13 December 2004 GST/HST Ruling 52962 - Tax Status of Various Diet and Anti-Smoking Products

Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.

This memorandum is further to our XXXXX meeting with Joe Nichols of Domestics Rebates and Sharon Heidinger, A/Manager of the Pre-Payment Risk Assessment, Audit Program Operations Division. At issue were rebate entitlements in circumstances where insufficient/incomplete documentation is submitted with a general rebate application.

Background Information

Reassessments of general rebates frequently occur where the rebate claimant submits photocopied receipts or does not send in their proof of export along with their rebate application. On occasion, the claimant sends in the required information to support their rebate claim, however, this may occur after the two-year filing deadline for the rebate has expired.

Issues

Will the CRA consider a general rebate to be filed where photocopied invoices are submitted, rather than original invoices with the rebate application?

Will the CRA consider the rebate applicant to have filed two separate rebate applications with respect to the same transaction where the applicant subsequently resubmits their rebate application with all of the appropriate supporting documentation (e.g., original invoices rather than photocopies)?

Where a rebate claimant initially submits their rebate application to the CRA accompanied by photocopied invoices, and then subsequently resubmits their rebate application accompanied by the original invoices/documentation, on what date will the CRA consider the rebate to have been filed:

•   the date on which the initial rebate was received, or alternatively

•   the date on which the rebate was received with all of the appropriate supporting documentation?

Decisions:

If the rebate application was filed in the prescribed form, and the prescribed manner, the CRA will consider a general rebate to have been filed by the claimant, notwithstanding the fact that photocopied invoices were submitted with the rebate application rather than original invoices.

It is our position that a rebate applicant would not be considered to have submitted a new or second rebate claim in respect of the same transaction in such circumstances, but rather, has simply requested a reassessment of a previously filed rebate claim where the applicant subsequently resubmits their rebate claim along with the original invoices.

Subsection 334(1) of the ETA provides that for the purposes of Part IX of the ETA, and subject to subsection 334(2) of the ETA, anything sent by first class mail or its equivalent will be considered to have been received by the person to whom it was sent on the day it was mailed. As such, the CRA will consider the initial date the rebate application was mailed to be the date the application was filed.

Explanation

Where a rebate application has been assessed, subsection 297(2) of the ETA provides that the Minister has the option to reassess or make an additional assessment of the amount of a rebate, notwithstanding any previous assessment of the amount of the rebate.

Where the CRA has the option to reassess a rebate application, it may consider doing so. Subsection 298(2) of the ETA provides that a reassessment of a rebate under section 297 of the ETA shall not be made more than four years after the day the application for the rebate was filed.

The CRA does have the legislative authority to reassess and approve a general rebate application in the circumstances where supporting documentation is not initially submitted, but subsequently is sent into the CRA. If a rebate has been otherwise filed in the prescribed form and the prescribed manner, but some supporting documentation is missing, the CRA will accept the rebate as being filed, and then may request the supporting documentation from the claimant.

Please note that the CRA is not bound to reassess a rebate claim. Furthermore, if the supporting documentation is not sent into the CRA within a reasonable period of time, the CRA may choose not to reassess the rebate claim. Rebate claimants cannot assume that they have an indefinite period of time to provide the CRA with documentation to support their rebate claims.

EXAMPLE

Statement of Facts

A recipient/claimant paid an amount in error to a supplier, and the cheque was dated June 16, 1998. The supplier refused to refund the tax to the recipient/claimant. As such, the recipient/claimant submitted its general rebate application to the Summerside Taxation Centre on February 1, 2000. However, the rebate application was rejected by the CRA since a photocopied invoice, rather than the original invoice, was submitted with the rebate application. A notice of assessment was issued to the recipient/claimant by the CRA with respect to the general rebate.

The recipient/claimant subsequently resubmitted their rebate application to the CRA on July 1, 2000, accompanied by the original invoice. The rebate was in respect of an amount paid in error equal to $401.45 relating to a 1998 invoice. The following information relates to the invoice and payment:

•   The date specified on the invoice from the supplier was February 1, 1998.

•   The date the recipient/claimant paid the amount to the supplier was June 16, 1998.

Issues:

Will the CRA consider the recipient/claimant to have submitted two separate rebates with respect to the same transaction where the recipient/claimant subsequently resubmits their rebate application with the original invoices? Will the CRA consider the rebate to have been filed within the two-year time limitation?

Decision:

The CRA will not consider the recipient/claimant to have submitted two separate rebate applications with respect to the same transaction when the purpose of the second submission was to provide the CRA with the original invoice. The CRA will consider the recipient/claimant to have requested a reassessment of a previously filed rebate claim. The CRA will consider the rebate application to have been filed on February 1, 2000, before the two-year time limit expired.

Explanation

The rebate application was initially submitted on February 1, 2000. The rebate was assessed by the CRA and a notice of assessment ("NOA") was issued to the recipient/claimant. In this regard, the CRA accepted the fact that the rebate application was filed, however, denied the claim on the basis that the original invoice was not submitted with the claim.

For purposes of determining the point in time at which the two-year time limitation commences with respect to the rebate, the date on which the recipient/claimant paid the amount in error is significant. In the case at hand, the recipient/claimant paid the amount in error on June 16, 1998.

Where a rebate has already been assessed, subsection 297(2) of the ETA provides the Minister with the discretion to reassess or make an additional assessment of the amount of a rebate, notwithstanding any previous assessment of the amount of the rebate.

Under subsection 261(3) of the ETA, a rebate in respect of an amount shall not be paid under subsection 261(1) of the ETA to a person unless the person files an application for the rebate within two years after the day the amount was paid or remitted by the person. In the case at hand, the recipient/claimant paid an amount in error to the supplier on June 16, 1998. As such, a rebate application to recover the amount paid in error could not have been filed later than June 16, 2000. Since the general rebate application was submitted to the CRA on February 1, 2000, the recipient/claimant did file their rebate application within the two-year time period.

Should you have any further questions, please feel free to contact me at (613) 952-0301, or Douglas Wood at (613) 954-9699.

2004/12/13 — RITS 53743 — Application of Subsection 9(2) of Part I of Schedule V to the Excise Tax Act