Section 152

Subsection 152(1) - When Consideration Due


Garage Gilles Roy (2007) Inc. v. The Queen, 2014 TCC 269

claim subject to real risk of rejection not an invoice

The appellant, which was a registrant and operated a garage, would in those instances where its repair work appeared to be covered by warranty, email the manufacturer specifying the work done (including the time spent and the cost of replacement parts), after the repair work was completed. If the manufacturer then approved the work, the appellant would receive payment (in accordance with a pre-established scale of the manufacturer), generally by set-off against the cost of parts purchased by it from the manufacturer. ARC assessed on the basis that the claims emailed to the manufacturers were invoices that triggered an obligation to collect GST.

Favreau J noted (at para. 23, TaxInterpretations translation) that "no ‘invoice'…was issued to the manufacturer…if the claim transmitted to the manufacturer was refused in whole or in part" and noted testimony (at para. 30) that approximately 20% to 30% of claims were partially rejected, and around 5% totally rejected (e.g., because of abnormal wear). He concluded (at para. 38) that "the system of submission of claims does not constitute an ‘invoice'…[and] the moment when the consideration for the taxable supply becomes due is the moment when the manufacturer approves the claim."

Canada v. Canadevim Ltée, 2011 GSTC 62, 2011 FCA 128

The registrant completed 55% of the construction work on a golf course, for which it was not paid. A key sponsor of the project had died, and the work was interrupted. The registrant registered a legal hypothec on the land for $1.2 million, which it later withdrew on a settlement with the successor to its client. The Court affirmed the Minister's finding that the registrant owed GST on $1.2 million. In order to be entitled to register a hypothec, a claimant must have already demanded payment . It followed under s. 152(1) that payment was due to the registrant by the time the hypothec was registered.

The Court also noted in the alternative that the trial judge erred in finding that, because the work was only 55% completed, there was no undue delay in issuing an invoice. The trial judge had essentially applied the test in s. 168(3)(c) that consideration is not due until work is "substantially completed." Although s. 168(3)(c) only applies where there is an agreement in writing, she found that it was was reasonable to apply the same test in these circumstances. Before concluding that, in these circumstances, an invoice should have been issued for the partially completed work, Noël J. stated (at paras. 32-33):

The difficulty this reasoning raises is that according to the very terms of paragraph 152(1)(b), the issuing of an invoice may be unduly delayed even if the work has only been partially completed, since the provision speaks of an invoice "in respect of the supply for that consideration or part."

... [The trial judge] had to question whether, according to the evidence, an invoice had to be issued for the purpose of paragraph 152(1)(b) for the part of the work that had been carried out.

Words and Phrases
undue delay

See Also

Revenue and Customs Commissioners v. Findmypast Ltd., [2017] CSIH 59

the time of a supply of services was accelerated by prepayment only where the services were precisely identifiable

Findmypast carried on the business of providing access to genealogical and ancestry websites which it owned or in respect of which it held a licence. The search function (which only revealed that a particular set of records, e.g., the Register of births for a particular town and period, was available, but not the record contents) was available free of charge to the general public, but to access and download particular documents, customers could either take out a subscription for a fixed period or use a system known as Pay As You Go (“PAYG”) which involved the payment of a lump sum in return for which the customer received a number of “credits” (also referred to as vouchers) used to view records. The credits were only valid for a fixed period, but unused credits could be revived if the customer purchased further credits within two years. During the period in question the taxpayer accounted for value added tax (VAT) on the price of PAYG vouchers at the time when they were sold. The result was that tax was paid both for redeemed vouchers and the significant number of vouchers that remained unredeemed. The taxpayer claimed repayment of the VAT accounted for in respect of unredeemed vouchers during the period.

The principal issues were (i) whether VAT should have been accounted for at the time when the vouchers were sold or when they were redeemed, having regard to s. 1(2) of the Value Added Tax Act 1994 (the “1994 Act”), which provided that “VAT on any supply of goods or services … becomes due at the time of supply” and s. 6(3) of the 1994 Act providing that generally a supply of services is to be treated as taking place at the time when the services are performed (to be read along with generally similar VAT Directive language); and (ii) whether on the purchase of a PAYG voucher the customer should be viewed as prepaying for services within the scope of s. 6(4) of the 1994 Act which provided, notwithstanding s. 6(3), that if before the time applicable under s. 6(3) “the person making the supply … issues a VAT invoice in respect of it or if, before the time applicable under [s. 6(3)] … receives payment in respect of it, the supply shall, to the extent covered by the invoice or payment, be treated as taking place at the time the invoice is issued or the payment is received.”

After finding a supply of services was made only at the time that particular records were downloaded, Lord Drummond Young then turned to the s. 6(4) prepayment rule (as informed by the corresponding VAT Directive rule in Art. 65), and found that it did not apply. He first noted (at para 46), that under the Court of Justice jurisprudence on Art. 65

VAT may be payable in advance of that date [of the supply] if the requirements of article 65 are satisfied, but for that to happen there must be precise identification of the goods and services that are to be supplied.

He further found (at paras 48, 51, 52, and 53):

When a customer acquires PAYG vouchers and makes a payment to the taxpayer, a number of matters are uncertain. First, and most importantly, it is uncertain whether the chargeable event – redemption of a credit by viewing or downloading a document - will ever occur. … Secondly, it is not clear when redemption will occur, and by that time a number of features of the service might have changed. … [T]he possibility that the available documents might have changed appears to be a real one. In its contractual terms and conditions the taxpayer expressly reserves the right to make changes to the website…[and] the number of credits charged to view a record may be changed from time to time.

[T]he elements of uncertainty… are sufficiently important to exclude the application of the prepayment rules contained in section 6(4) … and article 65.. . . of the Principal VAT Directive. If a prepayment is to be chargeable to VAT, it must relate to a particular supply of goods or services, with a direct link between the goods or services and the consideration paid in advance.

… [W]e are of the opinion that the uncertainties in the present case are so material that the payment made when PAYG credits are purchased cannot be considered a prepayment towards the cost of any particular search. …

… The supply is the viewing and downloading of documents, but it cannot be known at the time when the payment is made how many credits will actually be used and how many will remain unredeemed. That makes it impossible at that stage for the taxpayer to know how much VAT should be accounted for. … In essence, article 65 and section 6(4) proceed on the proposition that a deemed supply takes place, but if the extent of that supply cannot be known at that point the system of accounting for VAT becomes unworkable.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Stare Decisis prior cases reviewed for principles rather than similar facts 90
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Service supply of genealogical records by website in satisfaction of previously purchased credits was a service 406
Tax Topics - Excise Tax Act - Section 168 - Subsection 168(6) precise services to be purchased with credits were not yet identified 152

Administrative Policy

CBAO National Commodity Tax, Customs and Trade Section – 2013 GST/HST Questions for Revenue Canada, Q. 10. ("Time Tax Becomes Payable When Consideration Is Comprised Of A Forgivable Loan")

available with membership password at

Respecting the situation where the consideration that is payable for a taxable management service is comprised of a forgivable loan which has a 5 year term (20% of principal amount being forgiven each year), CRA stated:

Consistent with subsection 152(1) of the ETA, this consideration would be considered to become due according to the relevant written agreement between the management service provider and the client and when any invoices are issued. In the absence of any particular conditions on the loan advance or forgiveness of amounts under the loan and assuming that the entire amount of the loan advance is required to be advanced at the outset under the agreement, the consideration would generally be considered to be paid and to become due, and the tax would therefore generally be payable, at the time the loan advance is made, not at the time the loan is forgiven.

21 October 2011 Interpretation Case No. 135932r

CRA responds to a confusing (and likely inaccurate) description of a P3 hospital project in which Project Co contructs the hospital with title remaining at all times with the hospital authority, starts issuing invoices to the hospital authority on completion of the construction and thereafter receives monthly amounts which are described by the correspondent as being in respect of the "lease/finance" portion of the project (although CRA notes that the information submitted indicates that the monthly billings are also in respect of facility management services provided by Project Co).

In commenting on the undue delay test, CRA states:

With respect to whether there was an undue delay in Project Co's issuing an invoice in respect of the supply, we would normally consider the normal business practice of Project Co in the circumstances in determining if there was an undue delay. If Project Co's normal practise is not to issue an invoice until construction of the real property is substantially complete, then tax will become payable on [mm/dd/yyyy], i.e., the date the First Invoice was issued. If Project Co's normal business practise in the circumstances is to issue invoices for some of the consideration payable as construction progresses, then tax will have become payable on the date any such invoices would have been issued. And if any part of the consideration that is reasonably attributable to the construction of the [facility] has not been paid or become payable by [mm/dd/yyyy], tax on such consideration will become payable on that date.

GST M 300-6-13 "Construction Contracts"

The Contractor's application for payment will not be regarded as an invoice, because the application is, in effect, merely a request that a certificate for payment be issued pursuant to the contract, and not a document creating an obligation to pay.

Paragraph 152(1)(b)

See Also

International Hi-tech Industries Inc. v. The Queen, 2018 TCC 240

departure of supplier from its usual prompt invoicing

The auditing firm (“DMCL”) for the appellant obtained the agreement of the appellant, as evidenced by a December 7, 2007 email sent by DMCL to the appellant, to fix the audit fee at a level higher than that originally estimated. In discussing, without concluding, whether DMCL had unduly delayed issuing its invoice after providing its audit opinion on January 23, 2008, Sommerfeldt J first noted (at para. 57):

It appears that the original intention of the Department of Finance, in drafting paragraph 152(1)(b) of the ETA, was that undue delay would be determined by reference to the usual invoicing practices of the particular supplier.

He then stated (at paras. 59-61):

Spur Oil … indicated that … the word “undue” should be given its dictionary meaning of “excessive.”

[Lacroix, 2011 FCA 128, at para. 32] confirmed that, even in a situation where the performance of a contractual supply is only partially completed, it is possible for the issuance of an invoice to be unduly delayed … .

...[I]t is noteworthy that on February 18, 2008, DMCL issued an invoice to IHI in respect of a report that DMCL had issued on January 23, 2008. In other words, the invoice was issued only 26 days after the report was issued. On the other hand, it appears that DMCL stopped working on the audit of IHI’s financial statements in November or December 2007, but did not issue an invoice until June 19, 2008, a delay of approximately five or six months.

Words and Phrases
undue delay
Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Regulations - Input Tax Credit Information (GST/HST) Regulations - Section 3 - Paragraph 3(a) - Subparagraph 3(a)(ii) invoice not issued if not sent 220
Tax Topics - Excise Tax Act - Section 169 - Subsection 169(1) no contractual nexus between ITC claimant and supplier 245
Tax Topics - Excise Tax Act - Section 168 - Subsection 168(9) possible deposits subsequently may have been applied by agreement as payments on account 205
Tax Topics - Excise Tax Act - Section 221 - Subsection 221(2) unregistered purchaser 33
Tax Topics - Excise Tax Act - Schedules - Schedule V - Part I - Section 9 - Subsection 9(2) sale by corporation not exempted 28

Subsection 152(3) - Payment

Administrative Policy

CBAO National Commodity Tax, Customs and Trade Section – 2013 GST/HST Questions for Revenue Canada, Q. 22. ("Assumption of ‘Under Water' Contract")

available with membership password at

A GST-registered Vendor sells resource properties to a GST-registered Purchaser, and Purchaser agrees to assume long-term contracts ("Assumed Contracts") for the processing of the properties' production at prices greater than the current market rates. The negative value of the Assumed Contracts is netted against the purchase price payable by Purchaser. CRA stated:

The definition of "service" in [s.] 123(1)… is broad, and… encompasses the assumption of the obligations of another party in return for consideration from the other party. … In this case, the Purchaser has supplied a service to the vendor and GST/HST is collectible on the consideration payable for the supply of the service.