CRA indicates that tax paid in error does not figure into the SAM formula for SLFIs

The special attribution method formula in ETA s. 225.2(2), as modified by the Selected Listed Financial Institution Attribution Method (GST/HST) Regulations, requires a SLFI to apply a weighted average provincial HST rate (determined based on the relative provincial weightings of its stakeholders) to the net federal GST “payable” by it under A of the formula to arrive at the level of provincial HST that normatively should have been payable by it, and to then compare this normative provincial HST to the actual provincial HST “payable” by it (under element F of the formula) to determine whether it is entitled to a refund or is obligated to make a top-up payment – subject to the making of special adjustments under element G of the formula, and subject to further elaboration for Quebec.

CRA indicated that the s. 123(1) definition of tax “is interpreted by it to include only amounts of tax that are actually payable under Part IX, such as tax under subsections 165(1) and (2),” so that “an amount paid in error as or on account of tax is not tax for GST/HST purposes.” Thus, in its view, such tax paid in error does not go into elements A and F of the formula, nor is a refund of the tax paid in error deducted under G of the formula as a refund of “tax under” e.g. ETA s. 165(1).

Neal Armstrong. Summaries of 19 January 2019 Interpretation 165888 under Selected Listed Financial Institution Attribution Method (GST/HST) Regulations, s. 46(1) - G2 - s. (iii) and s. 263.01(1).