CRA finds that a litigant receiving a court award of costs plus GST/HST is not required to report such tax

CRA considers that as court awards of costs (including any awards on a solicitor and client scale) “do not constitute consideration for a taxable supply or a service and do not form part of the consideration paid for the lawyer’s services of the winning party,” that party is not required to account for any GST or HST in computing its net tax for the reporting period in question, even where the award of such costs included a GST or HST amount.

The point, that the award does not represent compensation for services supplied by the winner to the loser (or the Court), is obviously correct. Of greater interest, this interpretation represents a restrictive and favourable interpretation of the requirement, in ETA s. 225(1) – A, that net tax of a person includes “all…amounts collected by the person…as or on account of tax.”

Neal Armstrong. Summaries of 3 April 2017 Interpretation 164742 under ETA s. 123(1) - supply and s. 225(3.1).