Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 197123
Dear [Client]:
Subject: GST/HST INTERPRETATION Documentary requirements for claiming input tax credits
Thank you for your letter of February 6, 2019, concerning the requirement of a goods and services tax/harmonized sales tax (GST/HST) registrant to obtain sufficient documentation to support its claim for an input tax credit (ITC). We apologize for the delay in our response.
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
We understand that […] (the taxpayer) is a GST/HST registrant who is engaged exclusively in commercial activities. Its business involves the purchase of […] (the goods) from Canadian suppliers for purposes of resale to persons located outside of Canada.
The taxpayer carries on business under a number of trade names, the majority of which are registered with the relevant provincial authority and listed under the taxpayer’s business number accounts with the Canada Revenue Agency (the CRA). It also carries on business under a further trade name that has not been registered, since that trade name is a derivative of a trade name that had previously been duly registered.
Due to the volume of the goods purchased by the taxpayer, the taxpayer entered into agency agreements with a number of third parties (the agents) to authorize them to purchase goods on its behalf. The taxpayer reimburses these agents for all purchases they make on its behalf by issuing payments directly from its bank account to the agents’ bank accounts or credit cards.
The taxpayer incurs GST/HST on the purchase of goods in Canada from GST/HST registered suppliers. Supporting documentation (for example, invoices or receipts) is provided by the suppliers for all purchases in respect of which the taxpayer wishes to claim ITCs.
In some cases, the supporting documentation provided to the taxpayer may not contain all of the required information set out in the Input Tax Credit Information (GST/HST) Regulations (the Regulations). The potential deficiencies in this information are summarized under the following points:
1. Some suppliers charged the taxpayer the GST/HST but did not list their GST/HST registration numbers on any invoices issued to the taxpayer. However, these suppliers were registered for GST/HST purposes during the relevant periods and the taxpayer has separately obtained, retained, and confirmed the suppliers’ GST/HST registration numbers.
2. Some of the taxpayer’s purchases total less than $150 and, as set out in the Regulations, require less documentary information for the purpose for claiming ITCs.
3. In some cases, invoices are addressed to the taxpayer under its various registered and unregistered trade names.
4. In other cases, invoices are addressed to the taxpayer’s agents.
5. Invoices issued by certain suppliers do not list the taxpayer’s name, which is required under the Regulations. However, credit card receipts are retained by the taxpayer to support that the goods were paid for by the taxpayer.
INTERPRETATIONS REQUESTED
You have provided […] documentation to support […] ITC claims in the circumstances described in points 1 to 5 above and requested […][our] interpretation of the legislation in each case.
INTERPRETATIONS GIVEN
Relevant legislative provisions
Pursuant to subsection 223(2), a person who makes a taxable supply to another person shall, on the request of the other person, forthwith furnish to the other person in writing such particulars of the supply as may be required for GST/HST purposes to substantiate a claim by the other person for an ITC or rebate in respect of the supply.
Where the recipient of a taxable supply is required to pay the applicable GST/HST to the supplier, subsection 169(4) states that a registrant may not claim an ITC for a reporting period unless, before filing the return in which the credit is claimed, the registrant has obtained sufficient evidence in such form containing such information as will enable the amount of the ITC to be determined, including any such information as may be prescribed.
According to section 3 of the Regulations, the following information is prescribed information for purposes of paragraph 169(4)(a):
(a) where the total amount paid or payable shown on the supporting documentation in respect of the supply or, if the supporting documentation is in respect of more than one supply, the supplies, is less than $30,
(i) the name of the supplier or the intermediary in respect of the supply, or the name under which the supplier or the intermediary does business,
(ii) where an invoice is issued in respect of the supply or the supplies, the date of the invoice,
(iii) where an invoice is not issued in respect of the supply or the supplies, the date on which there is tax paid or payable in respect thereof, and
(iv) the total amount paid or payable for all of the supplies;
(b) where the total amount paid or payable shown on the supporting documentation in respect of the supply or, if the supporting documentation is in respect of more than one supply, the supplies, is $30 or more and less than $150
(i) the name of the supplier or the intermediary in respect of the supply, or the name under which the supplier or the intermediary does business, and the registration number assigned under section 241 to the supplier or the intermediary, as the case may be,
(ii) the information set out in subparagraphs (a)(ii) to (iv),
(iii) where the amount paid or payable for the supply or the supplies does not include the amount of tax paid or payable in respect thereof,
(A) the amount of tax paid or payable in respect of each supply or in respect of all of the supplies, or
(B) where provincial sales tax is payable in respect of each taxable supply that is not a zero-rated supply and is not payable in respect of any exempt supply or zero-rated supply,
(I) the total of the tax paid or payable under Division II of Part IX and the provincial sales tax paid or payable in respect of each taxable supply, and a statement to the effect that the total in respect of each taxable supply includes the tax paid or payable under that Division, or
(II) the total of the tax paid or payable under Division II of Part IX and the provincial sales tax paid or payable in respect of all taxable supplies, and a statement to the effect that the total includes the tax paid or payable under that Division,
(iv) where the amount paid or payable for the supply or the supplies includes the amount of tax paid or payable in respect thereof and one or more supplies are taxable supplies that are not zero-rated supplies,
(A) a statement to the effect that tax is included in the amount paid or payable for each taxable supply,
(B) the total (referred to in this paragraph as the “total tax rate”) of the rates at which tax was paid or payable in respect of each of the taxable supplies that is not a zero-rated supply, and
(C) the amount paid or payable for each such supply or the total amount paid or payable for all such supplies to which the same total tax rate applies, and
(v) where the status of two or more supplies is different, an indication of the status of each taxable supply that is not a zero-rated supply; and
(c) where the total amount paid or payable shown on the supporting documentation in respect of the supply or, if the supporting documentation is in respect of more than one supply, the supplies, is $150 or more,
(i) the information set out in paragraphs (a) and (b),
(ii) the recipient’s name, the name under which the recipient does business or the name of the recipient’s duly authorized agent or representative,
(iii) the terms of payment, and
(iv) a description of each supply sufficient to identify it.
For purposes of section 3 of the Regulations, “supporting documentation” is defined in section 2 of the Regulations to include:
(a) an invoice,
(b) a receipt,
(c) a credit-card receipt,
(d) a debit note,
(e) a book or ledger of account,
(f) a written contract or agreement,
(g) any record contained in a computerized or electronic retrieval or data storage system, and
(h) any other document validly issued or signed by a registrant in respect of a supply made by the registrant in respect of which there is tax paid or payable.
[…]
[…]. Please note that our comments are general in nature and that the taxpayer’s eligibility to claim a particular ITC is subject to verification by the CRA at the time of an audit, including the matter of whether it has retained sufficient documentation to support the claim.
1. Entitlement to claim ITCs when the supplier’s GST/HST number is not listed
[…].
[…]
Subsection 169(4) requires that “the registrant has obtained sufficient evidence in such form containing such information as will enable the amount of the input tax credit to be determined, including any such information as may be prescribed.” There is no requirement in either this subsection or the Regulations that the information be obtained in a single document or be obtained all at the same time.
Accordingly, as long as the required information has been obtained in any manner prior to claiming the ITC, the taxpayer would generally meet the documentary requirement in subparagraph 3(b)(i) of the Regulations.
It should be noted that the requirement for the recipient to obtain the supplier’s GST/HST registration number only applies when the total amount paid or payable shown on the supporting documentation in respect of the supply is $30 or more. Also note that if the recipient were to request that the supplier provide its registration number (or any other information required to substantiate its ITC claim), the supplier would be required under subsection 223(2) to provide that information to the recipient, whether it is provided on the invoice or by some other means.
2. Supporting documentation for purchases totalling less than $150
[…].
[…]
The name of the recipient is not prescribed information for purposes of paragraph 169(4)(a), according to either paragraph 3(a) or (b) of the Regulations. The name of the recipient is only required under paragraph 3(c) of the Regulations when the total amount paid or payable shown on the supporting documentation in respect of the supply or supplies is $150 or more.
3. Entitlement to claim ITCs where the taxpayer’s trade name is listed on the invoice
[…].
(a) Based on the Regulations, where supporting documentation is addressed to the taxpayer under a registered trade name, […].
[…]
In accordance with subparagraph 3(c)(ii) of the Regulations, the recipient’s name, the name under which the recipient does business, or the name of the recipient’s duly authorized agent or representative is acceptable as prescribed information for purposes of paragraph 169(4)(a). Since the legislation uses the word “or”, the presence of any one of those names on the supporting documentation will satisfy the requirement under this subparagraph.
(b) Where supporting documentation is addressed to an unregistered derivative of a registered trade name of the taxpayer, […]. For example, paragraph 21 of GST/HST Memorandum 8.4, Documentary Requirements for Claiming Input Tax Credits states the following:
* Where the person or its intermediary uses a trade name and this name is used by that person or that intermediary to do business, the trade name satisfies the prescribed information requirements noted in [subparagraph 3(c)(ii) of the Regulations]. There is no requirement that the name under which the supplier or its intermediary does business be registered with the province in which the supplier or the intermediary resides, or in which the supply is made, order to meet the ITC documentary requirements.
[…]
Subparagraph 3(c)(ii) of the Regulations simply refers to “the name under which the recipient does business.” There is no requirement that such a name be registered with the relevant provincial authority.
4. Invoices listing one of the taxpayer’s agents as the recipient of the supply
Where a purchase of $150 or more is made on the taxpayer’s behalf by one of its agents, subparagraph 3(c)(ii) requires that the name of the recipient’s duly authorized agent or representative must be listed on the supporting documentation. Further, the term “supporting documentation” can include the recipient’s own internal records.
Where the taxpayer uses agents to purchase goods on its behalf and the parties have entered into agency agreements to that effect, in cases where invoices are addressed to an agent acting on the taxpayer’s behalf (rather than to the taxpayer directly), but the taxpayer is listed as the recipient in its electronic and accounting records on purchases made by its agents, […].
[…]
As noted in our response to 3(a) above, if the name of the taxpayer’s duly authorized agent or representative is shown on the invoice issued by the supplier, the condition in subparagraph 3(c)(ii) of the Regulations would be satisfied. This is supported by the statement in paragraph 30 of Memorandum 8.4 that “as an alternative to indicating the name of the recipient, it is acceptable that the sales invoice or other supporting documentation indicates the name of the recipient’s duly authorized agent or representative.”
Our comments are based on the assumption that the parties are engaged in a valid principal/agent relationship. In order to support the fact that a person made a particular purchase as a duly authorized agent of the taxpayer, a copy of the agency agreement and other information relating to the purchase would generally need to be retained in addition to any other supporting documentation required by the Regulations.
Please note that whether two parties are engaged in a valid principal/agent relationship is a question of fact that must be determined on a case by case basis. Please refer to GST/HST Info Sheet GI-012, Agents for a discussion of the factors to consider when making such a determination.
5. Purchases of $150 or more where no recipient is listed on the invoice or receipt
The taxpayer makes some of its purchases from suppliers who provide a cash register receipt or other documentation that does not identify the recipient of the supply, but the taxpayer is listed as the recipient in its electronic and accounting records, including its credit card receipts and statements. Given the breadth of the definition of the term “supporting documentation” found in section 2 of the Regulations, which can include the recipient’s own internal records, […].
[…]
As indicated in our response to #1 above, there is no requirement in either subsection 169(4) or the Regulations that the information to support an ITC be obtained in a single document or be obtained all at the same time. Therefore, provided there is sufficient evidence in the taxpayer’s internal records to clearly establish that it was the recipient of the supply for which the receipt was issued, the taxpayer’s name (legal or trade name) need not appear on a cash register receipt issued by the supplier in respect of such purchases in order to meet the requirement under subparagraph 3(c)(ii) of the Regulations.
Please note that, similar to a cash register receipt, a credit card receipt or statement typically does not contain all of the information required by the Regulations for purchases of $150 or more. Therefore, such documents would also need to be retained in conjunction with other valid supporting documentation in order to support the taxpayer’s claim for an ITC.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the interpretation(s) given in this letter, including any additional information, is not a ruling and does not bind the CRA with respect to a particular situation. Future changes to the ETA, regulations, or the CRA’s interpretative policy could affect the interpretation(s) or the additional information provided herein.
If you require clarification with respect to any of the issues discussed in this letter, please call Graham Leflar, Senior Rulings Officer, directly at 306-975-4733. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Catherine Séguin-Ouimet
Manager
General Operations Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
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