Section 2
Intermediary
See Also
Agence du revenu du Québec v. Stamatopoulos, 2018 QCCA 474
The respondent (“Stamatopoulos”) served as an intermediary between clothing manufacturers and subcontractors, who would sew and assemble the clothing. Representatives of the subcontractors, who had provided Stamatopoulos with valid GST and QST registration numbers which he had checked (along with other registration information), delivered the clothing after it had been sewn directly to the manufacturers. Stamatopoulos paid their invoices (issued in the name of the subcontractors) by cheque after, in turn, being paid by the manufacturers. The subcontractors did not remit the QST paid to them by Stamatopoulos, and the trial judge found (at para. 27 that de facto managers, who were unknown, managed the subcontractors rather than their de jure (i.e., registered) managers. Although the ARQ acknowledged that the contracted-for sewing services had been received, it took the position (paras. 36, 43) that such work had not been performed by the subcontractors named in the invoices.
Before affirming the finding below that the invoices received by Stamatopoulos satisfied the documentary requirements for claiming input tax refunds, Marcotte JCA stated (at paras. 53-54, 56):
[C]ontrary to what was pleaded by the Agency, it matters little whether the person with whom the taxpayer deals directly in connection with a genuine commercial transaction acts as a “supplier” or an “intermediary,” since the provisions of the Regulation respecting the Québec sales tax provide that the invoice must contain the name of the “supplier” or that of the “intermediary” who is authorized by the supplier to cause or facilitate the making of the supply. Whether the person with whom the taxpayer deals directly, in a genuine commercial transaction, itself supplied the work is without consequence if the supporting documentation satisfies the requirements of this Regulation… .
Furthermore, where the taxpayer has discharged the taxpayer’s initial burden of proving that the invoices in fact were issued by a person with whom the taxpayer dealt directly in a genuine commercial transaction, it then falls on the tax authorities to prove, on the balance of probabilities, that the person with whom the taxpayer dealt directly did not act as a “supplier” or as an “intermediary.” …
[T]he judge concluded that the evidence presented by the Agency did not support the hypothesis that a business other than the subcontractors indicated in the invoices had transacted with Mr. Stamatopoulos, all the more as he had demonstrated his direct contractual relationship with the subcontractors and as the Agency did not contest that the invoices emanated from the subcontractors stated on the invoices, but instead challenged that the services actually were provided by them.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 169 - Subsection 169(4) | burden shifted to ARQ once taxpayer showed that it had business dealings with suppliers named in invoices | 272 |
| Tax Topics - General Concepts - Onus | onus shifted to ARQ once the taxpayer had demonstrated that he had business deaings with issuer of mooted invoice | 209 |
SNF L.P. v. The Queen, 2016 TCC 12
The appellant ("SNF"), acquired metal scrap from 12 suppliers, who were registered for GST purposes, but who did not remit the GST which they invoiced to SNF. Each supplier named in the invoices was “a 'prête‑nom' and not the actual supplier” (i.e., each supplier acted on behalf of an undisclosed principal). After stating (at para. 53) that “since a "prête‑nom" contract is a valid contract, the question then is whether the "prête‑nom" is an intermediary of the true supplier whose name may appear on the documentation supporting the supply,” Rip J concluded (at para. 81)
That…suppliers may not have carried on a business or were "prête‑noms" does not, on the facts, affect the appellant's right to claim ITCs.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 169 - Subsection 169(4) | ITCs where reasonable efforts to verify suppliers and registration numbers, where GST not remitted | 402 |
| Tax Topics - Excise Tax Act - Section 261 - Subsection 261(1) | no rebate entitlement for an error caused by the applicant’s own inattention and carelessness | 114 |
| Tax Topics - General Concepts - Agency | "prête‑nom" contract is a valid contract | 217 |
PDM Royalties Limited Partnership v. The Queen, 2013 TCC 270
In an attempt to obtain input tax credits for GST incurred on the IPO of an income fund, the income fund and a subsidiary LP (which held the business) agreed that the taxable expenses were to be incurred for the account of the LP. After finding that such agreement was not sufficient to make the LP the "recipient" of the services, as it was not a party to the agreements with the services providers, V. Miller went on to note various deficiencies in the invoices of the suppliers, and stated (at para. 51):
[W]here an invoice represented services to both the Appellant and the Fund and I could not ascertain the portion payable by the Appellant, I did not allow the ITC involved.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Recipient | intragroup expense-bearing agreement did not change the recipient of services rendered on IPO | 280 |
| Tax Topics - Excise Tax Act - Section 169 - Subsection 169(1) | internal agreement to allocate IPO costs was ineffective/services consumed rather than re-supplied | 380 |
Tchebotar v. The Queen, [2013] GSTC 43, 2013 TCC 32 (Informal Procedure)
The appellants shredded all their sales records but "were fastidious in recording and categorizing their business expenses" (para. 25). Campbell J found that the Minister was justified in using a net worth assessment to determine the appellants' income, and to impose gross negligence penalties based on the amounts thus determined.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 285 | sales records shredded | 51 |
Administrative Policy
GST Memorandum (New Series) 8.4
The documentary requirements would be satisfied where a sales representative for a supplier ("who may or may not be the agent of that supplier") makes a taxable supply of property on behalf of that supplier as its intermediary. The invoice identifies the intermediary's name and its GST/HST registration number. Accordingly, with this information, the person who acquires the property may satisfy this element of the documentary requirements to be eligible to claim an ITC
Finance
Regulatory Impact Analysis Statement (accompanied the 2000 amendment in 2000 to add "intermediary" definition):
These Regulations are amended to permit an invoice or receipt issued to the registrant by an agent or other intermediary of the supplier to be used to substantiate an input tax credit claim of the registrant. ... The amendment to enable a receipt or invoice issued by an agent or other intermediary to suffice as supporting documentation for an input tax credit claim simplifies compliance for registrants. Section 3
Supporting Documentation
See Also
Fiera Foods Company v. The King, 2023 TCC 140
The two bakery plants of the appellant in Toronto were staffed in significant part by temporary workers (“TWs”), who were sourced from third parties (the “Agencies”), which solicited for the TWs and directed them to the appellant. The appellant kept detailed records as to the hours worked by the TWs, which it provided to the Agencies for billing purposes, received invoices from the Agencies for the amounts identified in the invoices, and paid the Agencies therefor (including for HST) once it reconciled the amounts with its records. The Agencies cashed the cheques issued to them by the appellant and mostly paid the TWs in cash, which often was distributed to them in envelopes at the bakeries by the appellant’s supervisors.
CRA did not allege that the TWs were employees of the appellant. They also were not treated by the Agencies as its employees, so that it did not make any source deductions or remittances. They also did not remit any of the HST collected from the appellant. The appellant “chose to ignore the obvious signs that the Agencies were not treating the TWs as employees and/or were not meeting the obligations of an employer because the Appellant’s principal objective was to secure the TWs needed to run its plants at the lowest possible cost” (para. 215).
CRA denied the input tax credit claims of the appellant for the HST paid by it to the Agencies.
Owen J found (at para. 236) that the “Agencies provided a supply to the Appellant that comprised soliciting and directing TWs to the Appellant and paying the TWs for the services provided by those TWs to the Appellant” so that for “the supply provided by each Agency to the Appellant, the Agency was a ‘supplier”, and the Appellant was a ‘recipient’." Thus, the HST at issue had been payable by the appellant.
The Crown also took the position that the invoices received by Fiera did not satisfy the documentary requirements of ETA s. 169(4)(a) and the Input Tax Credit Information (GST/HST) Regulations (the “Regulations”), apparently on the grounds that the invoices were issued, not by the Agencies but, rather, by unauthorized “representatives” of the Agencies who in fact were not “linked” to the Agencies (see, e.g., paras. 155, 267). Before finding that such documentary requirements were met, Owen J indicated that:
- “Reading into paragraph 169(4)(a) a requirement regarding the form in which the information (including prescribed information) must be contained runs contrary to the precise and unequivocal words that Parliament has used” (para. 284).
- However, the specific information listed in s. 3 of the Regulations was required to be obtained by the ITC claimant in some form (para. 289), a requirement which was satisfied here.
- If (contrary to the view of Owen J), the definition of “supporting documentation” in the Regulations did not have a significant role to play, that definition “does not require that information prescribed by section 3 be in a particular form” (para. 301) and, in particular, para. (h) of that definition “does not impose a requirement that all forms in which information prescribed by section 3 is contained be validly issued or signed by a registrant in respect of a supply made by the registrant” (para. 309).
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 169 - Subsection 169(4) - Paragraph 169(4)(a) | no particular form of supplier documentation is required for ITC purposes | 328 |
| Tax Topics - Excise Tax Act - Section 169 - Subsection 169(1) | no requirement that the tax be payable to a particular person | 285 |
Axamit Versa Inc. v. The King, 2022 CCI 163
The ARQ denied input tax credits claimed by the appellant (“Axamit”) for its 2015 year regarding GST charged by its landlord. Axamit did not provide any document specifically listed in the Input Tax Credit Information (GST/HST) Regulations to the ARQ during the audit or following its filing of its Notice of Objection. However, Gagnon J, after referring to the similar finding in CFI Funding that s. 169(4) “simply provides that the registrant must have obtained the prescribed information in a form that will allow the ITCs to be determined” and that “[h]ow that information is obtained does not matter,” found that it was unnecessary that the GST registration number be set out in a document issued by the landlord, stating (at paras. 50, 53, TaxInterpretations translation):
[I]t does not appear appropriate that the scope of general wording of the preamble to the definition of supporting documentation in the Regulations be limited to the enumeration following the preamble. To the contrary, the text of the preamble allows for the flexibility that Parliament intended. The word "document" in the French version and the word "form" in the English version reflect this choice. The word document [“record” in English] is [broadly] defined in subsection 123(1) … .
[T]he testimony of Appellant's president confirmed that the information for Landlord's GST number included in Appellant's Exhibit Book was obtained as early as 2013 and provided to the external accountants. The Court considers this testimony to be credible … . Appellant had therefore obtained this information prior to the filing of the 2015 annual return containing the claimed ITC. The condition for obtaining the GST number does not require any particular form or that this information be provided to the Agency in order for the Court to grant the appeal.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 223 - Subsection 223(2) | purpose of s. 223(2) | 253 |
| Tax Topics - Excise Tax Act - Section 169 - Subsection 169(4) | unnecessary that the GST registration number be set out in a document issued by the supplier | 191 |
CFI Funding Trust v. The Queen, 2022 TCC 60
The appellant (“CFI”) carried on the business of securitizing automobile dealer leases through concurrent lease structures under which it leased the interest of automobile dealers (the “Originators”) as lessors under automobile leases, so that it became the lessee and sublessor of the automobiles, and then prepaid much of the rent that was to arise under such leases (the “Master Concurrent Lease Agreements” or “MCLAs”) to the Originators. CRA originally denied input tax credit claims of CFI for the HST that was charged to it by the originators on the prepaid rent payments on the grounds that such payments were consideration for a financial service but, after some time, ultimately reversed that position and confirmed the ITC denials on the basis that CFI had not satisfied the documentary requirements of s. 169(4) and the Input Tax Credit Information (GST/HST) Regulations (the “Regulations”). Before allowing the appeal, Hogan J stated (at paras. 38, 40 and 48):
I believe that the broad term “form” was used in subsection 169(4) of the Act and section 2 of the Regulations because Parliament was mindful of the benefits of paperless record keeping. …
[I]nformation stored on a registrant’s computer server qualifies as supporting documentation. …
I conclude that the Regulations do not set out a general requirement for the supporting documentation to be issued or signed by the supplier. The definition of “supporting documentation” only requires the document to be issued or signed by the supplier where the documentation does not fit within one of the document types outlined in paragraphs (a) to (g) or fall within the meaning of “form” as set out in the preamble to the definition. To place this requirement on all supporting documentation would read words into the Regulations where the words of the definition are otherwise precise and unequivocal.
Hogan J went on to find that such requirements as summarized above had been satisfied by CFT spreadsheets showing inter alia the prepaid rent amounts (together with HST thereon), along with testimony as to how this information was collected from the original leases, and some sample leases.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 169 - Subsection 169(4) | information stored on recipient's computer server qualifies as a "form" | 241 |
Administrative Policy
23 March 2017 CBA Commodity Taxes Roundtable, Q.19
Yco misaddressed its invoice to Xco (also a registrant) for a taxable supply by either (i) misspelling Xco’s name, or (ii) using the name of Xco’s sole shareholder. In either case, if Xco obtains a corrected invoice from Yco, will it be accepted as “supporting documentation” as defined in s. 2 of the Input Tax Credit Information (GST/HST) Regulations? What if Xco obtains from Yco a letter confirming that Yco misaddressed the original invoice and that it should have been addressed to Xco?
CRA responded:
Where all the prescribed information as defined in section 3 of the Regulations is set out in the supporting documentation, a registrant may be able to claim an ITC in respect of a supply they acquired in the course of their commercial activity even though the invoice issued for that supply may contain errors related to the registrant name or be issued to the wrong registrant. …
If an attempt is made to remedy the [described] situation by obtaining an amended invoice in compliance with the disclosure requirements, then the CRA will accept the amended invoice as supporting documentation.
With respect to the letter from the supplier … [p]aragraph (h) … includes “any other document validly issued or signed by a registrant in respect of a supply made by the registrant on which GST/HST is paid or payable”. Consequently, a letter issued by a supplier in respect of a supply made by that supplier would qualify under this paragraph.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 232 - Subsection 232(3) - Paragraph 232(3)(a) | incorrect invoice could be corrected with a letter | 71 |
Section 3
Paragraph 3(a)
See Also
Rochus Geissel, as liquidator of RGEX GmbH v Finanzamt Neuss (Neuss Tax Office), C 374/16, [2017] BVC 58 (European Court of Justice, 5th Chamber)
The European VAT rules required that an invoice provide the “full” name and address of the supplier. The Court held that this requirement can be satisfied by a “letter box” address of a correctly-named supplier, noting that the principal focus of the purchaser and the tax authority auditing its input tax deduction claim for the VAT charged by the letter box supplier should be on whether that supplier had a valid VAT registration.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Regulations - New Harmonized Value-Added Tax System Regulations - Subsection 13(1) | a letter box address is a valid address for VAT purposes | 477 |
Les Ventes et Façonnage de Papier Reiss Inc v. The Queen, 2016 TCC 289
The taxpayer operated a business that bought and sold recycled or non-compliant paper. Input tax credits were denied for the GST on invoices received from six purported suppliers (the "Suppliers") of the taxpayer, all of whom had a GST registration numbers at the time they issued their invoices to the taxpayer. The Minister submitted that the invoices presented were invoices of convenience because the Suppliers were not the true suppliers of the products acquired by the taxpayer.
In dismissing the appeal, Lafleur J stated (at paras 209, 211, 215 and 223):
There is no doubt that the Suppliers were not engaged in any commercial activity during the years at issue. …
All of the cheques issued by the Appellant in payment of the invoices in question were cashed at cheque-cashing centres. …
According to…Kosma‑Kare [2015 TCC 182] and Salaison Lévesque [2014 FCA 296]...the name of the true supplier or its intermediary (within the meaning of the ETA) must appear on the invoices and good faith is not a relevant criterion in that regard. …
The Appellant submits that since the Respondent acknowledged that supplies had been provided in relation to the invoices issued by the 4 suppliers, this was sufficient to entitle it to ITCs. This argument cannot be accepted.
Administrative Policy
23 March 2017 CBA Commodity Taxes Roundtable, Q.11(b)
If A is assessed for failure to charge GST/HST to B, and then then amalgamate, Amalco may generally claim an input tax credit for the GST/HST that was payable by one predecessor to the other (so that only interest is now payable on the assessment). In particular:
Where the predecessor (the supplier) did not provide the documentary evidence to the other predecessor prior to the amalgamation, the new successor could provide the necessary documentation thereby allowing the new successor to claim the ITC effectively reducing their liability to any applicable interest and penalty.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 271 | an unpaid GST/HST remittance obligation can be offset against an ITC if the vendor and purchaser amalgamate | 235 |
Subparagraph 3(a)(ii)
See Also
International Hi-tech Industries Inc. v. The Queen, 2018 TCC 240
The auditing firm (“DMCL”) issued an invoice for audit services rendered to the appellant which it claimed not to have seen until it was obtained and presented to it by Crown counsel during the trial. The payment arrangements for the services of DCML were partially evidence by an initial retainer letter and then by an email sent a number of months later by DMCL to the appellant, to fix the audit fee at a level higher than that originally estimated, and provide for a payment schedule.
After noting (at para. 65) that “the information required by subsection 169(4) … may be contained collectively in multiple documents,” Sommerfeldt J noted that whether s. 3(a)(ii) or (iii) of the Input Tax Credit Information (GST/HST) Regulations applied turned on whether DCML had issued an invoice to the appellant. In this regard, he noted after quoting definitions of “issue” (para. 71):
[I]n order to issue an invoice, not only must the invoice be created, but it must also be sent to the client or customer.
Accordingly, it was possible that the DMCL invoice had not been issued to the appellant. However, even if it had not been so issued, so that the applicable requirement was in s. 3(a)(iii), the supporting documentation did not actually specify the dates on which the payments had been made.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 152 - Subsection 152(1) - Paragraph 152(1)(b) | departure of supplier from its usual prompt invoicing | 274 |
| Tax Topics - Excise Tax Act - Section 169 - Subsection 169(1) | no contractual nexus between ITC claimant and supplier | 265 |
| Tax Topics - Excise Tax Act - Section 168 - Subsection 168(9) | possible deposits subsequently may have been applied by agreement as payments on account | 233 |
| Tax Topics - Excise Tax Act - Section 221 - Subsection 221(2) | unregistered purchaser | 35 |
| Tax Topics - Excise Tax Act - Schedules - Schedule V - Part I - Section 9 - Subsection 9(2) | sale by corporation not exempted | 30 |
Paragraph 3(b)
Cases
Dr. Kevin L. Davis Dentistry Professional Corporation v. The Queen, 2021 TCC 25, aff'd 2023 FCA 76
A professional corporation’s orthodontics practice claimed input tax credits on the basis of an administrative arrangement of CRA with the Canadian Dental Association under which orthodontists filed their GST returns using 35% of the patient’s total treatment cost as an estimate of the consideration for the supply of the orthodontic appliance (which was zero-rated), with only the balance treated as exempt - and with a requirement, when the annual results became available at year end, to reconcile their 35% ITC estimate with their actual taxable supplies. However, in the view of CRA, the corporation did not comply with the requirement under this policy to “identify the consideration for the zero-rated supply of the appliance separately from the consideration for the exempt supply of services” (the agreement with the patient stated that “[o]ur orthodontic fee includes a portion, up to 35%, relating to the value of orthodontic appliances,” but the invoices contained no allocation between the services and device. Accordingly, CRA disallowed the corporation’s input tax credit claims – effectively on the basis that there was a single supply of exempt orthodontic services.
Wong J confirmed the corporation’s position that it made both exempt and zero-rated supplies to its patients on a 65/35 basis, so that the zero-rated supplies generated ITCs.
CRA also justified its ITC disallowance on the basis that the invoices rendered to the patients did not comply with the Input Tax Credit Information (GST/HST) Regulations. (This position was odd, because these Regulations apply to invoices received from a supplier (i.e., to input invoices), and are not directly relevant to the ITC position of a supplier rendering invoices (i.e., output invoices)). In any event, Wong J found that the corporation’s invoices complied with these Regulations. In particular:
- they showed the tax on the taxable supplies included because they showed nil (overall) tax (s. 3(c)), and they therefore also included the (nil) amount of tax for each supply (s. 3(b)); and
- they included the total amount paid for the supplies (s. 3(a)).
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Schedules - Schedule VI - Part II - Section 11.1 | orthodontic practices make two supplies of services and devices | 383 |
| Tax Topics - Excise Tax Act - Section 169 - Subsection 169(5) | agreement with the Canadian Dental Association was an exercise of discretion under s. 169(5) | 273 |
Subparagraph 3(b)(i)
See Also
1378055 Ontario Limited v. The Queen, 2019 TCC 149
The appellant, which was seeking to develop one of its residential rental properties as a commercial storage site, received services from individuals or companies associated with the Foley family in connection with such property development. Some of the invoices did not set out the HST registration number of the supplier. In finding that this failing precluded an input tax credit claim for the HST on those invoiced amounts, Sommerfeldt J stated (at para 74):
[T]he Courts have consistently taken the position that section 3 of the ITCI Regulations is to be strictly applied. …
THD Inc. v. The Queen, 2018 TCC 147
The appellant, which had a trucking business, acquired various supplies from a supplier (“Service Stakkers”) for which it was invoiced, with the first invoice being received in or around September 2012. By letter dated August 20, 2012, Revenu Québec had revoked the GST registration of Service Stakkers effective the earlier date of first registration of Service Stakkers on May 14, 2012. When Revenu Québec brought deficiencies in the invoices originally issued by Service Stakkers to the appellant’s attention in 2014, it got Service Stakkers to issue fresh invoices, but these did not contain a valid registration number.
In finding that the appellant did not satisfy the documentary requirements for claiming input tax credits, Favreau J stated (at paras. 58-59, TaxInterpretations translation):
The appellant thus did not have in hand the particulars prescribed by the Regulation at the time that it claimed the ITCs as required by paragraph 169(4)(a) … .
In the circumstance, the auditor did not have to consider the new invoices presented by the appellant in May 2014 but he confirmed that the new invoices were also invalid, because the GST/HST appearing on the new invoices had been annulled effective May 14, 2012.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 182 - Subsection 182(1) | damages received for the “modification” of a supply contract were deemed to be GST-inclusive irrespective of an ITC to the purchaser | 182 |
Administrative Policy
19 June 2019 GST/HST Interpretation 197123 - Documentary requirements for claiming input tax credits
The taxpayer, a GST/HST registrant engaged exclusively in commercial activities, purchases goods from Canadian suppliers for resale to non-residents. Some suppliers charged the taxpayer the GST/HST but did not list their GST/HST registration numbers on any invoices issued to the taxpayer. However, these suppliers were registered for GST/HST purposes during the relevant periods and the taxpayer has separately obtained, retained, and confirmed the suppliers’ GST/HST registration numbers. CRA stated:
Subsection 169(4) requires that “the registrant has obtained sufficient evidence in such form containing such information as will enable the amount of the input tax credit to be determined, including any such information as may be prescribed.” There is no requirement in either this subsection or the Regulations that the information be obtained in a single document or be obtained all at the same time.
Accordingly, as long as the required information has been obtained in any manner prior to claiming the ITC, the taxpayer would generally meet the documentary requirement in subparagraph 3(b)(i) of the Regulations.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Regulations - Input Tax Credit Information (GST/HST) Regulations - Section 3 - Paragraph 3(c) - Subparagraph 3(c)(ii) | no requirement that trade name be registered/recipient name can be supported in the recipient's internal records | 386 |
8 March 2018 CBA Commodity Tax Roundtable, Q.15
Systematix Technology (2006 TCC 277, aff’d 2007 FCA 226) stated: “there must be a registration number assigned to the supplier in conformity with subsection 241(1) is the time of the supply or, at the latest, the time of the filing of the return.” SNF L.P. held that an ITC cannot be claimed for GST/HST that was paid to a supplier whose registration number was cancelled as of the sale date. When must the registration number be valid? Before referencing its GST/HST Registry, CRA stated:
Generally, the registration number assigned to the supplier must be valid at the time the tax in respect of the supply becomes payable by the recipient or is paid by the recipient without having become payable. This is consistent with when the ITC of the recipient first arises under subsection 169(1) of the ETA, and when the tax becomes collectible or is collected by the supplier. The requirement under paragraph 169(4)(a) and the Input Tax Credit Information (GST/HST) Regulations to obtain the GST/HST registration number assigned to the supplier is intended to substantiate that the supplier is validly registered for purposes of claiming the ITC.
However, CRA stated:
[U]nder subsection 169(5), the Minister is given discretionary power in certain circumstances to exempt a specified registrant, a specified class of registrants, or registrants in general from the documentary and information requirements stated in subsection 169(4), if the Minister is satisfied that there is, or will be, sufficient evidence to establish the particulars of a supply and the tax paid or payable in respect of the supply. The Minister may also specify the terms and conditions for applying such an exemption.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 169 - Subsection 169(5) | CRA has discretion to waive requirement for contemporaneously valid vendor registration number | 128 |
Paragraph 3(c)
Subparagraph 3(c)(ii)
See Also
Lohas Farm Inc. v. The Queen, 2019 TCC 197
A grey marketer (Lohas) of newly-released iPhones purchased them in Vancouver-area Apple stores for export to Hong Kong and Taiwan, where those models were still unavailable. In order to get around Apple’s limit of two iPhones per purchase policy, Lohas used friends and acquaintances to make the purchases (the “buyers”). After finding that the buyers had purchased as agents for Lohas, D’Auray J went on to find that most of the input tax credit (ITC) claims of Lohas for the GST charged on the purchases satisfied the Input Tax Credit Information (GST/HST) Regulations.
Although many of the receipts issued by the Apple stores had missing, scratched, fictitious or unreadable names for the buyers (as agents of Lohas), for the transactions where a bank draft was issued to a buyer, a “memo prepared by Lohas showed the name of each buyer, the iPhones purchases, the tax and the commissions paid” (para. 147) However, for the transactions that Lohas paid in cash, the memo did not always indicate the name of the buyers – and, as noted, the receipts were defective- so that ITCs were denied for these, but not for those where the names were noted in the memo.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Agency | buyers made purchases of iPhones as agents for a grey market reseller | 450 |
| Tax Topics - General Concepts - Onus | no burden of displacing an assumption as to a factual matter which the taxpayer could not be reasonably expected to know | 286 |
| Tax Topics - Excise Tax Act - Section 169 | purchases were made as agent for grey market registrant | 278 |
2253787 Ontario Inc. v. The Queen, 2014 TCC 121 (Informal Procedure)
The appellant operated a small grey market business to buy iPhone 4 units from Apple's Canadian retail channels and resell them in Hong Kong, where they were not yet available. Friends and family members (the "buyers") would purchase one or two phones each, for which the appellant fully reimbursed them. The Minister denied the appellant's input tax credit claim for the HST incurred by the buyers on the basis that they were not its agents (and also on the basis of inadequate documentation).
Bocock J found that the buyers were not the appellant's agents as they did not have the authority to bind it. Apple's terms of sale prohibited buying phones for resale - that is, Apple would never have entered into the sales contracts directly with the appellant. Bocock J stated (at para. 17):
[A] principal cannot appoint an agent to engage in a contractual entreaty [sic] into which the principal has no legal capacity or authority to enter: 1524994 Ontario Ltd. v. Canada, 2007 FCA 74 at paragraph 18.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Agency | grey market buyers cannot be agents | 175 |
Administrative Policy
19 June 2019 GST/HST Interpretation 197123 - Documentary requirements for claiming input tax credits
The taxpayer, a GST/HST registrant engaged exclusively in commercial activities, purchases goods from Canadian suppliers for resale to non-residents. It carries on business under a number of trade names, the majority of which are registered with the relevant provincial authority and listed under the taxpayer’s business number accounts with CRA, but it also carries on business under a further trade name that has not been registered, since that trade name is a derivative of a trade name that had previously been duly registered. CRA stated:
Subparagraph 3(c)(ii) of the Regulations simply refers to “the name under which the recipient does business.” There is no requirement that such a name be registered with the relevant provincial authority.
The taxpayer entered into agency agreements with a number of third parties (the agents) to authorize them to purchase goods on its behalf, and reimbursed them for all purchases made on its behalf. CRA stated:
[I]f the name of the taxpayer’s duly authorized agent or representative is shown on the invoice issued by the supplier, the condition in subparagraph 3(c)(ii) … would be satisfied. …
[This assumes] that the parties are engaged in a valid principal/agent relationship. ...[A] copy of the agency agreement and other information relating to the purchase would generally need to be retained ... .
The taxpayer makes some of its purchases from suppliers who provide a cash register receipt or other documentation that does not identify the recipient of the supply, but the taxpayer is listed as the recipient in its electronic and accounting records, including its credit card receipts and statements. CRA stated:
[T]here is no requirement in either subsection 169(4) or the Regulations that the information to support an ITC be obtained in a single document or be obtained all at the same time. Therefore, provided there is sufficient evidence in the taxpayer’s internal records to clearly establish that it was the recipient of the supply for which the receipt was issued, the taxpayer’s name (legal or trade name) need not appear on a cash register receipt issued by the supplier in respect of such purchases in order to meet the requirement under subparagraph 3(c)(ii) of the Regulations.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Regulations - Input Tax Credit Information (GST/HST) Regulations - Section 3 - Paragraph 3(b) - Subparagraph 3(b)(i) | GST/HST registration number can be obtained in any manner prior to claiming ITC | 179 |
23 March 2017 CBA Commodity Taxes Roundtable, Q.18
Where a partner makes a purchase for use in the partnership business and receives a satisfactory invoice other than that it is in his name rather than that of the partnership, this will satisfy the documentary requirements for the partnership claiming an input tax credit. The same considerations apply to an employee reimbursement.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 175 - Subsection 175(1) | where a partnership reimburses a partner for a partnership expense, an invoice on file in the partner’s name is satisfactory | 212 |
11 September 2000 Ruling File Nos. 11601-3, 11650-10 and 11750-5-1
The Nominee holds legal title to lands (the "Property") as bare trustee for and on behalf of the Owner. Under the terms of the Nominee Agreement, it agreed to deal with the Property only on the directions of the Owner and to execute and deliver all agreements, leases, covenants, instruments and assurances required by Owner from time to time in connection with the Property. In connection with the Owner’s development of the Property, the Nominee has contracted on behalf of the Owner for the supply of goods and services from third parties, with the resulting contracts and invoices being in the name of the Nominee.
Ruling:
The Nominee may be considered to be the Owner's representative for purposes of the Regulations. Invoices and contracts supporting the Owner's claim for input tax credits, identifying either the Nominee or the Owner as the recipient of the supplies, along with the Nominee Agreement, satisfy the documentary requirements as prescribed in the Regulations.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Recipient | beneficial owner was recipient of contracts entered into in name of nominee | 61 |
Subparagraph 3(c)(iii)
See Also
1378055 Ontario Limited v. The Queen, 2019 TCC 149
The appellant, which was seeking to develop one of its residential rental properties as a commercial storage site, received services from individuals or companies associated with the Foley family in connection with such property development. The invoices (with one exception) were silent as to the terms of payment. In finding that s. 3(c)(iii) nonetheless was satisfied, Sommerfeldt J stated (at para. 71):
[I]f a contractual document (which presumably includes an invoice) does not state express terms of payment, the fee or price that is the subject of the invoice is payable in cash currently or perhaps within a reasonable time. …[I]t is my understanding that the fees that were the subject of the Invoices were to be paid within a reasonable time, if not immediately. Accordingly … each of the Invoices, by specifying the amount of the fee to be paid, with the implied requirement that the fee be paid in cash within a reasonable time, has satisfied the requirement in subparagraph 3(c)(iii) to set out the terms of payment.
Subparagraph 3(c)(iv)
See Also
Construction S.Y.L. Tremblay Inc. v. Agence du revenu du Québec, 2018 QCCA 552
In the federal Construction S.Y.L. Tremblay case, Bédard J found that house-repair invoices, that did not give the house address or describe the precise nature of the work performed (and that were rendered in the name of entities that did not remit the GST), failed to satisfy the requirements of s. 3 of the Input Tax Credit Information (GST/HST) Regulations, so that the appellant’s related input tax credit claims were properly denied. Prior to that decision, the appellant in that case had appealed the denial by the ARQ of the input tax refunds claimed by it for QST on those invoices under the equivalent provisions under the Quebec Sales Tax Act, to the Court of Quebec – and also stated that (at para. 25) “I am convinced that the appellant did not truly acquire the supplies for which it claimed ITCs in its net tax calculation.” After the ARQ then made a motion for the Quebec appeal to be dismissed as an abuse of process, the appellant filed a declaration that it intended to file more numerous documents and produce 19 witnesses in support of its appeal.
Before going on to affirm the finding of the Court of Quebec that allowing this (Quebec) appeal to proceed would constitute an abuse of process, Thibault JCA stated (at paras. 39-42, TaxInterpretations translation) that:
After having decided that the evidence which the appellant sought to advance was not new, the judge determined that, even if it were, it would not change the result because it did not satisfy the requirements prescribed by the QSTA and the Regulation.
To have a right to the claimed input tax refunds, the appellant had to establish that it had acquired the supplies for which it claimed the refunds and provide invoices issued by the suppliers that conformed to the requirements under the QSTA and the Regulation.
… Since all the supplies had a value of $150 or more, the invoices were required to contain a description sufficient to identify each supply. However, none of them had such a description. … The new evidence would not provide any invoice that could qualify for the desired refunds.
Even with the additional evidence, the appellant cannot demonstrate the validity of the claimed input tax refunds. The appellant’s provision of numerous witnesses cannot remedy this deficiency since those documents do not satisfy the requirements for obtaining input tax refunds.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Stare Decisis | Court of Quebec not bound by Tax Court decisions/stare decisis does not preclude relitigation where unfairness would otherwise result | 239 |
| Tax Topics - General Concepts - Abuse of Process | taxpayer’s attempt to relitigate an adverse TCC decision in the Court of Quebec was an abuse of process given that the new evidence to be tendered did not address its defective invoices | 412 |
| Tax Topics - Excise Tax Act - Section 169 - Subsection 169(4) | failure of invoices to describe supply was in itself sufficient to deny credit | 180 |
Barlis 06 - Investimentos Imobiliários e Turísticos SA v. Autoridade Tributária e Aduaneira, [2016] EUECJ C-516/14 (European Court of Justice (Fourth Chamber))
A law firm’s invoice paid by a Portuguese registrant which, for example, simply referred to “Fees for legal services rendered until the present date,” did not satisfy the EU Directive respecting the requisite detail to be provided on an invoice. However, the Portuguese registrant then provided the Portuguese authority with other documents (not in invoice form, as technically required) containing the missing particulars. The European Court of Justice found that an input tax deduction should not be denied, stating:
[T]he fundamental principle of the neutrality of VAT requires deduction of input VAT to be allowed if the substantive requirements are satisfied… . It follows that the tax authorities cannot refuse the right to deduct VAT on the sole ground that an invoice does not satisfy the conditions required by…[the] Directive…if they have available all the information to ascertain whether the substantive conditions for that right are satisfied.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 169 - Subsection 169(4) | requirement to grant credit if registrant provides non-invoice back-up | 453 |
Construction S.Y.L. Tremblay inc. v. The Queen, 2013 TCC 406 (Informal Procedure)
The appellant was retained by insurance companies to repair houses that had been damaged by fire or flood. He did not check the GST registration numbers of his subcontractors, who cashed the cheques he paid to them at cheque-cashing centres. In finding that the appellant was not entitled to claim input tax credits given the failure of the invoices (for amounts over $150) provided to him to satisfy the requirements of the Input Tax Credit Information (GST/HST) Regulations (and after underlining the requirement in s. 3(c)(iv) thereof that there be a “description of each supply sufficient to identify it”), Bédard J. stated (at paras. 23-24):
Since the purpose of paragraph 169(4)(a) of the ETA and the Regulations is to protect the consolidated revenue fund against both fraudulent and innocent incursions … a description is sufficient when it allows the Agency to identify the work performed by the suppliers. In my opinion, invoices the appellant submitted to evidence cannot meet the condition set out at sub-paragraph 3(c)(iv) of the Regulations unless they contain the following information:
(i) the exact place the supplier in question rendered services. By exact place, I mean the street address where the work was carried out;
(ii) the exact nature of the supply. In this case, the invoices could have referred to the estimates that, I repeat, described the exact nature of the work to be carried out and the payment conditions. ...
[In] all the invoices submitted … at least one mandatory element of information is missing.
He also stated (at para. 25):
I am convinced that the appellant did not truly acquire the supplies for which it claimed ITCs in its net tax calculation ... .
Bijouterie Almar Inc. v. The Queen, 2010 TCC 618, [2010] GSTC 181
The Minister disallowed the ITCs claimed for $15 million of gold jewellery purchases made over four years on the grounds inter alia that the appellant had not purchased the gold jewellery. Lamarre J. fouind that the appellant had displaced the Ministere's assumption by demonstrating that the supplier had sufficient inventory to supply the appellant.
| Other locations for this summary | |
|---|---|
| Tax Topics - Excise Tax Act - Section 169 - Subsection 169(1) | Vendor had capacity to provide goods |
Administrative Policy
23 March 2017 CBA Commodity Taxes Roundtable, Q.3
When a business purchases more than $150 (e.g., the purchase of a computer) from a retail store, the cash register receipt will not identify the purchaser, as required. Will this requirement be met if the purchase is made with a credit or debit card, so that the last four digits of the card will appear on the retailer’s receipt, and the purchase will appear on the credit card or bank statement? CRA responded:
There is no requirement that the evidence needed to support an ITC claim be contained in a single document. …
Therefore … if all the information related to the supply is accessible and is prescribed information that enables the CRA to determine the amount of the ITC, then that information will be acceptable to the CRA as satisfying the documentary requirements under subsection 169(4).