International Hi-Tech – Tax Court of Canada finds that secured creditors of a bankrupt corporation could launch a GST appeal in the name of the corporation
S. 266 of the ETA indicates that a receiver for a secured creditor who has taken control of a debtor’s property under its security interest "shall be deemed to be an agent of the [debtor] and any supply made or received and any act performed by the receiver in respect of [such]… assets… shall be deemed to have been made , received or performed...as agent on behalf of the [debtor]." Bocock J found that, after the receiver for the shareholder (and affiliates) of a bankrupt corporation acquired essentially all its assets out of the bankrupt estate pursuant to their security interest, it could bring an appeal in the name of the corporation to recover denied input tax credit claims, notwithstanding that the trustee in bankruptcy had not authorized such proceeding.
Although startling, this result is not literally inconsistent with the bolded words, i.e., there is nothing stating that the receiver’s agency is restricted to making or receiving supplies on the debtor’s behalf.
He implicitly treated the ITC entitlement as having been assigned to the receiver without discussing the prohibition in the s. 67 of the Financial Administration Act against the assignment of Crown debts. However, this point does not undercut the above branch of his decision and in fact reinforces the approach taken of bringing an action in the name of the corporation to get the cash.
Neal Armstrong. Summary of International Hi-Tech Industries v. The Queen, 2014 TCC 198 under ETA, s. 266(2)(a).