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Subsection 231(1) provides that where a person reports the tax collectible in respect of an arm's length taxable supply (other than a zero-rated supply) on its GST/HST return for the appropriate reporting period, remits the net tax remittable on that return, and subsequently writes off all or part of the consideration and tax for the supply as a bad debt, the person may, in determining its net tax for the reporting period in which the bad debt is written off, deduct an amount determined in accordance with the formula set out in that provision. ... To finance this arrangement, ABC has entered into a written agreement (the "Agreement") with XYZ financing under which ABC assigns, for consideration, receivables from its customers. ... ABC reviewed the situation, attempted to collect the outstanding consideration and tax, and determined there to be no reasonable prospect of collecting any part of the receivable from Echo. ...

For example, this could occur when: a collection has been suspended because of an inability to pay caused by the loss of employment and the taxpayer is experiencing financial hardship; a taxpayer is unable to conclude a payment arrangement because the interest charges represent a significant portion of the payments; or payment of the accumulated interest would cause a prolonged inability to provide basic necessities (financial hardship) such as food, medical help, transportation, or shelter; consideration may be given to cancelling all or part of the total accumulated interest. Consideration would not generally be given to cancelling a penalty based on an inability to pay or financial hardship unless an extraordinary circumstance prevented compliance, or an exceptional situation existed. For example, when a business is experiencing extreme financial difficulty and enforcement of such penalties would jeopardize the continuity of its operations, the jobs of the employees, and the welfare of the community as a whole, consideration may be given to providing relief of the penalties. ...

For example, this could occur when: a collection has been suspended because of an inability to pay caused by the loss of employment and the taxpayer is experiencing financial hardship; a taxpayer is unable to conclude a payment arrangement because the interest charges represent a significant portion of the payments; or payment of the accumulated interest would cause a prolonged inability to provide basic necessities (financial hardship) such as food, medical help, transportation, or shelter; consideration may be given to cancelling all or part of the total accumulated interest. Consideration would not generally be given to cancelling a penalty based on an inability to pay or financial hardship unless an extraordinary circumstance prevented compliance, or an exceptional situation existed. For example, when a business is experiencing extreme financial difficulty and enforcement of such penalties would jeopardize the continuity of its operations, the jobs of the employees, and the welfare of the community as a whole, consideration may be given to providing relief of the penalties. ...

For purposes of the Excise Tax Act (the "ETA"), forgiven debts pursuant to an arrangement under the Companies' Creditors Arrangement Act are considered to be bad debts as opposed to reductions of consideration. ... Opco could not pay the consideration nor the GST/HST payable in respect of the supplies. ... Rationale Suppliers A, B and C filed their returns accounting for the GST/HST payable under Division II in respect of the supplies, remitted their net tax and a portion of the debt consisting of both consideration and tax owed by Opco became uncollectible. ...

The lease payment is consideration for a supply of the right to explore for or exploit a mineral deposit and the supply is deemed not to be a supply and any consideration paid or due, in respect of such a right is deemed not to be consideration for the right pursuant to subsection 162(1) of the Act. ...

Ruling Given The consideration paid for the supply of Level II ballet to the student from Springfield Private School will be exempt of tax, since it is a mandatory prerequisite for the Level III ballet class. Also, the consideration charged for Level III ballet to the student who is eligible to receive a school credit from Springfield Private School will be exempt of tax. ... Furthermore, the consideration charged for the supply of lessons to the other dance school students who are not eligible to receive a credit will be subject to tax, even if they are in the same dance class as the Springfield student. ...