The Tax Court dismissed the bank’s appeal, ruling that the provision of Aeroplan Miles was part of a single provision of promotional and marketing services provided by Aeroplan to the bank and therefore subject to GST / HST. In obiter, the tax court also ruled that Aeroplan Miles are not “gift certificates” because they do not have attributes similar to money.
The issue on appeal to the Federal Court of Appeal was whether the Tax Court judge erred in concluding that the bank had acquired Aeroplan promotion and marketing services and not just miles. Aeroplan. If the Tax Court judge erred in this interpretation, the next question to be determined was whether the Tax Court judge also erred in concluding that Aeroplan Miles are not. âgift certificatesâ for the purposes of the Act.
The bank argued to CAF that the offer of Aeroplan Miles made available was the provision of Aeroplan Miles to customers of the bank. However, FCA judge Wyman Webb, writing on behalf of the majority, rejected this argument. He said in his ruling that the bank’s customers were not required to pay the consideration to Aeroplan under the agreement. As such, customers were not legally responsible for paying GST / HST on supplies made under this agreement. Instead, Justice Webb wrote, the bank was the party liable for the GST / HST.
Justice Webb’s decision also found that the agreement explicitly identifies both primary and ancillary supplies as part of Aeroplan’s promotional and marketing services. Other Aeroplan obligations, which would include issuing Aeroplan Miles to customers of the bank, are incidental to promotional and marketing services.
The FCA noted that the classification of Aeroplan Miles under the Act would affect both those who redeem Aeroplan Miles and Aeroplan, which would accept miles for goods or services. Yet neither the people who redeemed Aeroplan nor Aeroplan Miles were parties to the appeal. Additionally, the Tax Court judge said in his ruling that it was not clear how Aeroplan handled the redemption of Aeroplan Miles.