GST/HST Notice 322, Recovery of the GST/HST Under the Digital Economy Measures, April 2022

General requirement under s. 211.14(1) to register and charge GST/HST to unregistered recipient

Collection of the GST/HST

A key component of the measures is that a business or platform is not required to collect the GST/HST in respect of those supplies if the recipient is registered under the normal GST/HST rules and provides their GST/HST registration number to the business or platform when the supply is made. If such a recipient does not provide their registration number at that time, the business or platform is required to collect tax in respect of those supplies.

Charge to registered recipient can be rebated under s. 232

Recovery of the GST/HST

Pursuant to section 211.17 of the ETA, a recipient is generally not allowed to claim an input tax credit, rebate, refund or remission in respect of any GST/HST that is required to be collected by a person that is registered under the simplified GST/HST regime. However, a number of exceptions exist; in particular, where a recipient that is registered under the normal GST/HST rules has paid the GST/HST to a supplier that is registered under the simplified GST/HST regime, the recipient may approach the business or platform and seek a refund or credit of the amount that was paid, pursuant to section 232 of the ETA. The recipient would need to demonstrate to the supplier that their registration under the normal GST/HST rules was in effect at the time the supply was made. …

Additional information on procedures for refunds and adjustments of the GST/HST may be found in … Memorandum 12-2 … .

Requirement under s. 211.14(1) for specified non-resident supplier to charge GST/HST to unregistered recipients

There is a general requirement under ETA s. 211.14(1) for a non-resident to register and charge GST/HST to unregistered recipients on most supplies of services or intangible personal property where a de minimis dollar threshold is exceeded. What if GST/HST is so collected in error (i.e., it was apparent that the recipient was registered)?

S. 232 rebate mechanism can be used if overcharge

S. 211.17 indicates that the recipient is generally not allowed to claim an input tax credit, rebate, refund or remission in respect of any GST/HST that is required to be collected by a person that is registered under the above regime. However, CRA indicated that a number of avenues are available, of which the only one it mentions is that the recipient may approach the non-resident to seek a refund of the over-charged GST/HST, in which case the normal s. 232 refund rules would apply (i.e., presumably the non-resident would be entitled to what effectively is an offsetting ITC for the GST/HST refunded by it in the reporting period in which it issues a credit note to the resident registered recipient, assuming that the GST/HST indeed was not collectible because the recipient could evidence its registration).