Encore Cellular – Tax Court of Canada finds that a Canadian buyer could not generate ITCs under ETA s. 178.8 on goods bought from non-residents without showing they had borne GST

The taxpayer claimed that it was entitled to input tax credits (ITCs) pursuant to s. 178.8 respecting cellphone and other goods which it had acquired, for resale in Canada by it, from non-registrant, non-resident suppliers. After noting that the general purpose of s. 178.8 was to potentially generate ITCs to a Canadian purchaser where the non-resident supplier bore non-creditable GST on the goods’ importation, and stating that s. 178.8 “only deems tax to have been paid or payable to the extent that tax was in fact paid or payable on importation,” MacPhee J rejected the taxpayer’s ITC claim given inter alia that it had not rebutted CRA’s “assumption that no GST/HST was paid upon importation,” i.e., that the non-resident suppliers had not borne GST on the goods’ importation.

Neal Armstrong. Summaries of Encore Cellular Inc. v. The King, 2024 TCC 35 under ETA s. 178.8(2) and s. 180.