No ITCS For Credit Card Loyalty Expenses - For Banks

FCA SKATES FINE LINE: CONCLUDES ITCS FOR PC BANK BUT NOT FOR AMEX!

In a long running tax issue in Canada, the question has been whether Financial Institutions like banks and credit card companies are entitled to take Input Tax Credits ("ITCs") when incurring Goods and Services Tax ("GST") on expenses related to associated loyalty point programs. The Tax Court of Canada ("TCC") has been fairly consistent on this question (answering it in the negative) but the Federal Court of Appeal ("FCA") has now come to opposite conclusions in two decisions involving PC Bank and Amex points cards.

In its more recent decision in Amex, the FCA seems to have signalled that ITCs are not going to be available where the primary motivation is driving its own credit card business!