Andrews v. R. - TCC: Driving service not a “transportation service” - not zero-rated for GST/HST

Andrews v. R. - TCC:  Driving service not a “transportation service” - not zero-rated for GST/HST

Andrews v. The Queen (February 13, 2017 – 2017 TCC 23, V. Miller J.).

Précis:   Mr. Andrews operated Canadian Auto, a sole proprietorship. Canadian auto arranged for drivers to transport cars from the US to Canada on a seasonal basis, typically where there was a medical emergency involving the owner or operator of the vehicle. The cars were driven under their own power and not towed or otherwise transported.  Mr. Andrews claimed that his supplies were zero-rated “transportation services”.  CRA maintained that they were “driver services” (not a term defined in the Excise Tax Act but one found in some CRA literature) and not zero-rated.  The Tax Court agreed with CRA.  The appeal was dismissed.  There was no order as to costs as this was an informal procedure appeal.

Decision:   The Court drew a distinction between zero-rated “transportation services” and non-zero-rated “driver services” as follows:

[19]        The term “driving services” is not defined in the Act. It is an expression used in Guide RC4080 - GST/HST Information for Freight Carriers. The reference to “driving services” is with respect to “freight transportation services” and it reads:

Freight transportation services

Freight transportation service means the service of transporting goods. In certain circumstances, other services may also be considered freight transportation services. Before determining whether a freight transportation service is taxable at 0%, 5%, 12%, 13%, 14%, or 15%, you have to determine if the service you provide is a freight transportation service. You also have to determine if the property and services you provide are incidental to, or part of, a freight transportation service.

Driving services

The service of a driver is usually not a freight transportation service. This is the case when, for example, a self-employed driver does not use his or her own truck and does not assume responsibility for the supply of the freight transportation service. The driver is then supplying a driving service.

[27]        Whether the service provided by Canadian Auto was a “freight transportation service” depends on whether it was a “particular service of transporting” tangible personal property.

[28]        When interpreting tax statutes, the Supreme Court of Canada, in Canada Trustco Mortgage Co v The Queen, 2005 SCC 54 stated at paragraph 10:

10 It has been long established as a matter of statutory interpretation that “the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament”: see 65302 British Columbia Ltd. v. R., [1999] 3 S.C.R. 804 (S.C.C.), at para. 50. The interpretation of a statutory provision must be made according to a textual, contextual and purposive analysis to find a meaning that is harmonious with the Act as a whole. When the words of a provision are precise and unequivocal, the ordinary meaning of the words play a dominant role in the interpretive process. On the other hand, where the words can support more than one reasonable meaning, the ordinary meaning of the words plays a lesser role. The relative effects of ordinary meaning, context and purpose on the interpretive process may vary, but in all cases the court must seek to read the provisions of an Act as a harmonious whole.

[29]        In order to ascertain the ordinary sense of the word “transporting”, I have consulted two dictionaries. The online Oxford dictionary defines the verb “transport” as “take or carry (people or goods) from one place to another by means of a vehicle, aircraft, or ship”. The Black’s Law Dictionary (10th Edition) defines “transport” as “to carry or convey (a thing) from one place to another”. As a result of these definitions, I have concluded that a “freight transportation service” means a particular service of carrying personal property from one place to another. The personal property can be carried by means of a vehicle, aircraft rail or ship. However, there must be mode of carrying the personal property. Contrary to the Appellant’s arguments, the vehicle cannot be both the personal property and the means of carrying it at the same time.

[30]        It is my view that the service provided by Canadian Auto was not a “particular service of transporting” and therefore, it was not a “freight transportation service”. Its services were not zero rated. Canadian Auto provided a driving service to the insurance companies and the owners of the vehicles.

As a result the appeal was dismissed.  There was no order as to costs as this was an informal procedure appeal.