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: 183900
Business Number: […]
Dear [Client]:
Subject: GST/HST INTERPRETATION
Backdating of registration and input tax credits
Thank you for your fax of [mm/dd/yyyy], concerning whether […][Corporation A] can backdate its registration for goods and services tax/harmonized sales tax (GST/HST) purposes and whether it can claim input tax credits. We apologize for the delay in providing this 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 the facts as follows based on information contained in your letter, further information obtained through subsequent telephone calls and documents, and a review of the website […]:
1. [Corporation A] was incorporated under the Canada Corporations Act (Footnote 1) in […][yyyy]. It was continued under the Canada Not-for-profit Corporations Act (Footnote 2) on […][mm/dd/yyyy].
2. [Corporation A] is resident in […][Canada].
3. […](Footnote 3).
4. [Corporation A] is associated to […][Corporation B] and […][Corporation C]. All three corporations are owned by […][X] and all three corporations have the same board of directors.
5. [Corporation A] is registered for GST/HST purposes. It uses BN […].
6. [Corporation A] registered for GST/HST purposes by telephone. Its original effective date of registration was March 18, 2016. [Corporation A] changed its effective date of registration to January 1, 2016.
7. [Corporation A] has an annual reporting period and its fiscal year end is December 31.
8. [Corporation A] filed returns for reporting periods ending December 31, 2010, December 31, 2011, December 31, 2012, December 31, 2013, December 31, 2014, December 31, 2015, and December 31, 2016. These returns were cancelled. Returns for reporting periods ending before 2016 were cancelled as they were for reporting periods prior to the effective date of registration. The return for reporting period ending December 31, 2016, was cancelled pending a response to this ruling request.
RULINGS REQUESTED
You would like to know:
1. Can [Corporation A] backdate its registration for GST/HST purposes to April 2010?
2. [Corporation A] would like know if the backdating of its registration will allow it to claim input tax credits for tax paid since April 1, 2010.
We acknowledge your request for rulings on the above matters. However, as noted in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, a ruling provides the Canada Revenue Agency’s (CRA’s) position on specific provisions of the legislation as these relate to a clearly defined fact situation of a particular person. As the circumstances are such that all of the pertinent facts cannot be established at this time (for example, what taxable supplies [Corporation A] was providing during the fiscal years in question), we are unable to rule on these issues. Rather, we are providing general information which we trust will be of assistance.
INTERPRETATION GIVEN
Backdating of registration
It is understood that [Corporation A] is currently registered for GST/HST. The effective date of registration is January 1, 2016.
The effective date of a person’s GST/HST registration depends on when they exceed the small supplier threshold (discussed below) or when they began collecting tax on their taxable supplies on a consistent basis.
In order to backdate its registration, [Corporation A] could show it was a registrant during the period in question by proving it was not a small supplier; in other words, it was required to be registered. Its other option is to show it charged GST or HST on a consistent basis during that period on its taxable supplies.
If [Corporation A] can demonstrate that it qualifies to have its registration backdated, its request, including supporting documents, should be sent to: […]
Supporting documentation should include invoices showing the GST or HST charged to its clients or documents showing how and when it exceeded the small supplier threshold.
Small supplier
In general, every person who makes a taxable supply in Canada in the course of a commercial activity (defined on the next page) engaged in by the person in Canada is required to be registered for the GST/HST, except where the person is a small supplier. A person is a small supplier if their total revenues and those of its associates from taxable supplies are $30,000 or less ($50,000 for public service bodies) in the last four consecutive calendar quarters and in any single calendar quarter.
For purposes of the GST/HST, [Corporation A] may be a non-profit organization (NPO), which is a public service body eligible for the $50,000 small supplier threshold. An NPO is defined to mean “a person (other than an individual, an estate, a trust, a charity, a public institution, a municipality or a government) that was organized and is operated solely for a purpose other than profit, no part of the income of which is payable to, or otherwise available for the personal benefit of, any proprietor, member or shareholder thereof unless the proprietor, member or shareholder is a club, a society or an association the primary purpose and function of which is the promotion of amateur athletics in Canada”.
Of note, [Corporation A] had associates during the period in question. Therefore, the revenue from its taxable supplies and that of its associates would all be included in the calculation of its small supplier threshold.
For GST/HST purposes, the definition of the term “commercial activity” includes the making of taxable supplies in the course of a business but specifically excludes the making of an exempt supply.
Based on your letter, it appears that [Corporation A] provides all of its member services for no consideration. If [Corporation A] is an NPO, then the supply of these services may be exempt under section 10 of Part VI of Schedule V and therefore not included in the small supplier calculation.
For more information, see GST/HST Memorandum 2.2, Small Suppliers, and Guide RC4022, General Information for GST/HST Registrants, under the heading “Small supplier”.
Generally, a person who is registered for the GST/HST is entitled to claim input tax credits for the tax paid or payable by them on inputs that are used, consumed, or supplied in the course of its commercial activities. Where property or a service is consumed or used partly in the course of a person’s commercial activities and partly in its non-commercial activities (less than 90%, but more than 10% in its commercial activities), the person must apportion the GST/HST for the property or service between these two activities. Guide RC4022 and Chapter 8, Input Tax Credits: Eligible ITCs, of the GST/HST Memoranda Series will provide more information on this subject.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, the interpretations 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 interpretations or the additional information provided herein.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-670-7943. 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,
Desneiges Arbour
Charities and Non-profit Organizations Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
FOOTNOTES
1 R.S.C. 1970, c. C-32.
2 S.C. 2009, c. 23.
3 […].
Email this Content