25 February 2016 CBA Roundtable, Q.8

When a credit note is issued under s. 232, a deduction against net tax can be taken only for the reporting period in which the credit note was issued (s. 232(3)(b)). If the registrant neglects to claim the deduction, will CRA reassess on a request to allow a late claim? CRA responded:

Our position as stated in... P-149R ...has not changed.

…Amounts included on previously filed GST/HST returns may be adjusted, except where a person is attempting to increase the amount of input tax credits (ITCs) or other credit adjustments without a corresponding increase in tax liability for the same reporting period.

In certain circumstances, administrative flexibility may be exercised to make adjustments for missed ITCs or deductions without a corresponding increase in tax liability for the same reporting period. This flexibility may include where the adjustment relates to an amount that may not be reported or accounted for in a subsequent period. The circumstances surrounding a registrant's request will be taken into account when deciding whether to adjust a previously filed return. For example, an audit of the registrant's records may be required.

In P-149R, CRA states that it generally will not assess a prior GST/HST return at the request of the registrant to the extent this will result in a reduction in net tax, so that the registrant should instead carry forward unclaimed input tax credits for claiming in its current return. However, this does not work for a credit arising under 232(3) , as that credit cannot be carried forward to a subsequent return. CRA indicated that in its policy under P-149R, it has the “flexibility” to allow assessing the prior return “where the adjustment relates to an amount that may not be reported or accounted for in a subsequent period.”