CRA states that it usually will provide administrative relief where a registrant fails to self-assess tax on the purchase of commercial real estate

A GST-registered person purchases commercial real estate and, when it files its return for that month, neglects to report the tax payable under s. 228(4) on the purchase (which is required to be reported on a separate line in the return) and to claim the offsetting input tax credit. If this is discovered by CRA on audit, it generally will assess the purchaser for its s. 228(4) tax, allow the off-setting ITC and not assess any interest. However, it states that it will not provide this “administrative relief” “where the purchaser was previously assessed under similar circumstances.”

Although ETA s. 296(2) requires CRA on audit to deduct any unclaimed ITCs from an assessment of net tax, CRA considers its usual approach described above to be “administrative relief” because, as a technical matter, “the tax payable [under s. 228(4)] is not part of the registrant’s net tax calculation” – so that in CRA’s view it is in its discretion as to whether, in addition to assessing the purchaser’s s. 228(4) tax, it also assesses the purchaser’s negative net tax resulting from recognizing the unclaimed ITC.

Neal Armstrong. Summaries of 25 February 2016 CBA Roundtable, Q.11 under ETA s. 228(4) and 296(2).