Children's Clean Air Network Society v. The Queen, 2013 TCC 352 (Informal Procedure) -- summary under Commercial Activity

The appellant ("CCAN") was a not-for-profit organization which, in the second of the three years in question, was registered as a charity for the promotion of environmental responsibility. Part of this promotion entailed the production and distribution of tailgate magnetic stickers, posters, signs, etc., to discourage idle engine operation. CCAN printed its sponsors' logos on these materials. CCAN collected HST on the amounts received from the sponsors, which represented a mark-up over the related costs incurred by it. It claimed input tax credits for the HST on such expenses. C Miller J found that s. 135 deemed CCAN not to make a supply to each sponsor as "the sponsor's sole use was to publicize its business" (para. 10). However, CCAN was engaged in commercial activity as it made a margin in its sponsor dealings (para. 12), the publicity it provided to them was commercial in nature (para. 16) and "there is no reasonable expectation of profit test in the definition of commercial activity" (para. 15). The sponsor arrangements entailed both the promotion of the sponsor and the advancement of CCAN's mission, but with former characterized as merely a way to accommodate CCAN's mission (para. 18). C Miller J found the commercial portion of use of the promotional purchases was 30%. ITCs for HST incurred after CCAN became a registered charity was denied under s. 225.1(2).