The appellant ("Great-West") provided prescription drug plans to the employees of various employers. The claims were processed by a third party ("Emergis") using its "Assure Card System." The plan members' claims were adjudicated electronically immediately upon being charged for filling a prescription at a participating pharmacy. Emergis would then reimburse the pharmacies for the claim amount, and submit periodic invoices to Great-West. The appellant sought a refund of GST and HST that it had paid on Emergis's fees, on the basis that Emergis was providing a financial service.
Before finding that the supply by Emergis was excluded by s. 4(2) of the Financial Services and Financial Institutions (GST/HST) Regulations as an administrative service and before noting (at para. 89) that "the taxability of a compound supply under the ETA is based on the essential character or substance of the supply and not the constituent elements of the supply," he stated (at para. 81):
[T]he essential character of the supply provided by Emergis to Great-West is the payment to the plan member of the drug benefit claimed by the plan member under a group health benefits plan. The payment of the amount is effected through the agreement of the pharmacy to forgo the collection of the full price of the drug at the point of sale.
The other services that Emergis agreed to provide, such as setting up a network, developing software standards, and maintaining a support desk, were ancillary or incidental to, or consequent upon, Emergis' agreement to pay plan members (para. 71).
See summary under Financial Services and Financial Institutions (GST/HST) Regulations, s. 4(2), s. 123(1) - financial services - para. (r.4), General Concepts - Payment and Receipt.