The appellant (“Northbridge”) issued fleet insurance policies to trucking companies who operated their vehicles in both Canada and the U.S. The Tax Court had found that none of such supplies of insurance were zero-rated under Sched VI, Pt. IX, s. 2(d) on the basis that this provision referenced the ordinary location of the insured vehicles, and there was no evidence on that point – and accordingly confirmed the denial of Northbridge’s related input tax credit claims.
Before allowing the appeal, Webb JA stated (at paras. 34, 36 and 45):
The risk of a claim arising from an accident (or other insurable event) is linked to a geographic location. An accident (or other insurable event) occurs at a particular location. …
… Since the policies issued by Northbridge in part related to accidents (and other insurable events) that are usually situated outside Canada, the supply of a portion of the policies qualified as a zero-rated supply. …
“[R]isks” means the risk of a claim arising from an accident or other insurable event. To the extent that any insurance policy issued by Northbridge covered such risks that were ordinarily situated in the United States, the supply of such a policy would be a zero-rated supply. The risks would be ordinarily situated in the United States based on the historical data for claims arising from accidents in the United States.
Since the Tax Court had not considered the evidence relating to this point, the matter was referred back to the Tax Court for such consideration.