Holding Company ITCs – Management Services

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Holding Company ITCs –  Management Services

MiedzI Copper Corporation v The Queen, 2015 TCC 26

The Appellant, a holding company whose only activity was holding shares in foreign entity Op-Cos, claimed Input Tax Credits (ITCs) for HST paid on management, professional, and geological survey fees.   At issue was the interpretation of “in relation to” in Excise Tax Act subsections 186(1) and (3), allowing a holding company to claim ITCs.

The TCC held that where a HoldCo does nothing else but hold shares of the subsidiary, everything the HoldCo “does can be said to be done in relation to the shares or indebtedness of” the subsidiary (para 35).


The Appellant is a holding corporation headquartered in Vancouver that carries out no activity other than holding all of the shares of a foreign corporation that in turn owns shares of a number of mineral exploration companies.   The Appellant has no employees or premises of its own, but raises funds to loan to its subsidiary to be loaned to the operating companies. All of its operations are carried out by contractors providing services to the Appellant.


The Appellant argued that subsection 186(1) is a look-through provision that allows a HoldCo to claim ITCs that the underlying corporation would have been claimed if the costs were incurred by it directly.

The Crown argued that the costs were HoldCo’s own corporate costs, that the “in relation to”must be interpreted in the context of “to the extent that” and “can reasonably be regarded”, limiting the eligible costs to those related to shares or indebtedness – an actual relationship between the expense and the shares or indebtedness.


Absent ETA subsection 186(1), a holding company would not be able to claim ITC. This subsection permits such claims so long as the conditions in the provision are met.  One condition is that the services in respect of which the ITCs are claimed can “reasonably be regarded as having been… acquired… for consumption or use in relation to the shares or indebtedness” of the subsidiary corporation.

The Court referred to the TCC decision in Stantec Inc. v. Her Majesty the Queen, 2008 TCC 400, aff’d 2009 FCA 285 where the phrase “in relation to” was given a broad interpretation such that no direct or substantial link between the cost and the shares of the subsidiary are needed (paras 14-15):

“Reasonably regarded in relation to” is an expression of the widest possible import. The Supreme Court of Canada addressed the phrase “in relation to” in Slattery (Trustee of) v. Slattery [1993] 3 S.C.R. 430 suggesting it implies a wide, rather than narrow, view in connecting two matters. When this expansive approach has a lead-in with the words “reasonably regarded”, I reach the inevitable conclusion that it should not take very much to draw a nexus between acquiring the listing services and the shares of either Keith Companies or Stantec California. 

There is no question there is a strong nexus between the listing services and the Stantec shares – they were the very shares listed, but the connection need not be one of a primary nor substantial nor directly related nature. The concept of “in relation to” is not one of prominence let alone exclusivity.

The TCC held that where a HoldCo does nothing else but hold shares of the subsidiary, everything theHoldCo “does can be said to be done in relation to the shares or indebtedness of” the subsidiary (para 35).  The Court concluded that  “there is a clear nexus between the administrative, management and legal services in issue and the shares or indebtedness of [the subsidiarty]. But for its ownership of the [subsidiary’s] shares and its funding of [subsidiary] by debt, [HoldCo] would not have acquired those services” (para 35″.

– Sas Ansari, JD LLM PhD (exp)

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