In Zomaron Inc. v. The Queen, 2020 TCC 35, the Tax Court of Canada (TCC) held that the services supplied by a company consisted of a single compound supply under the Excise Tax Act (the Act). Zomaron Inc. was hired as an intermediary to facilitate the negotiating process between credit and debit card processing service providers and potential merchants inclined to make use of the processing service for customer transactions. The TCC found that the services Zomaron Inc. provided were inextricably intertwined and integrally connected to one another such that the services constituted a single supply, rather than several distinct supplies. The TCC continued their analysis to determine that the single compound supply constituted "arranging for" a financial service within the meaning of paragraph (l) of subsection 123(1) of the Act and was, therefore, tax exempt.
Tax Foresight correctly predicted that the supplied intermediary services consisted of a single compound supply versus multiple separate supplies. The prediction was based on several factors, including that:
- The company received a single payment for completing each transaction in its entirety as opposed to its constituent elements;
- The company's services were purchased as a package as none of the constituent elements would have commercial efficacy on its own; and
- The service elements were designed to work together such that they were integrally connected
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.