19 November 2001 GST/HST Interpretation 37728 - Relationship Between the 4-year Limitation in Paragraph 298(1)(f) and Subsection 315(1)

Dear XXXXX:

Thank you for your letter of October 19, 2001 concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the assessment of the individual partners of a partnership.

Interpretation Requested

You are requesting an interpretation respecting the relationship between the 4-year limitation in paragraph 298(1)(f) of the Excise Tax Act (ETA) for assessing individual partners of a partnership and the Minister's authority to take collection action against the partners under subsection 315(1) of the ETA.

Interpretation Given

Subsection 315(1) of the ETA provides that the Minister may not take collection action under sections 316 to 321 of the ETA in respect of any amount payable or remittable by a person that may be assessed (other than penalty or interest), unless the amount has been assessed.

Before the CCRA can assess a person, there has to be a liability. Subsection 272.1(5) of the ETA provides, in part, that each partner or former partner (other than a limited partner who is not a general partner) is jointly and severally liable, together with the partnership, for all amounts that become payable or remittable by the partnership before or during the period in which the person is a member of the partnership. An individual partner has, therefore, joint and several liability together with the partnership to remit any tax that is payable or remittable by the partnership during that period. Subsection 272.1(5) of the ETA applies to amounts that become payable or remittable after April 23, 1996 and to all other amounts and obligations outstanding after that day.

The Minister has the authority to assess any amount that an individual partner is liable to pay or remit under Subdivision b.1 of Division VII of the ETA by virtue of paragraph 296(1)(e) of the ETA. Paragraph 298(1)(f) of the ETA provides that the Minister may not assess an individual partner under the provisions of subsection 296(1) of the ETA for an amount for which the individual partner became liable more than four years after the individual partner became liable.

However, subsection 298(4) of the ETA provides that an assessment may be made at any time where, in respect of a particular matter, the person has

(a) made a misrepresentation attributable to the person's neglect, carelessness or willful default,

([b]) committed fraud in the making or filing of a return or application for a rebate or in supplying or failing to supply any information under Part IX of the ETA, or

([c]) filed a waiver that is in effect at that time.

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the Excise Tax Act, if enacted, could have an effect on the interpretation provided herein. 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 Canada Customs and Revenue Agency 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) 952-0419.

Yours truly,

Anne Kratz
General Operations Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate