore, it is not clear whether the clearance, settlement, payment and interchange system used by RBC was closely similar to that which was used by CIBC. [90] By reason of the above‑mentioned factual differences between the RBC case and these Appeals, I am of the view that RBC may be distinguished. (f) Summary [91] Having considered the documentary evidence, particularly the Cardholder Agreement and the Annual Reports, it is my view that the debts that were owed by the Cardholders to CIBC, as a result of the credit card transactions that are the subject of these Appeals, were debts that arose from the lending of money. (4) Meaning of primarily [92] The carve‑outs in subparagraph (a)(ii) and paragraphs (c) and (d) of section VI‑IX‑1 of the ETA each require a connection with Canada. In the case of a debt that arises from the lending of money, subparagraph (a)(ii) states that the loaned money must be primarily for use in Canada. In the case of a debt that is consideration for a supply of personal property, paragraph (c) states that the property must be for use primarily in Canada. In the case of a debt that is consideration for a supply of a service, paragraph (d) states that the service is to be performed primarily in Canada. Thus, each of those carve‑outs requires an analysis of the meaning of the word primarily. [93] In Mid‑West Feed, in the context of the ITA, former Chief Justice Couture stated: To my mind the true meaning of this enactment is clearly reflected by the word “primarily”. When regarded in its ordinary sense it implies a “use” of an asset that exceeds any other use. That is[,] it must be the predominant use. In the Shorter Oxford Dictionary “Primarily” is defined as “… 2. Of the first importance, principal, chief.” “Principal” is also defined in the same dictionary as: “First in rank of importance … hence principally – adv. in the chief place, mainly, above all.”[127] Former Chief Justice Couture went on to quote a passage from an Australian case, which indicated that, when referring to a purpose, a principal purpose may be contrasted with a subsidiary purpose.[128] [94] At the trial level in Will-Kare Paving, in dismissing an appeal under the ITA, Justice Sarchuk stated: The word “primary” (and thus, primarily) means first in order of time, or development, or in intention. The word “principal” (which is virtually interchangeable with the word “primary”) means chief; leading; most important or considerable; primary; original, highest in rank, authority, character, importance, or degree.[129] On appeal, Justice Strayer stated that Justice Sarchuk had “correctly ascribed to ‘primarily’ in this context the meaning of ‘most important’….”[130] [95] In considering the meaning of primarily, a more quantitative approach was reviewed by Justice Rothstein, then of the Federal Court of Appeal, in Burger King Restaurants, which considered whether investment tax credits, under the ITA, were available in respect of 68 fast‑food restaurants, 48 of which had been analysed by using a space test, in which the areas of the restaurants used for food processing (which included preparation) were compared with the areas that were used for sales and consumption. Justice Rothstein stated: The more difficult question is whether the buildings are used primarily for the purpose of manufacturing or processing goods for sale. The learned Tax Court judge, on the basis that the areas of the buildings used for processing amounted to less than 50% of the total areas of the buildings, concluded that the buildings were not used primarily for processing. Of 48 buildings analysed, approximately 46.5% of space was used for processing. This analysis was based on an attribution of space most favourable to the appellant. Under other allocation formulas, less space was attributed to processing. Although in some layouts, more than 50% of the buildings were used for processing, the overall average was less than 50% and counsel agreed, and the learned judge found, that the "primarily" question should not be determined on a building by building basis in the circumstances of this case.[131] [96] The second paragraph quoted above is particularly germane in the context of CIBC’s Appeals, which deal with numerous Visa Card transactions. Using a similar approach in these Appeals suggests that I should review those transactions on an overall or aggregate basis, rather than a transaction‑by‑transaction basis. [97] In response to a submission by counsel for Burger King that a qualitative approach should be used by the court, Justice Rothstein referred to the Mother’s Pizza case, in these terms: In Mother’s Pizza Parlour (London) Limited et al. v. The Queen, Pratte J.A. determined that when different portions of a building are permanently used for two different purposes, the most important factor in determining the purpose for which the building is primarily used is the amount of space in the building used for each one of the two purposes…. In accordance with Mother’s Pizza, use of the space in the buildings is the most important consideration in determining the use primarily made of the buildings. However, that does not exclude other considerations and we are prepared to assume, without deciding, that in a case such as this, a qualitative assessment is also relevant…. However, the qualitative evidence must be sufficiently persuasive and must be capable of being analysed in such a way as to cause the Court to displace the result of the quantitative space test.[132] [Footnote omitted.] [98] The above comments indicate that, in determining whether the carve‑outs’ primarily in Canada criteria were satisfied, a court may consider qualitative factors, as well as quantitative factors, provided that the former are persuasive to the point of causing the court to displace the result of an analysis of the latter. [99] In Gerbro Holdings, former Associate Chief Justice Lamarre noted that the Federal Court of Appeal had indicated in Will-Kare Paving that primarily means “most important”, which, she suggested, corresponds to “more than 50%”.[133] (5) Meaning of for use in Canada [100] The first carve‑out in section VI‑IX‑1 of the ETA refers to “a debt that arises from … the lending of money that is primarily for use in Canada….”[134] [101] Justice Bowman made the following comments about the meaning of the word use: The word “use” is one of the commonest and most frequently used in the English language, as is “utiliser” in French. Indeed, the definition of the verb “use” in the New Shorter Oxford Dictionary of the English Language is “make use of (a thing) esp. for a particular end or purpose; utilize, turn to account ...; work, till, occupy, (land, ground etc)”. The noun “use” is defined as “act of using, fact of being used”. After this exercise in circularity we are no wiser than before (or, for that matter, any better informed). Similarly, “utiliser” is defined in Le Petit Robert 1 [sic] dictionnaire de la langue française as “rendre utile, faire servir à une fin précise ... employer”.[135] [102] In Sie‑Mac Pipeline, Justice Brulé noted that the word use is “a word of wide signification.”[136] [103] In my view, there was a use of funds, when, after being advised by Visa Canada of the net settlement amount payable by CIBC for a particular day, CIBC forwarded funds to Visa Canada’s designated settlement bank, and Visa Canada then directed its settlement bank to transfer funds to CIBC’s designated settlement account, after which the funds were paid to GPDI, which paid the funds to the merchant, in satisfaction of the Cardholder’s obligation to pay the merchant.[137] [104] The focus of subparagraph (a)(ii) in section VI‑IX‑1 of the ETA is on the location where the loaned money is used, and not on the location where the cardholder uses or consumes the property or service purchased with that money. In these Appeals, the loaned money was used to pay merchants located in Canada. In other words, the loaned money was used when the merchants were paid. The fact that Cardholders may have used their Visa Cards to purchase property located outside Canada or to purchase services that the Cardholders used or consumed outside Canada does not negate that, on the facts of these Appeals, the loaned money was used to pay merchants who were in Canada. [105] In terms of geographical location, there were a number of factors that connected the use of the money that was the subject of the credit card loans (to use a phrase that was used by CIBC in its Annual Returns) to Canada: (a)CIBC was federally incorporated in Canada, was resident in Canada, and carried on business in Canada (as well as elsewhere).[138] (b)CIBC only issued Visa Cards to Canadian residents with a Canadian address.[139] (c)The majority of the Cardholders were Canadian citizens.[140] (d)After March 20, 2001, GPDI provided all processing and payment services to the existing merchants located in Canada and negotiated and entered into merchant agreements with new merchants located in Canada.[141] (e)Visa did not permit CIBC, as the Visa‑member Acquirer of record, to contract with merchants outside of Canada, with very limited exceptions.[142] (f)Under the Visa rules (by which GPDI was bound), with very limited exceptions, GPDI could not acquire merchant business outside of Canada.[143] (g)In other words, the merchants whose transactions with Cardholders are the subject of these Appeals were located in Canada.[144] (h)All of the relevant Visa Card transactions occurred at merchant locations in Canada.[145] (i)In other words, the Visa Card transactions at issue in these Appeals were made at or through merchant locations in Canada and were charged to the Cardholders Visa Card accounts.[146] (j)Under the Marketing Alliance Agreement, CIBC was required to furnish bank services in respect of the agreements with the various merchants (the “Merchant Agreements”).[147] (k)Under the Marketing Alliance Agreement, GPDI was required to use commercially reasonable efforts to encourage new merchant customers to open depository accounts with CIBC.As well, GPDI was not to solicit or encourage merchants to transfer those depository accounts to another financial institution.[148] (l)Under the Marketing Alliance Agreement, CIBC was required to “maintain distinct VISA BIN numbers adequate for use in clearing all of the Credit Card Transactions of NDPS’ [i.e., GPDS’] Merchant Business in Canada [emphasis added].”[149] That provision suggests that the clearing process occurred in Canada. (m)Section 1 on page 1 of the specimen Merchant Agreement among a particular merchant, GPDI and CIBC stated that, subject to the merchant giving notice of the selection of a different financial institution, the merchant “agree[d] to maintain an approved merchant bank account with Member [i.e., CIBC] as [its] designated financial institution for [its] credit card … receivables….”[150] (n)Section 2 on page 1 of the Terms and Conditions of Merchant Agreement stated, “Merchant will maintain an approved bank account with Member [i.e., CIBC] as its designated financial institution for its credit card … receivables….” Section 23 on page 3 of that document stated, “The financial institution set forth in the Merchant Application is designated by Merchant as a depository institution for debits and credits hereunder. Merchant agrees that it must maintain an account with such depository at all times during the term of the Agreement and thereafter until all obligations of Merchant are paid in full hereunder. Merchant authorizes payment for receivables purchased hereunder to be made by paying such depository therefor with instructions to credit Merchant’s account…. Global [i.e., GPDI] must approve in writing any proposed changes to the account numbers or to the designated depository institution.”[151] (o)CIBC held and owned the settlement account, although CIBC fettered its right to deal with the money as it saw fit, and committed to operate the settlement account strictly in the manner agreed to by GPDI.[152] (p)CIBC was the banker for GPDI with respect to the acquirer business.[153] (q)GPDI maintained certain bank accounts with CIBC in Canada.[154] (r)The bank account that GPDI used for payments and receipts in respect of the Visa Payment System was with CIBC.[155] (s)In a letter dated October 8, 2019, from CIBC’s counsel to the Crown’s counsel, for the purpose of clarifying or correcting answers previously provided by CIBC to the Crown in the course of an examination of a CIBC representative, CIBC’s counsel stated that “all of the money in the Settlement Account was ultimately paid by CIBC to GPDI to permit GPDI to meet those payment obligations to the merchants. The payment by CIBC to GPDI was effected in two ways: (a) CIBC paid GPDI by way of CIBC paying the merchants to which GPDI owed the money, as and when GPDI directed CIBC to do so, by transferring money from the Settlement Account to the Merchant Depository Accounts identified by GPDI. (b) CIBC also paid GPDI by way of a direct transfer, from the Settlement Account to GPDI’s account, of any balance remaining in the Settlement Account at the end of the day after payments had been made to merchants as directed by GPDI [underlining in the original].”[156] (t)In describing its funds settlement process, in its 2006 10‑K, Global stated, “We [which was defined in that document to mean Global and its subsidiaries] use our network telecommunication infrastructure to deliver funding files to the member [which was generally a financial institution in a credit or debit card association], which creates a file to fund the merchants over the Federal Reserve’s Automated Clearing House system in the United States, or the Automated Clearing Settlement System or the Large Value Transfer System in Canada.”[157] The foregoing statement confirms that different clearing and settlement systems were used in the United States and Canada. Later, in the 2006 10‑K, Global referred to “timing differences and certain changes in settlement processing transactions in Canada [emphasis added].”[158] The foregoing reference indicates that the settlement processing transactions in respect of the Visa Payment System occurred in Canada. (u)On March 20, 2001, GPDI entered into the Credit Facility (as defined in paragraph 20 above), with CIBC’s New York agency. On November 19, 2004, GPDI entered into an amended and restated Credit Facility with a syndicate of US banks, including CIBC’s New York agency. The Credit Facility consisted of two components. On November 18, 2005, the Credit Facility was amended to terminate one of the components and to make CIBC Inc. the provider.[159] In its 2006 10‑K, Global stated that CIBC was the administrative agent and lender in respect of the Credit Facility.[160] The Credit Facility was denominated in Canadian currency. (This factor is not particularly significant, as the Credit Facility was used only twice, each time only briefly, over the three‑year duration of the Reporting Periods.) (v)There was no evidence of any merchants who used a bank account sited outside Canada as their depository account for credit card receivables. This would suggest (but does not prove)[161] that, under the Visa Payment System, the merchants were paid in Canada. (w)There was no evidence of any merchant who received its credit‑card‑receivable payments from GPDI at a location outside Canada. This would suggest (but does not prove)[162] that, under the Visa Payment System, the merchants were paid in Canada. (x)In its 2006 10‑K, Global stated that it and its subsidiaries marketed their products and services throughout the United States, Canada and Europe, and that it conducted its business through money transfer offerings in a few other countries. As well, Global said that it received referrals from approximately 1,500 bank branch locations in Canada.[163] Global also stated that its principal international facilities were located in five non‑US cities, one of which was Toronto.[164] In a table setting out total revenues of Global and its subsidiaries, Global stated that the revenue in the 2006 fiscal period from domestic (which I understand to mean US) direct merchant services was US$481,273,000, and that the revenue during the same period from merchant services in Canada was US$208,126,000.[165] While these observations do not prove that the money loaned by CIBC to the Cardholders was used in Canada, they do indicate that the presence and activities of Global and its subsidiaries in Canada were not insignificant, which, in turn, provides support for the proposition that the loaned money was primarily used in Canada (i.e., it was primarily used to pay the merchants in Canada, and not elsewhere). (y)The 2006 Annual Report contains a table titled “Provision for (Recovery of) Credit Losses”. That table, which is organized geographically, shows the provisions (or recoveries) made in Canada, the United States and other countries. The table shows that, in 2006, a provision for credit losses of $238,000,000 was made in respect of CIBC’s credit card business in Canada. The table also shows that no provision for (or recovery of) credit losses was made in respect of credit cards outside Canada.[166] This suggests that CIBC did not have a non‑Canadian credit card business, or, if it did, the non‑Canadian credit card business was relatively modest. [106] By reason of the magnitude of the factors listed above, I am of the view that, on a balance of probabilities, more than 50% of the aggregate payments made by GPDI to merchants, under the Visa Payment System, were made to merchant depository accounts in Canada. [107] As noted above, in a tax context, the word primarily generally means (among other things) principally, mainly, most importantly, or more than 50%. Accordingly, considering the factors enumerated above, I am of the view that the money paid by CIBC indirectly to the merchants (i.e., through the Visa Payment System), in satisfaction of the Cardholders’ obligations to the merchants, was loaned money that was primarily for use in Canada. F. Contextual Discussion [108] Section VI‑IX‑1 of the ETA is located in Part IX of Schedule VI of the ETA, which enumerates zero-rated supplies.[167] Part IX (which has the heading “Financial Services”) refers to a supply of certain financial services made by a financial institution to a non‑resident person, and to a supply made by a financial institution of a financial service that relates to certain insurance policies in respect of non‑resident individuals, or in respect of property or risks situated outside Canada. [109] Section VI‑IX‑1 is notable because it begins with a relatively broad reference to a supply of a financial service made by a financial institution to a non‑resident person, but then goes on to list five exceptions (including the three carve-outs described above). [110] While most of the other Parts in Schedule VI contain inclusive lists of various properties and services, some of those Parts, like section VI‑IX‑1, begin with a general provision, but then list various exceptions or exclusions. For instance, section VI‑III‑1 (under the heading “Basic Groceries”) refers to supplies of food or beverages for human consumption (with a parenthetical inclusion of sweetening agents, seasonings and certain other ingredients), but then sets out a lengthy list of items that are excluded. Similarly, section VI‑V‑7 (under the heading “Exports”) refers to a supply of a service made to a non‑resident person, but then lists nine types of services that are not included. For other examples, see section VI‑V‑10.1, section VI‑V‑22 and section VI‑VII‑2 of the ETA. [111] Thus, the structure of section VI‑IX‑1 (i.e., a general statement with specific exceptions) is not unusual in the context of Part IX of Schedule VI. [112] Turning to the broader context in respect of section VI‑IX‑1, the immediately preceding schedule, i.e., Schedule V, lists exempt supplies.[168] Section 1 of Part VII (which has the heading “Financial Services”) of Schedule V is brief and to the point. It states that a “supply of a financial service that is not included in Part IX of Schedule VI” is an exempt supply. [113] Commenting on section V‑VII‑1, Justice Lamarre (as she then was) stated: 19. In addition, section 1 of Part VII of Schedule V of the ETA expressly provides that a supply of a financial service that is not included in Part IX of Schedule VI of the ETA is an exempt supply…. 25. It is important to state that if a financial service is not specifically zero‑rated by Part IX of Schedule VI, it is automatically exempt by virtue of section 1 of Part VII of Schedule V…. 35. According to the Explanatory Notes referred to above, Part IX of Schedule VI describes the circumstances in which a financial service is zero-rated. It [i.e., the Explanatory Note] specifies that such a service is an exempt supply unless the supply is explicitly ("nommément") included in Part IX…. 38. … Indeed, it is clear that Parliament intended to exempt financial services from the ETA when it introduced section 1 of Part VII of Schedule V. The only financial services that can be zero-rated are the ones that are set out in Part IX of Schedule VI, and they constitute the exception…. 41. Section 1 [of Part IX of Schedule VI] is not a general statutory provision. Rather, it sets out an exception. Specifically, in order to be zero‑rated, a financial service must be explicitly ("nommément") included in sections 1 and 2.[169] [Underlining and italics were in the original.] [114] Thus, the context of section VI‑IX‑1 of the ETA, particularly section V‑VII‑1 of the ETA, makes it clear that generally Parliament intended that a supply of a financial service would be an exempt supply, such that a zero‑rated supply of a financial service is the exception. [115] The context of section VI‑IX‑1 of the ETA, which indicates that a supply of a financial service is generally an exempt supply, with a zero‑rated supply of a financial service being an exception, supports my view that the word loan should be given a broad meaning, and the phrase the lending of money that is primarily for use in Canada should be given a meaning that focuses on the use of the loaned money (i.e., to pay the merchant) and not on the use of the property or services that a Cardholder acquires from the merchant. G. Purposive Discussion [116] Insight into the purpose of section VI‑IX‑1 of the ETA is gleaned from reviewing certain government documents pertaining to the introduction of the applicable legislation. [117] In the 1989 Technical Paper issued by the Minister of Finance, when the federal government was considering the introduction of the GST, the following statement was made in respect of exported services: Financial services provided to non‑residents for use outside Canada will be zero‑rated, as is the case for all other exports of goods and services. As a result, providers of financial services will be eligible to claim input tax credits in respect of tax‑paid purchases used in the provision of exported services. This will ensure that Canadian firms providing financial services remain competitive in global markets.[170] [118] As indicated at the end of the above statement, one of the objectives of the government was, as reiterated elsewhere in the same document, to “ensure that Canadian firms providing financial services remain competitive on world markets.”[171] [119] While CIBC (either directly or through subsidiaries or affiliates) competes globally with other financial institutions, the facts of these Appeals do not touch on global competitiveness. Although some holders of CIBC Visa Cards no doubt travelled internationally and used their Visa Cards outside Canada, those transactions are not the subject of these Appeals. As I understand it, in these Appeals, the parties deliberately limited the subject matter of the Appeals to Canadian transactions. Accordingly, the PASF specifies that the Cardholders were Canadian residents with a Canadian address, the only transactions that are pertinent to these Appeals were with merchants located in Canada, and the Visa Card transactions occurred at merchant locations in Canada. Thus, if anything, the facts of these Appeals raise questions of domestic, rather than global, competitiveness. Therefore, I do not think that my interpretation of section VI‑IX‑1 of the ETA will have an adverse effect on global competitiveness. [120] The 1989 Technical Paper continues with the following statement: In the absence of special rules, there could be instances where firms would have an incentive to restructure transactions, through the use of foreign branches or affiliates, to inflate their input tax credits. Rules will be introduced, following discussion with the financial sector, to address this issue.[172] [121] While there is no suggestion that CIBC was using foreign branches or affiliates to inflate its ITCs, the above statement makes it clear that the government was concerned about situations, in a cross‑border context, whereby ITCs could be inflated. The policy that underlay that concern is consistent with my interpretation of section VI‑IX‑1. [122] The Explanatory Notes issued by the Minister of Finance in February 1990 for Bill-62 stated the following in respect of Part IX of Schedule VI of the ETA: This Part describes the circumstances in which a financial service is zero‑rated. A financial service is exempt unless it is explicitly noted in this Part. … Paragraph (a) precludes a financial service from being zero‑rated if it relates to a debt that arises from deposits in Canada and the instrument issued as evidence is a negotiable instrument. Also excluded from zero‑rating in paragraph (a) is a financial service that relates to a debt arising from a loan, the funds of which are primarily for use in Canada. [173] [123] During a hearing before a standing committee of the Senate, the following statement was made by Bruce B. Flexman, National Partner‑in‑Charge, GST, Peat Marwick Thorne: Under Part IX, financial services made to a non‑resident by a Canadian financial institution will be zero-rated unless those services relate to an activity or transaction in Canada.[174] [124] The above statement was part of the review of the GST legislation that Mr. Flexman provided to the Standing Committee. Although Mr. Flexman was not speaking on behalf of the Department of Finance, the above statement was consistent with the 1989 Technical Paper and both sets of the 1990 Explanatory Notes. [125] The above statement indicates that a financial service supplied by a financial institution to a non‑resident is not zero‑rated if the service relates to an activity or transaction in Canada. In these Appeals, the Cardholders were Canadian residents with Canadian addresses, the merchants were located in Canada, the credit card transactions occurred at merchant locations in Canada, the Settlement Account was with CIBC (which was a resident of Canada), GPDI had a bank account with CIBC, and the merchants were required to have depository accounts for credit card receivables with CIBC (unless they opted out of that requirement). Taken together, those factors indicate that the interchange services related to transactions in Canada. [126] Based on the foregoing, my view is that the purpose of section VI‑IX‑1 is to provide a narrow (rather than a wide) exception to the ETA’s general premise that a supply of a financial service is an exempt supply. Thus, the purpose of section VI‑IX‑1 is consistent with my view that the carve‑out in subparagraph (a)(ii) thereof catches the credit card transactions and the interchange services that are the subject of these Appeals. H. Summary [127] Based on the foregoing analysis, it is my view that the interchange services that are the subject of these Appeals related to debts that arose from the lending of money (from CIBC to the Cardholders) that was primarily for use in Canada. Accordingly, Debt #1 came within the carve-out in subparagraph (a)(ii) of section VI‑IX‑1 of the ETA, and the supplies of the interchange services by CIBC to GPDI were exempt supplies, and not zero‑rated supplies. [128] By reason of the above finding, it is not necessary for me to consider whether Debt #2, Debt #3, Debt #4 or Debt #5 was an exempt supply or a zero‑rated supply. I. Penalties [129] The Minister assessed late-remittance and instalment penalties, for the 2006 and 2007 Reporting Periods, under paragraphs 280(1)(a) and 280(2)(a) of the ETA, as those two provisions read at the applicable time. CIBC takes the position that it exercised due diligence in attempting to comply with the ETA. [130] I have considered whether CIBC may rely on the due diligence defence, which the Supreme Court of Canada explained, in La Souveraine, as follows: The due diligence defence is available if the defendant reasonably believed in a mistaken set of facts that, if true, would have rendered his or her act or omission innocent. A defendant can also avoid liability by showing that he or she took all reasonable steps to avoid the particular event…. The defence of due diligence is based on an objective standard: it requires consideration of what a reasonable person would have done in similar circumstances.[175] [131] Although La Souveraine dealt with a regulatory offence, the Federal Court of Appeal has confirmed that the defence is also available in respect of administrative penalties: This Court has held that there is no bar to the defence argument of due diligence, which a person may rely on against charges involving strict liability, being put forward in opposition to administrative penalties…. It may be worth reviewing the principles governing the defence of due diligence before applying them to the facts of the case at bar. The due diligence defence allows a person to avoid the imposition of a penalty if he or she presents evidence that he or she was not negligent. It involves considering whether the person believed on reasonable grounds in a non‑existent state of facts which, if it had existed, would have made his or her act or omission innocent, or whether he or she took all reasonable precautions to avoid the event leading to the imposition of the penalty…. In other words, due diligence excuses either a reasonable error of fact, or the taking of reasonable precautions to comply with the Act.[176] [132] The Federal Court of Appeal further explained the defence of due diligence in this manner: 8. According to Corporation de l’école polytechnique v. Canada, 2004 FCA 127, a defendant may rely on a defence of due diligence if either of the following can be established: that the defendant made a reasonable mistake of fact, or that the defendant took reasonable precautions to avoid the event leading to imposition of the penalty. 9. A reasonable mistake of fact requires a twofold test: subjective and objective. The subjective test is met if the defendant establishes that he or she was mistaken as to a factual situation which, if it had existed, would have made his or her act or omission innocent. In addition, for this aspect of the defence to be effective, the mistake must be reasonable, i.e. a mistake a reasonable person in the same circumstances would have made. This is the objective test. 10. As already stated, the second aspect of the defence requires that all reasonable precautions or measures be taken to avoid the event leading to imposition of the penalty.[177] [133] In these Appeals, CIBC asserts that it was duly diligent in attempting to comply with its obligations under the ETA. [134] In 2006, 2007 and 2009, Stephen L. Bobkin was CIBC’s Senior Director, Commodity Taxation. Mr. Bobkin initially earned a Certified Management Accountant (CMA) designation, and subsequently a Chartered Professional Accountant (CPA) designation. As Mr. Bobkin’s title was Senior Director, Commodity Taxation, it appears that CIBC had more than one employee who worked on commodity taxation, which presumably included GST/HST matters. Thus, it is my understanding that CIBC employed knowledgeable and competent tax professionals to assist it in understanding and complying with its obligations under the ETA. [135] To show a lack of due diligence by CIBC, the Crown points to (among other things) the above statements made in the memoranda attached to the respective Notices of Objection.[178] However, those statements were made in 2011 (in respect of the 2006 Reporting Period), in 2012 (in respect of the 2007 Reporting Period) and in 2013 (in respect of the 2008 Reporting Period). In other words, each statement was made approximately five years after the applicable Reporting Period. Furthermore, the statements were made while endeavoring to resolve a dispute with the Minister, and, in particular, in an effort to refute the Minister’s position in respect of paragraphs (c) and (d) of section VI‑IX‑1 of the ETA. Therefore, in my view, those statements are not indicative of CIBC’s knowledge, care or attention in 2006, 2007 and 2008; nor do they prove that CIBC failed to take reasonable precautions to comply with the ETA. [136] As noted above, the Crown put forward its initial theory of the case when it filed the 2016 Reply (as defined above). On three subsequent occasions, the Crown changed its theory of the case, resulting in the filing of the 2019 Reply (as defined above) and the 2020 Reply (as defined above).[179] I have repeated this brief procedural history, not to be critical of the Crown, but rather to emphasize the complexity of the facts, the statutory provisions and the other legal principles that underlie these Appeals. [137] Again, without being critical of the Crown, the fact that it took more than four years for the Crown to revise (more than once) and ultimately finalize its position in respect of these Appeals, calls for some recognition that, by interpreting section VI‑IX‑1 of the ETA in a manner different from the position on which the Crown ultimately landed, does not mean that CIBC failed to exercise due diligence. [138] In my view, CIBC’s filing position was not unreasonable, nor was it as indefensible as the Crown suggests. With respect to one of the key issues in these Appeals, i.e., whether the Visa Card transactions constituted loans by CIBC to the Cardholders, there is jurisprudence going both ways. As noted above, I prefer the broad definition of loan (which recognizes that a lender may pay the loan proceeds to a third party in satisfaction of the borrower’s obligation to the third party), but it does not follow that, by adopting the narrow definition of loan (i.e., requiring a direct payment from the lender to the borrower), CIBC failed to exercise due diligence in completing and filing its GST/HST returns. [139] Another critical issue in respect of which there are divergent views pertains to the breadth of the phrase relates to, as used in section VI‑IX‑1 of the ETA. As explained above, in reliance on Slattery, Stantec, Miedzi Copper and Mac’s Convenience Stores, I expressed a preference for a broad interpretation of the phrase relates to. However, as counsel for CIBC observed, in the Sarvanis case, Justice Iacobucci pointed out that the phrase in respect of “is not … of infinite reach.”[180] In RBC, albeit on somewhat different facts, Justice Smith concurred with that position,[181] which, to me, indicates that, in the context of these Appeals, CIBC’s position was not unreasonable.[182] [140] In summation: (a)as it is my understanding that CIBC engaged knowledgeable and competent GST/HST professionals to advise it in respect of its obligations under the ETA, (b)given the complexities of the underlying facts and legal principles (as manifest, in part, by the Crown’s evolving position over the years), (c)also given that the filing position taken by CIBC was not unreasonable, and (d)not seeing “any clear manifestation of a lack of diligence in this case”,[183] I have concluded that CIBC has satisfied the requirements of the due diligence defence. V. CONCLUSION [141] The Appeals from the reassessments in respect of the Reporting Periods ending on October 31, 2006 and October 31, 2007 are allowed, and those Reassessments are referred back to the Minister for reconsideration and reassessment on the basis that CIBC is not liable for the penalties that were assessed. [142] The Appeal from the Reassessment in respect of the Reporting Period ending on October 31, 2008 is dismissed. [143] As success is divided, I am not inclined to award costs to, or against, either party. Signed at Ottawa, Canada, this 18th day of December 2024.[184] “Don R. Sommerfeldt” Sommerfeldt J. CITATION: 2024 TCC 160 COURT FILE NO.: 2014-4581(GST)G STYLE OF CAUSE: CANADIAN IMPERIAL BANK OF COMMERCE v. HIS MAJESTY THE KING PLACE OF HEARING: Toronto, Ontario DATES OF HEARING: January 29‑30, 2024 and February 5, 2024 REASONS FOR JUDGMENT BY: The Honourable Justice Don R. Sommerfeldt DATE OF JUDGMENT: December 18, 2024 APPEARANCES: Counsel for the Appellant: Al Meghji Carly Fidler Roger Smith Leandra Gupta Counsel for the Respondent: Craig Maw Janice Liu Jesse Toma COUNSEL OF RECORD: For the Appellant: Name: Al Meghji Firm: Osler, Hoskin & Harcourt LLP Box 50, 1 First Canadian Place Toronto, ON M5X 1B8 For the Respondent: Shalene Curtis-Micallef Deputy Attorney General of Canada Ottawa, Canada [1] Signed pursuant to a written request and authorization issued by Chief Justice St‑Hilaire under section 16 of the Tax Court of Canada Act. [2] Excise Tax Act, RSC 1985, c. E‑15, Part IX, as enacted by SC 1990, c. 45, and as further amended. [3] Partial Agreed Statement of Facts, dated January 26, 2024, signed by counsel for each party, and entered as Exhibit AR‑1. [4] Exhibit AR‑2. [5] Bank Act, SC 1991, c. 46, as amended. [6] PASF, ¶1 & 3‑4. [7] PASF, ¶1‑2. [8] PASF, ¶5. [9] PASF, ¶13, 18 & 21. [10] PASF, ¶13 & 15. [11] The term non‑resident and the word person are defined in subsection 123(1) of the ETA. [12] PASF, ¶7‑9. [13] Rachel Brandes, Visa’s VP, finance and CFO, explained that, in the Visa Payment System, an issuer issues credit cards to cardholders, and an acquirer processes transactions on behalf of merchants; see Transcript, vol. 2 (January 30, 2024), p. 132, lines 5‑11. See also Canadian Imperial Bank of Commerce v. The Queen, 2018 TCC 109, ¶5(15)(d). [14] PASF, ¶17‑19. [15] PASF, ¶19‑21. [16] PASF, ¶10. [17] Exhibit R‑2, p. 1 ¶1. [18] PASF, ¶11‑12; and Exhibit AR-3, vol. 1, tabs 2 & 3. [19] PASF, ¶22. [20] PASF, ¶23 & 29. Ms. Brandes stated, “An interchange fee is a transfer price between the acquirers and the issuers. It can flow both ways, but in a typical purchase transaction, it’s a fee that is paid from the acquirer to the issuer.” See Transcript, vol. 2 (January 30, 2024), p. 133, lines 12‑15. [21] PASF, ¶21. [22] PASF, ¶26. See also Canadian Imperial Bank of Commerce v. The Queen, 2018 TCC 109, ¶5(16); and 2021 FCA 10, ¶15‑17. [23] PASF, ¶27‑28. [24] PASF, ¶30. Paragraph 30 of the PASF uses the term taxation year, rather than the term reporting period. Based on the table labelled “Income Taxes” on page 39 of CIBC’s Annual Accountability Report for 2006 (Exhibit AR‑2, vol.2, tab 23), the table labelled “Taxes” on page 42 of CIBC’s Annual Accountability Report for 2007 (Exhibit AR‑2, vol. 2, tab 24) and the table labelled “Taxes” on page 51 of CIBC’s Annual Accountability Report for 2008 (Exhibit AR‑2, vol. 2, tab 25), it appears that CIBC’s taxation year began on November 1 of a particular year and ended on October 31 of the subsequent year. Thus, CIBC’s 2006, 2007 and 2008 taxation years corresponded with the Reporting Periods. The page numbers used in this footnote coincide with the small page numbers printed in the respective Annual Accountability Reports, and not with the larger numbers that appear to have been put on the documents when compiling the JBD. [25] PASF, ¶31. [26] Terms and Conditions of Merchant Agreement, Exhibit AR‑2, tab 22, p. 1, ¶2. See also Transcript, vol. 1 (January 29, 2024), p. 85, line 18 to p. 86, line 16. [27] Transcript, vol. 2 (January 30, 2024), p. 133, lines 3‑4; p. 134, lines 19‑23; p. 134, line 27 to p. 135, line 1; p. 135, lines 6‑15; and p. 135, line 21 to p. 136, line 21. [28] PASF, ¶32. [29] PASF, ¶33. Unless otherwise specifically stated, all monetary amounts in these Reasons are expressed in Canadian currency. [30] PASF, ¶34. No particulars were given in respect of CIBC Inc., which was presumably a subsidiary or an affiliate of CIBC, other than the placing of a US flag in the oval designating CIBC Inc. in Appendix B to the Closing Submissions of the Canadian Imperial Bank of Commerce (“CIBC’s Submissions”). I assume that the US flag indicated that CIBC Inc. was resident in the United States. [31] PASF, ¶35. [32] PASF, ¶36. [33] PASF, ¶37. [34] PASF, ¶39. [35] PASF, ¶40 & 42. [36] PASF, ¶44. [37] PASF, ¶45. [38] See paragraph (c) of the definition of factor B in the formula in subsection 169(1) of the ETA. While paragraph 39 of the PASF states that “CIBC acquires business inputs for the purpose of making … supplies”, it says nothing about CIBC importing property or a service or bringing property or a service into a participating province. Therefore, for simplicity, in the above summary of subsection 169(1), I have omitted the references to importing and bringing into a participating province. As well, I have not considered paragraph (a) of the definition of factor B in the formula in subsection 169(1). [39] See paragraph (b) of the definition of factor B in the formula in subsection 169(1) of the ETA. [40] Section 2 of Part IX of Schedule VI to the ETA is not relevant here, as it relates to a supply of a financial service that relates to an insurance policy. [41] Appellant’s Read-Ins, being Exhibit A‑1, tab 4, p. 8‑10. [42] Ibid, tab 6, p. 1. [43] Continental Bank Leasing Corporation et al. v. The Queen, [1994], 1 CTC 2306 (TCC), p. 2311; and Massicotte v. The Queen, 2004 TCC 558, ¶15. [44] CIBC’s Submissions, ¶40 & 42, and Appendix B. [45] See ¶14(q)‑(r) above; the 2020 Reply, ¶13P, 13S & 17D(i); and CIBC’s Submissions, ¶40. [46] See ¶20-21 above; the 2020 Reply, ¶13TA & 17E; and CIBC’s Submissions, ¶40. [47] See ¶14(k)‑(n) above; the 2020 Reply, ¶12(o), 13T & 17D(ii); and CIBC’s Submissions, ¶42(a). [48] See ¶14(o) above; the 2020 Reply, ¶17D(iii); and CIBC’s Submissions, ¶42(b). [49] See the 2020 Reply, ¶17D(iv); and CIBC’s Submissions, ¶42(c). [50] The Queen v. Canada Trustco Mortgage Co., [2005] 2 SCR 601, 2005 SCC 54, ¶10. See also The Queen v. Loblaw Financial Holdings Inc. [2021] 3 SCR 687, 2021 SCC 51, ¶24. [51] Income Tax Act, RSC 1985, c.1 (5th Supplement), as amended. [52] Slattery (Trustee of) v. Slattery, [1993] 3 SCR 430. [53] Ibid. p., 445‑446. [54] Le Robert & Collins Dictionnaire Français-Anglais / Anglais-Français, 9th ed. (Glasgow: HarperCollins Publishers, 2010), p. 547. [55] Le Petit Robert – Dictionnaire Alphabétique et Analogique de la Langue Française, nouvelle édition (Paris : SNL Le Robert, 2016), p. 1455. [56] LSData - LSD.Law, https://www.lsd.law > define > ligare; accessed December 12, 2024. [57] Slattery, supra note 52, p. 445-446. [58] Stantec Inc. v. The Queen, 2008 TCC 400, ¶14; affirmed, 2009 FCA 285. [59] Ibid, ¶15; and 2009 FCA 285, ¶16. [60] Miedzi Copper Corporation v. The Queen, 2015 TCC 26, ¶32 & 34. [61] Mac’s Convenience Stores Inc. v. The Queen, 2012 TCC 393, ¶45. [62] Ibid, ¶49‑50. The omitted footnotes designate the relevant edition of The Canadian Oxford Dictionary, which is the second edition, and contain the citations of the Nowegijick case, which is [1983] 1 SCR 29, and the Slattery case, which is given in footnote 52 above. [63] PASF, ¶26. See also paragraph 14 above. [64] Exhibit R‑2, p. 4, ¶1.vii. [65] See Diewold v. Diewold, [1941] SCR 35, at page 39, where the Supreme Court of Canada quoted the above definition from Stroud’s Judicial Dictionary. See also Barejo (TCC #1), as cited in the next footnote, ¶55, 56, 59‑60 & 62. [66] Barejo Holdings ULC v. The Queen, 2019 FCA 47 (subsequently referred to in these Reasons as “Barejo (FCA)”), ¶5 & 55. In one of two lower‑court decisions in respect of this matter, the citation of which is 2015 TCC 274 (which is referred to in these Reasons as “Barejo (TCC #1)”), Justice Boyle stated, at paragraph 65, “There is not a single all purpose, all encompassing, and all limiting or circumscribing legal definition of debt in Canada. Nor does one appear to be either necessary or desirable.” Justice Boyle appended his reasons in Barejo (TCC #1) as an appendix to his reasons for an order, cited as 2018 TCC 200 (which is referred to in these Reasons as “Barejo (TCC #2)”), in respect of a supplemental motion dealing with a follow-up question. Barejo (FCA) was an appeal from Barejo (TCC #2). [67] C.R.B. Dunlop, Creditor‑Debtor Law in Canada, 2d ed. (Toronto: Carswell, 1995). [68] Barejo (TCC #1), supra note 66, ¶129. [69] Barejo (FCA), supra note 66, ¶91. [70] Subparagraph (a)(ii) of section VI-IX-1 of the ETA. [71] Angus Stevenson (ed.), Oxford Dictionary of English (3rd ed.), (Oxford: Oxford University Press, 2010), p. 1010. [72] Bryan A. Garner (ed.), Black’s Law Dictionary (12th ed.), (St. Paul: Thomson Reuters, 2014), p. 1083. [73] Ibid, p. 1121. [74] Faraggi v. The Queen, 2007 TCC 286, ¶90; aff’d 2004 FCA 15. On the Tax Court’s website, this case is referenced as 2530-1284 Québec Inc. c. La Reine, 2007 TCC 286. [75] CIBC’s Submissions, ¶69. [76] Gillette Canada Inc. v. The Queen, docket 1999-746 IT-G, (TCC, dated October 12, 2001), ¶21; aff’d 2003 FCA 22 (for different reasons). [77] Respondent’s Written Submissions, dated February 5, 2024 (the “Crown’s Submissions”), ¶82. [78] Gillette Canada, supra note 76, ¶21. [79] Autobus Thomas Inc. v. The Queen, [1999] 2 CTC 2001, 99 DTC 259, TCC docket 96-2508-IT-G, dated September 18, 1998, ¶36 & 38-39. [80] Autobus Thomas Inc. v. The Queen, [2002] 1 CTC 3, 2000 DTC 6299, FCA docket A-606-98, dated January 18, 2000, ¶6; aff’d [2001] 3 SCR 5, 2001 SCC 64. See also Black v. The Queen, 2019 TCC 135, ¶110. [81] Bank of Montreal v. Ralph, [1997] A.J. No. 146; 1997 CarswellAlta 53, 68 ACWS (3d) 1073 (ABQB), ¶16, per Michael Funduk, Master in Chambers. [82] President’s Choice Bank v. The Queen, 2022 TCC 84, ¶5, 73, 89, 128-129, 132, 135, 137, 143-145, 150-151 and 156-158. The citation of the 2021 CIBC Visa case referred to in quoted paragraph 150 above is 2021 FCA 10. [83] Joint Book of Documents, Exhibit AR-2, vol. 1, tab 20, p. 1. [84] Ibid, p. 4. [85] Exhibit R-1, p. 1. [86] Transcript, vol. 1 (January 29, 2024), p. 101, lines 10-15. [87] CIBC Annual Accountability Report for 2006, Exhibit AR-2, vol. 2, tab 23, p. 39. The page numbers in respect of the Annual Reports, as shown in these footnotes, are the small numbers that were printed in those reports (some of which numbers are shown in each report’s table of contents), and not the larger numbers that appear to have been inserted when compiling the Joint Book of Documents or a binder of documents for the purposes of disclosure and discovery. [88] Ibid, p. 42, left-hand column. See also (i) the full-page Consolidated Balance Sheet on p. 80, which showed “Credit card” under the heading “Loans”; (ii) Note 4, titled “Loans”, on p. 92; the table titled “Average Balance Sheet, Net Interest Income and Margin”, on p. 132; and several other entries in various tables on pages 134-135 and 139-140 that categorized credit card transactions as loans. [89] Ibid, p. 42, right-hand column. [90] Ibid, p. 47. [91] Ibid, p. 54. [92] Ibid, p. 71. [93] Ibid, p. 74. [94] Ibid, p. 85. [95] CIBC Annual Accountability Report for 2007, Exhibit AR-2, vol. 2, tab 24, p. 46. [96] Ibid, p. 48. [97] Ibid, p. 53, left-hand column. See also (i) the full-page Consolidated Balance Sheet on p. 84, which showed “Credit card” under the heading “Loans”; and (ii) several other entries in various tables and notes on pages 98, 103-104, 106, 139-144 and 146-147, which categorized credit card transactions as loans. [98] Ibid, p. 53, right-hand column. [99] Ibid, p. 75, left-hand column. [100] Ibid, p. 91. [101] CIBC Annual Accountability Report for 2007, Exhibit AR-2, vol. 2, tab 24, p. 98. [102] CIBC Annual Accountability Report for 2008, Exhibit AR-2, vol. 2, tab 25, p. 55. [103] Ibid, p. 57. [104] Ibid, p. 62, left-hand column. See also (i) the full-page Consolidated Balance Sheet on p. 94, which showed “Credit card” under the heading “Loans”; and (ii) several other entries in various tables and notes on pages 109, 116-117, 119, 148, 157-162 and 164-5, which categorized credit card transactions as loans. [105] Ibid, p. 62, right-hand column. [106] Ibid, p. 75. [107] Ibid, p. 85, right-hand column. [108] Ibid, p. 101, left-hand column. [109] Ibid, p. 148. [110] Ibid, p. 157. [111] Ibid, p. 161. [112] Exhibits R-3, R-4 and R-5 respectively. [113] Exhibit R-3, p. 16 of the 2006 memorandum; Exhibit R-4, p. 18 of the 2007 memorandum; and Exhibit R-5, p. 10 of the 2008 memorandum. [114] Royal Bank of Canada v. The King, 2024 TCC 125 (“RBC”), ¶54 & 56 (although in ¶1 there is an indication that the sources of the interchange fees were the non-resident merchants). On October 24, 2024, RBC filed a notice of appeal in the Registry of the Federal Court of Appeal. The subject of the appeal appears to be an issue that is different from the issue referenced in these Reasons. [115] Ibid, ¶84. [116] Ibid, ¶1-3. [117] PASF, ¶21. [118] RBC, supra note 114, ¶12(13). [119] PASF, ¶31. [120] RBC, supra note 114, ¶53. [121] See paragraph 13 above. [122] RBC, supra note 114, ¶ 12(11)(g) & 54. [123] See subparagraph 14(o)-(p) above. [124] Exhibit AR-2, vol. 2, tab 23, p. 74. [125] In the definition of “Change of Control”, on page 4 of the Amended and Restated Credit Agreement (Exhibit AR-2, vol. 1, tab 9), dated as of November 19, 2004, among GPDI, various banks described as the “Lenders”, and CIBC, clause (a) of that definition indicated that there would be a change of control if GPI (i.e., Global) were to “cease to own and control, of record and beneficially, directly, 85% of each class of outstanding Capital Stock [defined to include “any nonredeemable capital stock”] of the Borrower [i.e., GPDI] free and clear of all Liens [defined to include a broad group of charges, encumbrances, etc.].” Thus, at the time of making that agreement, it appears that Global owned at least 85% of each class of issued shares of GPDI. [126] Exhibit AR-2, vol. 2, tab 26, p. 9. [127] Mid‑West Feed Limited et al. v. MNR, [1987] 2 CTC 2101 (TCC), at 2109‑2110. [128] Ibid, quoting from Barnes v. Deveson, [1960] VR 604 (Vict. SC), at 605. [129] Will‑Kare Paving & Contracting Limited v. The Queen, 97 DTC 506 (TCC), at 510. [130] Will‑Kare Paving & Contracting Limited v. The Queen, 98 DTC 6203 (FCA), at 6205; affirmed on other grounds, [2000] 1 SCR 915 (SCC). [131] Burger King Restaurants of Canada Inc. v. The Queen, [2000] 2 CTC 1 (FCA), at p. 5, ¶9‑10. [132] Ibid, at p. 5-6, ¶12, 14‑15. The omitted footnote contains the citation of the Mother’s Pizza case, which is 88 DTC 6397 (FCA). [133] Gerbro Holdings Company v. The Queen, 2016 TCC 173, ¶120; affirmed, 2018 FCA 197. [134] Subparagraph (a)(ii) of section VI-IX-1 of the ETA. [135] Glaxo Wellcome Inc. v. The Queen, 1996 CarswellNat 853, 96 D.T.C. 1159, [1996] 1 C.T.C. 2904 (TCC), ¶15. [136] Sie-Mac Pipeline Contractors Ltd. v. MNR, [1989] 1 CTC 2334, 89 DTC 230 (TCC), ¶15. [137] PASF, ¶26(k)-(o). See also subparagraphs 14(k)-(o) above. [138] Fresh as Amended Reply to the Fresh as Amended Notice of Appeal, filed on January 31, 2020, ¶13A; and Fresh as Amended Answer to Amended Amended Reply, filed on February 7, 2020, ¶1.13A; and PASF, ¶1. [139] PASF, ¶15. [140] Respondent’s Read-Ins, Exhibit R-6, tab 23, p. 73, lines 6-12. [141] PASF, ¶21. [142] Testimony of Rachel Brandes, Transcript, vol. 2 (January 30, 2024), p. 136, lines 7-21. [143] Transcript, vol. 2 (January 30, 2024), p. 136, lines 7-21. See also paragraph 19 and footnote 27 above, and Exhibit R-2, p. 5, ¶1.ix. [144] During the examination for discovery of CIBC’s officer, counsel for CIBC advised counsel for the Crown that “the GPDI interchange that we’re talking about here relates to transactions that occur in Canada based on where the merchant is located, in Canada. So the merchant is located in Canada.” See Respondent’s Read-Ins, Exhibit R-6, tab 23, p. 72, lines 17-20. [145] PASF, ¶31; and Exhibit R-6, tab 23, p. 73, lines 1-5. [146] Fresh as Amended Reply to the Fresh as Amended Notice of Appeal, filed on January 31, 2020, ¶13N; and Fresh as Amended Answer to Amended Amended Reply, filed on February 7, 2020, ¶1.13N. [147] Exhibit AR-2, vol. 1, tab, 4, p. 15, s. 3.2. [148] Exhibit AR-2, vol. 1, tab 4, p. 21, s. 6.2. [149] Exhibit AR-2, vol. 1, tab 4, p. 24-25, s. 8.3(a). [150] Exhibit AR-2, vol.1, tab 21, p. 1, ¶1; and Exhibit R-2, p. 3, ¶1.v. [151] Exhibit AR-2, vol. 1, tab 22, p. 1 & 3, ¶2 & 23. [152] Exhibit AR-2, vol. 1, tab 4, p. 19, ¶5.1(a); and Exhibit R-2, p. 3, ¶1.iv & p. 8, s. 6. [153] Exhibit R-2, p. 3, ¶1.v. [154] PASF, p. 7, ¶36. [155] See the Marketing Alliance Agreement, Exhibit AR-2, tab 4, p. 20, ¶5.3. [156] Exhibit R-2, p. 9, #6. [157] Exhibit AR-2, vol. 2, tab 26, p. 5-6. [158] Ibid, p. 33. [159] PASF, p. 7, ¶32-34. [160] PASF, p. 7, ¶36; and Exhibit AR‑2, vol. 2, tab 26, p. 34. The 2006 10‑K defines “CIBC” as meaning Canadian Imperial Bank of Commerce. It is not clear whether that term means only that bank, or that bank and its subsidiaries. [161] It is my understanding that the Crown is relying, in part, on facts that were not assumed by the Minister when reassessing or confirming the reassessments. Accordingly, the Crown has the burden of proof in respect of many of the factual elements of these Appeals. See footnote 43 above. [162] See the preceding footnote. [163] Exhibit AR-2, vol. 2, tab 26, p. 3-4. [164] Ibid, p. 20. [165] Ibid, p. 3. [166] Exhibit AR-2, vol. 2, tab 23, p. 57. [167] See the definition of zero-rated supply in subsection 123(1) of the ETA. [168] See the definition of exempt supply in subsection 123(1) of the ETA. [169] National Bank Life Insurance Company v. The Queen, 2005 TCC 425, ¶19, 25, 35, 38 and 41. [170] Michael H. Wilson, “Goods and Services Tax Technical Paper,” (Ottawa: Department of Finance, August 1989), p. 144. [171] Ibid, p. 141. [172] Ibid, p. 144. [173] Michael H. Wilson, Explanatory Notes to Bill C-62 (Ottawa: Department of Finance, February 1990), p. 256. See also National Bank Life Insurance, supra note 169, ¶26 & 35, which quotes from a subsequent set of Explanatory Notes released by the Department of Finance in May 1990. With respect to Part IX of Schedule VI of the ETA, the May 1990 Explanatory Notes stated, “This Part describes the circumstances in which a financial service is to be zero‑rated. A financial service is exempt unless it is explicitly included in this Part.” See Explanatory Notes to Bill C‑62 (Ottawa: Department of Finance, May 1990), as quoted in the National Bank Life Insurance case. [174] Senate of Canada Proceedings of the Standing Senate Committee on Banking, Trade and Commerce, issue 36, May 23, 1990, p. 36:44. [175] La Souveraine, Compagnie d’assurance générale v. Autorité des marchés financiers, [2013] 3 SCR 756, 2013 SCC 63, ¶56. See also The Queen v. The Corporation of The City of Sault Ste. Marie, [1978] 2 SCR 1299, 85 DLR (3d) 161. [176] Corporation de l’École Polytechnique v. The Queen, 2004 FCA 127, 2004 GTC 1148, ¶27-28. See also Canada (Attorney General) v. Consolidated Canadian Contractors Inc., [1999] 1 FC 209, 165 DLR (4th) 433 (FCA), ¶21 & 24; and Pillar Oilfield Projects Ltd. v. The Queen, [1993] GSTC 49, 2 GTC 1005 (TCC), ¶11 & 26. [177] Les Résidences Majeau Inc. v. The Queen, 2010 FCA 28, ¶8-10. [178] Crown’s Submissions, p. 51, ¶191 & fn. 200. See also paragraph 85 above. [179] See paragraphs 35-36 above. [180] Sarvanis v. The Queen, [2002] 1 SCR 921, 2002 SCC 28, ¶22. [181] RBC, supra note 114, ¶75-76. [182] Lest I be accused of giving a double message, I will note that, in Sarvanis, Justice Iacobucci also stated that the “phrase, ‘in respect of’, is clearly a broad one” and that “the phrase ‘in respect of’ signals an intent to convey a broad set of connections.” See Sarvanis, supra note 180, ¶20 & 22 respectively. Accordingly, as explained above, I maintain my view that, for the purpose of section VI-IX-1 of the ETA, as it applies to the facts of these Appeals, the phrase relates to is to be given a wide or broad interpretation. [183] Tri-Bec Inc. v. The Queen, [2002] GSTC 27 (French), [2003] GSTC 24 (English), TCC docket 2000-5161-GST-I, ¶25. [184] Signed pursuant to a written request and authorization issued by Chief Justice St‑Hilaire under section 16 of the Tax Court of Canada Act.