Digests

Customs and Excise

Excise Tax Act

Appeal from Tax Court of Canada decision (2008 TCC 337) finding respondent’s disbursements incurred as agent for its clients, therefore not subject to GST—In course of providing legal services, respondent acquiring various goods, services from third-party suppliers—Respondent not collecting, remitting GST on disbursements viewed as having been incurred as agent for its clients—No evidence led concerning any understanding third-party suppliers had regarding who was liable to pay for goods, services supplied—Whether disbursements at issue were incurred by respondent as agent for its clients—Onus on lawyer to establish existence of agency relationship—Court previously recognizing essential quality of agency is whether putative agent having capacity of affecting principal’s legal position—While Tax Court Judge referencing liability under contracts as being indicator of agency relationship, Judge failing to address whether respondent, clients liable under agreements with third-party suppliers—Judge erring in law by relying upon general nature of solicitor-client relationship—It does not follow that, because solicitor-client relationship generally one of agency, all financial obligations incurred by lawyer while providing legal services incurred as agent of its clients—Proper test requiring Judge to determine whether respondent’s clients were bound by contracts with third-party suppliers—No evidence supporting such conclusion—Respondent thus not meeting onus of establishing it acted as agent for its clients when incurring disbursements—Goods, services attracting disbursements were taxable supplies, respondent required to collect, remit GST thereon—Appeal allowed.      

Canada v. Merchant Law Group (A-443-08, 2010 FCA 206, Dawson J.A., judgment dated August 5, 2010, 17 pp.)