The registrant served retail travel agencies by booking and purchasing airline tickets for the agencies' customers, which resulted in the receipt by it of commissions from the airlines. Where the retail agencies had no agreement with the issuer of the customer's credit card, the registrant would act as the "merchant" insofar as the credit card issuer was concerned, so that the voucher amount for the ticket was advanced to it, with that amount being used by the registrant towards the cost of the ticket. In those situations, the registrant charged $15 per ticket to the retail agency to cover the charge of 2% to 3% by which the credit card issuer discounted the amounts which it paid to the registrant..
Archambault J found that the $15 fees of the registrant were consideration for supplies of services to the travel agencies, but that such supplies were exempt supplies under three aspects of the financial services definition, of which the most apt were paras. (l) and (i) (arranging for payment of a credit card voucher amount). Archambault J stated (at para. 31):
Skylink obtained payment of the amount of the credit card slip from the issuer pursuant to the obligation that the issuer had towards the credit card holder.
The amounts were not excluded by para. (n) (consideration for a taxable supply) and (t) (prescribed service). Archambault J stated (at para. 32):
In my view, paragraph (n) does not apply here since Skylink arranged not for obtaining payment of the ticket price, but rather for obtaining payment of the amount of the credit card slip by the issuer.
Regarding para. (t), Archambault J found that the collection of credit card voucher amounts was "solely the ... taking of the receipt ... of other amounts" under s. 4(2) of the Financial Services (GST) Regulations: "I do not see here any other kind of service" (para. 38). S. 4(2) also did not apply because, under s. 4(3)(a), the registrant was a "person at risk" for the amounts involved. Archambault J. stated (at para. 40):
Under the terms and conditions of its agreement with the issuer, Skylink could be required to pay back to the issuer the amount of the credit card slip. For example, if a customer does not sign the slip and disputes its validity, the issuer is entitled to require Skylink to repay it the amount appearing on the slip.... [I]n some instances, as a result of bankruptcy or for some other reason, the retail agency may be unable to reimburse Skylink.