25 July 1994 GST/HST Interpretation 11745-6(glr) - Establish a Credit Assessment at the Time of Audit

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                                                                        July 25, 1994

Dear Mr. XXXXX

I refer to your letter of July 12, 1994, addressed to Mr. Steve Mosher, Legislation and Regulations, concerning the eligibility of your client, XXXXX, to claim the transitional credit.

Statement of Facts

I understand that XXXXX is a quarterly filer. XXXXX filed all its 1991 returns by their respective due dates and failed to claim the transitional credit provided by subsection 346(1). XXXXX was audited by the Department in August, 1992. The auditor did not establish a credit assessment at the time of audit to allow XXXXX to claim the transitional credit. On June 30, 1993, you forwarded a rebate application on behalf of XXXXX to the XXXXX District Excise/GST Office claiming the basic credit of $300. On July 6, 1993, you forwarded an amended rebate application for the transitional credit, claiming the maximum amount allowable of $1,000. On November 19, 1993, and May 31, 1994, the XXXXX District Excise/GST Office advised you that XXXXX was not eligible to claim the transitional credit.

Interpretation Given

On July 5, 1991, the Honourable Otto Jelinek, former Minister of National Revenue, announced that the time limit for a monthly or quarterly filer to claim the transitional credit had been extended. The extension provided that a qualifying registrant could claim the transitional credit in a GST return for any reporting period ending in 1991. This extension of the time limit was subsequently confirmed on November 5, 1991, by the Honourable Don Mazankowski, former Minister of Finance. On September 14, 1992, Mr. Mazankowski announced a further amendment regarding the transitional credit. This amendment clarified that in order for a monthly or quarterly filer to be eligible to claim the transitional credit, the GST return still must cover a reporting period ending in 1991, but the GST return must be filed before 1993.

I have reviewed the documentation submitted with your letter. The latest GST return in which XXXXX could have claimed the transitional credit was the return covering the period October 1 - December 31, 1991, which was due by January 31, 1992. However, XXXXX filed all its GST returns for reporting periods ending in 1991 by their respective due dates and failed to claim the transitional credit in any of these returns. The auditor was, therefore, correct in not establishing a credit assessment for the transitional credit at the time of the audit in August, 1992, as the time limit for XXXXX to claim the credit had expired.

The foregoing comments represent our general views with respect to the subject matter of your letter. Unannounced proposed or future amendments to the legislation may result in changes to our interpretation. These comments are not rulings and, in accordance with the guidelines set out in GST Memorandum 100-3, do not bind the Department with respect to any particular fact situation.

If you have any questions or require further information, please direct your enquiry to the XXXXX District Excise/GST Office, XXXXX, or telephone. Ms. XXXXX, and her staff will be pleased to assist you.

Yours sincerely,

H.L. Jones
Director
General Tax Policy
Policy and Legislation
Excise/GST