Northbridge issued around 5,000 insurance policies each year to trucking companies operating in Canada and the US. It claimed ITCs for 1/3 of the GST/HST paid by it on its general head office and overhead costs on the basis that a portion of its insurance supplies were zero-rated under s. VI-IX-2. However, the Tax Court had completely denied its ITC claims on the basis that Northbridge had not determined the extent to which each of its policies was zero-rated, and instead only had “global evidence.”
In rejecting this approach, Webb JA stated (at para. 26):
[T]he general head office and overhead costs are incurred as part of the overall business being carried on by Northbridge. Any property or service acquired as part of the general head office and overhead costs is not acquired solely to be consumed in relation to a particular insurance policy, but rather such property or service is acquired to be consumed or used in relation to all insurance policies issued by Northbridge.
He referred the matter back to the Tax Court to determine the amount of ITCs to which Northbridge was entitled for such GST/HST costs in accordance with s. 141.02.