8 March 2018 CBA Commodity Tax Roundtable, Q.12

A non-registered corporation did not self-assess under s. 191(3) on completing the construction of a triplex nor did it claim ITCs. In response to Q.9 at the 2015 Roundtable, CRA indicated that, if the corporation sent to CRA, in the same envelope, a return declaring and remitting the GST under s. 191(3), and rebate claims under ss. 257 and 256.2(3) (resulting in a net refund position), s. 296(2.1) would not apply and s. 228(6) would apply, with the result that the tax would not be considered to have been paid until the filing of the return so that a s. 280.1 penalty and s. 280(1) interest would apply.

Would the answer change if, in the same envelope, the corporation made the s. 191(3) filing (the same as before) but, rather than making the rebate claims, instead only provided the invoices and other documentary support showing the availability of such claims and, in its covering letter, indicating that it was not making such rebate claims and instead was requesting CRA to apply s. 296(2.1)?

CRA responded:

In general, if the corporation submits the documents as described above, our response would remain the same as that provided in 2015. It would appear that subsection 228(6) of the ETA would apply in this case.

Provided that the corporation met all the requirements for qualification, it could make a request under the voluntary disclosure program to request relief from the application of penalties and interest.

A non-registered corporation did not self-assess under ETA s. 191(3) on completing the construction of a triplex nor did it claim input tax credits. If it simply lay in the grass and did nothing until CRA discovered this situation on audit. S. 296(2.1), by virtue of requiring CRA, at the time of reassessing the corporation for undeclared GST, to retroactively allow any available but unclaimed rebates, would protect the corporation against any charges for interest (or late-filed return penalty under s. 280.1), provided that the rebate claims for unclaimed ITCs and the s. 256.2 new rental residential property rebate put it in a net refund position. Would the answer change if the corporation did not wait for any audit and sent to CRA, in the same envelope, an s. 191(3) self-assessment filing and documentary support showing the availability of the offsetting rebate claims.

CRA indicated that this would be treated as the equivalent of a late-filed return and late rebate claims under s. 228(6), rather than engaging the s. 296(2.1) audit-to-net-tax rules, so that interest and penalties would apply. The correct procedure for accessing interest penalty and interest relief was to follow and comply with the voluntary disclosure program rules.