President's Choice Bank v. Canada (the King), 2024 FCA 135 -- summary under Commercial Activity

PC Bank, a corporation in the Loblaw group, issued loyalty points to its cardholders based on their expenditures, which could then be applied by the cardholders towards purchases at Loblaw-branded stores, with PC Bank then paying the cash value of those points (the redemption payments) to Loblaws, but also receiving payments of two types from Loblaws that reduced its loss on paying the redemptions amounts. Goyette JA found that the Tax Court had failed to recognize that the redemption amounts, although paid in the course of PC Bank’s exempt financial services business, were also paid in the course of its commercial activity of “driving customers to Loblaws” – and that it did not matter that PC Bank was incurring a loss on this commercial activity because a commercial activity of a corporation was not required to have a reasonable expectation of profit.