2 June 1994 GST/HST Interpretation 11635-3[2] - Voluntary Registration

Dear Sirs:

This is in reply to your letter of December 7, 1993 and in furtherance to telephone discussions with Gerry O'Reilley of this Office[.]

We understand that XXXXX was scheduled to discontinue its operations at the end of September, 1991, having then completed its original mandate. However, as a result of a number of claims registered by various contractors and consultants against XXXXX the corporation continued operations in order to finalize the settlement of these claims. In the course of its operations since 1991, the corporation did not conduct any transactions where GST had to be collected from other parties. XXXXX did not apply for, nor is it currently registered for, GST.

XXXXX[.] As of the date of your letter, there were still some outstanding claims to be settled.

You question whether XXXXX is eligible to claim a refund for the GST paid as input tax credits. In order to claim input tax credits, the person making the claim must have been a registrant at the tax was incurred, i.e., a person who is registered or required to register. You state in your earlier letter dated June 26, 1991, to Ms. Karen Hill of this office, that the actual construction for which XXXXX was formed was completed prior to January 1, 1991, the date of coming into force of the GST legislation. We assume that no taxable supplies were made in Canada after that date.

As we mentioned, to claim input tax credits, a person must have been registered or required to be registered at the time that the GST was incurred. XXXXX was not registered at that time, therefore, we need only determine if it was required to be registered at the time the tax was incurred. To be required to be registered, a person who is not a small supplier, must be making taxable supplies in Canada in the course of commercial activities engaged in by the person in Canada. Since XXXXX did not make any taxable supplies in Canada after January 1, 1991, it was, therefore, not required to register after that date. Accordingly, since XXXXX was not registered nor required to register when the GST was incurred, the corporation is not eligible to claim input tax credits for GST paid after 1990.

While XXXXX is not required to register, there is provision in the Excise Tax Act to permit voluntary registration of a person who is engaged in commercial activities in Canada, but who does not necessarily make taxable supplies in Canada. XXXXX can be considered to be engaged in commercial activities in Canada by paying claims in the process of terminating its original commercial activities. However, the effective date of registration for voluntary registrants is the date that the application for such is received by this Department. Accordingly, XXXXX can voluntarily register and claim input tax credits but only in respect of GST paid after the effective date of registration.

If you have any questions or require additional assistance please contact Gerry O'Reilley at (613) 954-4397.

Sincerely,

H.L. Jones
Director
General Tax Policy
Policy and Legislation
Excise/GST

XXXXX