29 February 2000 GST/HST Interpretation 25801 - Time Limitation for Claiming an Input Tax Credit

Dear Sir:

This is to confirm our telephone conversation of February 1, 2000, in response to your letter of December 14, 1999 concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) with respect to the time limitation imposed by subparagraph 225(4)(a)(iii) of the Excise Tax Act for claiming an input tax credit (ITC).

Interpretation Requested

You have provided the following facts:

•   A person who is a registrant is a specified person as defined by the Excise Tax Act;

•   The fiscal year of the specified person is the calendar year;

•   GST has been paid or became payable during any part of the calendar year (fiscal year) 1997.

Does a specified person, to meet the time limitation for an ITC under subparagraph 225(4)(a)(iii) have until December 1999 to claim input tax credits from fiscal year 1997?

Interpretation Given

General - For registrants that are "specified persons" during the reporting period in which the relevant tax becomes payable, the input tax credit in respect of that tax must be claimed on or before the due date of the return for the last reporting period of the registrant ending within two years after the fiscal year that includes the reporting period in which the tax becomes payable.

Application - In the scenario we discussed, GST became payable or paid by a specified person in January 1997. The fiscal year, in this case, is the calendar year and therefore the specified person could claim the ITC up until the last reporting period ending in 1999 provided the return is filed by its' due date.

[Subparagraph 225(4)(a)(iii)]

Exception - Where the supplier fails to charge tax in the reporting period in which the tax becomes payable, specified persons may claim an input tax credit in return filed by the due date of the return for their last reporting period that ends within two years after the end of the fiscal year in which the supplier first charges them tax. This extension is limited to a person corresponding to the general four-year time limit for claiming input tax credits.

[Subparagraph 225(4)(a)(i)]

Exception - The two-year limit is extended (but not beyond the general four-year limit provided to non-specified persons) where an input tax credit of a particular person is claimed in error by another person within the two-year period and the particular person paid the tax..

[Subparagraph 225(4)(a)(ii)]

The foregoing comments represent our general views with respect to the subject matter of your letter and our subsequent telephone conversation of February 1, 2000. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST/HST Memoranda Series, do not bind the Department with respect to a particular situation.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at 613-954-7931.

Yours truly,

David Crawford
General Operations Unit
General Operations & Border Issues Division
Excise and GST/HST Rulings Directorate