Ouazana – Tax Court of Canada finds that a retroactive GST registration of a real estate buyer relieved the vendor of liability for failure to charge GST

In February 2014, the taxpayer made a taxable supply of real property to a purchaser which represented that it was registered for GST and QST purposes but, in fact, was not, so that the registration numbers it provided were invalid. In 2016, the purchaser was re-registered with retroactive effect to the sale date in February 2014 with the same registration numbers that it had provided to the taxpayer.

In finding that the retroactive registration was effective for ETA s. 221(2)(b) purposes, so that the appellant could not be reassessed for its failure to charge GST to the purchaser, Favreau J stated:

When the effective date of registration is backdated, the retroactive effect of the registration must be recognized for all purposes of the ETA unless there is a clear provision of the ETA to the contrary. No such provision seems to exist in respect of paragraph 221(2)(b).

He contrasted the situation here of a voluntary registration under s. 241(1), where “there is no limitation to the discretionary power of the Minister to backdate the effective date of registration,” and a non-voluntary registration under s. 241(1.5), where there is essentially no ability of the Minister to backdate the registration date.

Neal Armstrong. Summary of Ouazana v. The Queen. 2020 TCC 124 under ETA s. 241(1).