Global Cash Access (Canada) Inc. v. R. – FCA: Fees Paid Casinos by Cash Access Company Fin. Services Exempt From GST

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Global Cash Access (Canada) Inc. v. The Queen[1] (November 19, 2013) involved terminals in casinos where patrons used credit cards and obtained cheques.  Those cheques were in turn cashed by the Casino and used by the patrons.  The taxpayer, Global, paid the casinos fees in connection with the cheques cashed.  At issue was whether those fees paid to the casinos were subject to GST:

[7]               During the period relevant to this appeal, Global gained access to the Casinos through written contracts. The contracts are substantially the same and the parties referred to one of them, the contract dated December 1, 1995 related to two Casinos in Windsor, as an exemplar.

[8]               The purpose of the contract, as stated in the preamble, was that Global would become a supplier of Funds Access Services within the Casinos, and that the Casinos would receive a commission for each completed transaction, the amount of which would vary depending upon the amount of cash provided to the casino patron:

Cash provided


Up to $420


$420 to $1,410


$1411 or more


[9]               The contract also provides for a “transaction volume incentive” which increased the amount of the commission once the volume reached certain levels. The table in the contract that describes the transaction volume incentive reads as follows:


Transaction volume incentive

$200,000 to $250,000


$250,001 to $300,000


Over $300,000


[10]           Paragraph 1 of the contract gives Global “the right to be the sole and exclusive supplier” of Funds Access Services in the Casinos for the term of the contract. Pursuant to paragraph 2 of the contract, the equipment and infrastructure required by Global to provide its Funds Access Service was to be provided by Global and at its cost, except that the Casinos were required to install and maintain the required telephone lines.

[11]           Paragraph 3 of the contract describes in some detail the procedures required to complete a Funds Access Service transaction. Based on that provision and the facts as found by Justice Woods, a transaction was considered to be completed when the following steps were correctly taken:

(a)           The credit card would be swiped at one of Global’s dedicated computer terminals in a Casino. If the terminal was located in one of Global’s kiosks in a public area of the Casino, the patron would swipe the card. If the terminal was located in the cashier area of the Casino, a cashier would swipe the card.

(b)          The patron or the cashier, as the case may be, would be prompted to key the amount of money requested by the casino patron. That would initiate Global’s automated approval process.

(c)           If the request was approved, a payment instrument – the “cheque” referred to in paragraph 12 of Justice Woods reasons (quoted above) – would be printed, showing the Casino as the payee. If the transaction was initiated by the patron at a kiosk, the patron would take the payment instrument to a cashier.

(d)          The cashier would obtain an authorization number from Global, either electronically or by telephone. The cashier would verify that the transaction was on or after the valid date and on or before the expiration date embossed on the patron’s credit card, and would ensure that the payment instrument contained a legible imprint of the credit card.

(e)           The cashier would also ensure that the payment instrument contained the information required to identify the patron as the owner of the credit card, and the information required to identify the bank that issued the credit card. According to the documentary evidence in the record, the identifying information about the patron would be hand-written on the payment instrument, either by the patron or by the cashier based on information provided by the patron.

(f)           The patron would acknowledge, by signature and initials in the appropriate spaces on the payment instrument, the amount of the cash requested and the amount of the fee the patron was required to pay to Global, which varied according to the amount of cash obtained. For example, for cash in the amount of $71 to $140, the fee was $17, and for cash in the amount of $3,521 to $7,050, the fee was $179.25.

(g)          The cashier would pay the patron the amount of cash requested, and would retain the payment instrument for the Casinos.

The Tax Court Judge held that the fees were paid for three separate supplies and only one of those, involving 25% of the fees, was exempt from GST:

[2]               The GST in issue was imposed on certain commissions paid by Global to two corporations that operated casinos in Ontario. (In these reasons, I use the term “Casinos” to refer to the two corporations and the casinos.) Global argued in the Tax Court, and maintains in this Court, that the commissions are exempt from GST because they were paid as consideration for a “financial service” as defined in subsection 123(1) of the Excise Tax Act. Justice Woods concluded that 75% of the commissions are subject to GST, but the remaining 25% is exempt.

[3]               The parties agree that the total amount of the commissions should be treated the same way, without allocation. Global argues that the commissions are entirely exempt from GST because they are consideration for a supply that falls within the statutory definition of “financial service”. The Crown argues that the commissions are entirely taxable because they are not consideration for a “financial service” as defined.

Thus it appears that on appeal neither the taxpayer nor the Crown wanted to support the finding at the Tax Court.  The Federal Court of Appeal accepted the view of the parties that there was only one supply:

[21]           The Casinos initially believed that the commissions it received from Global in respect of Funds Access Service transactions were exempt from GST. Accordingly, they did not collect GST from Global on the commissions. The Minister of National Revenue concluded otherwise and initially assessed Global for the uncollected GST. The Casinos paid the GST and were reimbursed by Global. Global then filed a rebate application on the basis that the GST had been paid in error. The Minister did not agree and assessed Global for the GST. The notice of assessment permitted Global to object and, when that did not succeed, to appeal to the Tax Court.

[22]           As indicated above, the issue before the Tax Court was whether the commissions paid by Global to the Casinos were consideration for a “financial service” supplied by the Casinos. Justice Woods concluded that what the Casinos supplied to Global in exchange for the commission was a bundle of supplies comprised of three elements, described as follows at paragraph 63 of her reasons:

63. Accordingly, there are three main aspects to the bundle of supplies by the Casinos: (1) allowing kiosks on the premises, (2) providing support services at the cashier cages such as transaction procedures and initiating transactions on behalf of patrons, and (3) cashing Global’s cheques.

[23]           She held that these three elements were not sufficiently interdependent to constitute a “single supply”, and that none of the three elements could properly be characterized as incidental to the other. Therefore, she considered it necessary to determine which of the three elements, if any, fell within the statutory definition of “financial service”. She concluded that only the third element, “cashing Global’s cheques”, fell within the statutory definition. She estimated that the third element represented 25% of the total value of what the Casinos supplied to Global and on that basis she concluded that only 25% of the commission was exempt from GST.


[24]           The parties agree that this was a case of a single supply by the Casinos, not a supply of several things of which only one was within the statutory definition of “financial service”. I agree.

[25]           It is clear from the contract and from the undisputed facts that none of the three elements of the supply as identified by Justice Woods had commercial efficacy on its own. More importantly, there is no evidence that Global would have been prepared to pay consideration to the Casinos for any of the three elements on its own. Since the three elements are integrally connected and there is a single consideration, there is a single supply.

The Federal Court of Appeal concluded that the supply in question was the making of an advance by the Casinos to patrons:

[28]           On any reasonable view of the evidence, the commercial efficacy of the arrangement depends critically on access to the Casinos’ cash. Global is in the business of providing the means by which holders of credit cards can be furnished with cash. Global entered into the contracts with the Casinos specifically to ensure that patrons of the Casinos could be furnished with cash on the Casinos’ premises. Unless the Casinos were willing and able to supply the cash, there would have been no point in Global setting up its equipment on the Casinos’ premises or specifying the documentation required to complete the transactions.

[29]           In my view, based on that understanding of the contract between the Casinos and Global, each completed transaction falls within paragraph (g) of the statutory definition of “financial service” (“the making of any advance, the granting of any credit or the lending of money” or « l’octroi d’une avance ou de crédit ou le prêt d’argent »).

[30]           I reach that conclusion because the heart of each transaction is an advance of money by the Casinos, disbursed to casino patrons at Global’s direction, and repayable by Global. The repayment obligation is performed when the Casino deposits the payment instruments into its bank account and the payments instruments are honoured by Global. The legal obligation of Global to repay the Casinos for the amount of cash advanced may arise because the payment instrument is, in law, a “cheque”, but it is also expressed in paragraph 5 of the contract:

5. [Global] agrees to guarantee payment on all […] payment instruments where the transaction and the payment instrument have been properly completed in accordance with [Paragraph 3].

The court also opined that paragraph (i) of the definition of “financial service” – “any service provided pursuant to the terms and conditions of any agreement relating to payments of amounts for which a credit card voucher or charge card voucher has been issued” – could equally apply:

[35]           Therefore, it could be said that the payment instrument is a document that, paraphrasing paragraph (i) of the statutory definition of “financial service”, relates to an amount for which a credit card voucher is issued. It could also be said that the service of completing the payment instrument in a way that complies with the requirements of the credit card issuers is a service within the scope of paragraph (i). However, that does not detract from the conclusion that what the Casino is supplying to Global is also an advance within the scope of paragraph (g), which in my view is more directly applicable in this case.

The court however rejected the application of paragraph (l) of the definition of “financial service” – “an agreement to provide, or the arranging for, a service referred to in any of paragraphs (a) to (i)”.

The Crown’s position was that paragraph (r.4) or (r.5) of the definition of “financial service” operated to remove the supplies from the concept of financial service:

(r.4) a service (other than a prescribed service) that is preparatory to the provision or the potential provision of a service referred to in any of paragraphs (a) to (i) and (l), or that is provided in conjunction with a service referred to in any of those paragraphs, and that is

 (i) a service of collecting, collating or providing information, or

 (ii) a market research, product design, document preparation, document processing, customer assistance, promotional or advertising service or a similar service,

 (r.5) property (other than a financial instrument or prescribed property) that is delivered or made available to a person in conjunction with the rendering by the person of a service referred to in any of paragraphs (a) to (i) and (l) ….

The court rejected this interpretation:

[38]           The underlying premise of the Crown’s argument is that the predominant supply is either the information-gathering aspect of the clerical work of completing the payment instruments, the physical access given to Global for the placement of its computer terminals and kiosks, or both. Given my conclusion as stated in paragraph 25 above, I cannot accept that premise. Therefore, I must conclude that Crown’s reliance on paragraphs (r.4) and (r.5) is misplaced.

Accordingly the Federal Court of Appeal allowed the taxpayer’s appeal and vacated the GST assessments.

Comment:  This case is important both on the basis of the primary finding that the supply was “the making of an advance”, but also because of the court’s practical, business-friendly interpretation of paragraph (i) of the definition of “financial services” – “any service provided pursuant to the terms and conditions of any agreement relating to payments of amounts for which a credit card voucher or charge card voucher has been issued”.  Although this latter finding may be obiter it is bound to have an impact on thinking within the larger GST community.

[1] 2013 FCA 269.