Aird & Berlis Successful in Pivotal Tax Court Appeal

CFI Funding Trust (the “Appellant”), which carries on the business of, among other things, securitizing automobile dealer leases, successfully obtained input tax credits related to HST payable on prepaid rents under a lease securitization structure. The case, CFI Funding Trust v. The Queen, 2022 TCC 60, addresses a primary GST/HST audit issue: prescribed documentation to support ITCs claimed under the Excise Tax Act.

The decision, which is regarded as one of the most important GST/HST decisions of the Tax Court in recent years, establishes that contrary to the Canada Revenue Agency’s assessing position, “supporting documentation” for the purposes of claiming ITCs need not be issued nor signed by the supplier. The Tax Court held that the Appellant had maintained and/or created sufficient documentation and information in both its books and records to support the ITCs and noted the CRA’s position could not be reconciled with its own stated policy on reverse invoicing, where, in certain circumstances, the recipient prepares the documentation to support ITCs. By clarifying the regulations prescribing what constitutes supporting documentation, the case will positively impact numerous GST/HST registrants seeking to claim ITCs based on information maintained in their books and records.

Neil Bass and Josh Kumar, of the Aird & Berlis Tax Group, successfully represented CFI Funding Trust.