Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
GST/HST Rulings Directorate
5th floor, Tower A, Place de Ville
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 248241
November 5, 2024
Dear [Client]:
Subject: GST/HST interpretation
Eligibility for a rebate on a deposit paid to a supplier
Thank you for your correspondence of [mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to a deposit collected by a supplier that would be applied in the event tax was assessed by the CRA.
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
Based on the information […] we received […], we understand the following:
1. The […][foreign representative] in Canada is following up on a transaction involving the export of a vehicle from Canada to […][country outside Canada] (“the Export”).
2. Accompanying the Export is a bill of lading […] (“The Bill of Lading”).
3. The Bill of Lading lists the shipper/exporter as […] (“Canco”) and the consignee as […] (“Nonresco”).
4. Canco is located at […][address in Canada].
5. Nonresco is located at […][address outside Canada].
6. The Bill of Lading describes the vehicle to be exported as a […][year, make and model of vehicle] with identification number of [#] (“the Vehicle”).
7. The Bill of Lading specifies that the Vehicle was laden on board the […] vessel at the port of […][Canadian city] on [mm/dd/yyyy] for delivery in […][city outside Canada].
8. Canco issued a document entitled […] (“the Certificate”) to Nonresco concerning the payment received and refunds applicable to the sale of the Vehicle. […].
9. An amount of $[...] is listed on the Certificate as a “tax deposit refund.” […].
10. […] we received a copy of […][provincial vehicle owner insurance and registration certificate] with the owner of the Vehicle listed as […][an individual].
INTERPRETATION REQUESTED
You would like to know if Nonresco can recover as a rebate from the CRA the amount listed as a “tax deposit refund” on the Certificate.
INTERPRETATION GIVEN
Based on the information provided, the CRA cannot provide Nonresco a rebate of the amount listed on the Certificate as a “tax deposit refund”.
GST/HST rebates
The CRA Guide RC4033, General Application for GST/HST Rebates, (RC4033) describes the circumstances in which a person can apply to the CRA for a rebate of tax paid, lists the documents a person must include with their rebate application and provides the timelines for a person to file their rebate application.
Subsection 261(1) of the Act specifies that the CRA will pay a rebate to a person if the person paid an amount as GST/HST in a situation where they should not have. The person must apply for the rebate using Form GST189, General Application for GST/HST Rebates, and include in their application the invoices, proof of payment of the tax and other information concerning the amounts paid in error. The application for a rebate must be filed within two years of the day that the person paid the amount of tax in error.
The amount listed as a “tax deposit refund” on the Certificate […] does not indicate that tax was paid. Consequently, Nonresco is ineligible for a rebate from the CRA.
If Nonresco did have sufficient documentation to prove that they paid GST/HST on the supply of the Vehicle and that they should not have, they would have two years from the day they paid the amount in error to file their application for a rebate. Since this period has expired, Nonresco would be ineligible for a rebate even if they obtained such documentary evidence.
Responsibilities of a registrant supplier
Generally, GST/HST registrants are responsible for collecting the GST/HST when they make taxable supplies (other than zero-rated supplies) of property and services in Canada. They hold this tax in trust until they report it on a return and remit it to the CRA.
The CRA selects registrants to be audited based on a risk assessment. During an audit, the CRA closely examines the books and records of a registrant to confirm whether they are fulfilling their tax obligations, following tax laws correctly, and receiving the credits to which they are entitled.
The CRA generally has four years from the last day in which a return was filed or was required to be filed to reassess it, and in the case of neglect, carelessness or fraud, there is no limitation period on the reassessment.
The […] “tax deposit refund” […] is an amount agreed to by the parties to the transaction, Nonresco[’s] […] best avenue for recovering this deposit is by taking the matter up directly with Canco. […].
DISCLAIMER
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1-4, Excise and GST/HST Rulings and Interpretations Service, the interpretation(s) given in this letter, including any additional information, is not a ruling and does not bind the Canada Revenue Agency (CRA) with respect to a particular situation. Future changes to the ETA, regulations, or the CRA’s interpretative policy could affect the interpretation(s) or the additional information provided herein.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-670-7281.
Should you have additional questions on the interpretation and application of the GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Sincerely,
Chris White
Industry Sector Specialist
Border Issues Unit 2
General Operations and Border Issues Division
GST/HST Rulings Directorate
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