Humber College - Tax Court finds that it was absurd not to allow a college to apply its GST rebate retroactively

Humber College was late in reporting the GST payable by it on the purchase of several properties, and in claiming the related 67% rebate.  The Minister charged interest from the filing deadline, but only applied the rebate from Humber's actual filing date.  If Humber had not filed for the rebate but waited instead for the Minister's assessment, s. 296(2.1) of the ETA would have compelled the Minister to apply the rebate as of the filing deadline.

C Miller J found that this basing of the interest calculations on the gross GST owing, rather than the net amount after rebate, contradicted the "inescapable conclusion that subsection 296(2.1) of the Act simply presumes the college applying for the rebate would naturally have the retroactive treatment."  Accordingly, Humber's approach, of retroactively netting the rebate for interest computation purposes, worked.

S. 296(2.1), respecting the deduction of available rebates on CRA assessments, is similar to s. 296(2), respecting the deduction of available input tax credits on CRA assessments.  However, Paquin found that in a late-filed return situation, ITCs did not reduce interest charges until the time they actually were claimed.  C Miller J distinguished Paquin on the basis that, unlike rebates, "ITC’s are not inextricably linked to the transaction giving rise to the GST."  In other words, the right to the rebate (which effectively is like a rate reduction) is somewhat automatic, whereas potentially difficult conditions must be satisfied in order to earn ITCs.

Neal Armstrong.  Summaries of Humber College Institute of Technology & Advanced Learning v. The Queen, 2013 TCC 146 under ETA ss. 280(1) and 296(2.1).