Section 223

Subsection 223(1) - Disclosure of Tax


National Money Mart Co. v 24 Gold Group Ltd, 2018 ONCA 812

supplier can issue an invoice after being assessed for the HST on the supply

A supplier (“Money Mart”) did not charge HST on a sale of unrefined gold. Later it was audited and assessed for the missing HST, and on payment of the assessment and also after having issued invoices to the purchaser (“24 Gold”) showing the sale particulars and the applicable amount of HST as being unpaid (which 24 Gold refused to pay as it was not satisfied it would receive an input tax credit), then sued 24 Gold for the tax.

24 Gold argued that s. 223(1), properly interpreted, requires “the invoice or receipt” in respect of the supply to be issued to the recipient at the time of the supply. In rejecting this argument, Brown JA stated:

Section 223(1) is silent on when a registrant must give disclosure of the tax payable to a recipient. The overwhelming weight of the jurisprudence, the CRA’s Policy Statement P-116, and the professional commentary have interpreted that statutory silence to mean that a registrant supplier can comply with the s. 223(1) disclosure obligations by delivering an invoice or receipt containing the prescribed information after the supply transaction.

Occo Developments Ltd. v. McCauley, 1996 CanLII 4803 (NBCA)

notice of GST can be issued after the supply was made

The appellant (“Occo”) sold a residential unit to the respondent and charged and collected GST. In May 1994, Occo received notice that following an assessment, Revenue Canada had determined that a further amount of GST was payable for the sale, and on June 23, 1994, Occo wrote to the respondent claiming this further amount as well as a proportional share of penalties and interest owed to Revenue Canada.

Bastarache JA noted (at para. 12) the respondent’s argument “that the amount of GST claimed must be incorporated in the original invoice, receipt or agreement, and it cannot be changed subsequently,” and then rejected this position, stating (at para. 13):

The Act … imposes the tax on the recipient of the service, not on the supplier. It would therefore be an unreasonable interpretation of subsection 223(1) to limit the sending of a notice of the amount of GST due to documents issued at the time the supply was received. … [T]he formulation of the obligations in s. 223(1) does not reveal any intention of Parliament to impose such a restriction.

Governor's Hill Development Ltd. v. Robert, [1993] GSTC 35 (Ont. Ct. G.D.), aff'd [1996] GSTC 43 (C.A.)

A statement in an agreement of purchase and sale that the "vendor agrees to pay the GST on Penthouse #19" was interpreted to mean that the vendor should absorb the GST that otherwise would be payable by the purchaser on the stipulated purchase price, rather than as meaning that the purchaser would still be responsible for paying GST over and above the purchase price and the vendor would satisfy its obligation merely by remitting the GST collectible by it from the purchaser to the Receiver General.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 224 84

Woodlawn Construction Ltd. v. Bedford Waterfront Development Corp. Ltd., [1993] GSTC 34 (NSSC T.D.)

The plaintiff was precluded from adding GST to the unit price that had won it a bid to work on a construction project given that the instructions provided to all tenderers stipulated that "federal and provincial taxes are to be included in the taxes quoted".

See Also

NWorks Management Corp. (Globotech Communications) v. Lincourt, 2018 QCCQ 1021

recipient of supply could be invoiced for QST after the supplier was assessed therefor

In various transactions between January 1, 2010 and June 30, 2014, the appellant (“NWorks”) issued invoices to the respondent that quoted its GST and QST registration numbers and charged GST, but failed to charge QST due (it alleged) to a mistaken understanding that none was applicable. On November 6, 2014, the ARQ assessed NWorks for such QST, and NWorks promptly sent a composite invoice in proper form to the respondent showing a balance owing for unpaid QST in respect of the period from January 1, 2010 onwards.

In finding that NWorks was entitled to recover the additional amounts from the respondent pursuant to the Quebec equivalent of ETA s. 224 on the basis that NWorks’s subsequent invoice had satisfied the requirements of the Quebec equivalent of ETA s. 223 (namely, of QSTA s. 425), Sirois JCQ stated (at paras. 61-62, 65-66, TaxInterpretations translation):

Occo establishes that it produces an unreasonable result to interpret the Act as precluding a supplier from recovering the tax that it did not “invoice” at the time of the supply of the service.

Occo provides that it requires clear wording in the Act to depart from its fundamental principles by holding the supplier-agent ultimately responsible for the tax in lieu of the recipient. …

[T]he object of ETA section 223 and QSTA section 425 is to permit the recipient from whom the taxes are collected to be apprised of the amounts owing for the supply and what are the payments due for each of the taxes so as permit it to receive credits to which it has a right upon being invoiced for those taxes.

That which the recipient must pay to the supplier-agent can be recovered as a credit or refund for inputs.

And at para. 116:

In the two decisions 130099 Canada Inc. v. Lamontagne [2009 QCCQ 7158 (CanLII)] and Romaniuk c. Broderies Pena S.E.N.C. [2011 QCCS 1941 (CanLII)] cited above, the courts added the non-existent words “at the time of invoicing” to the text of QSTA section 425.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 224 supplier who failed to charge QST could recover, following assessment, from recipient 146
Tax Topics - Excise Tax Act - Section 225 - Subsection 225(4) - Paragraph 225(4)(c) purpose is to permit late recovery and matching ITC 124

Lauber v. Reid, 2016 QCCA 1587

unless otherwise stipulated, contract price is exclusive of GST even if supplier not registered until invoicing

Under the terms of a contract for home renovation work to be performed for the appellant (a real estate agent) by the respondent, the respondent was to be paid 35% of the sale price “in consideration of the renovation work” with a minimum of $805,000 and a maximum of $910,000. After the house was sold, the respondent invoiced the appellant for $805,000 (which was paid) plus $40,250 GST and $80,299 QST (which were disputed) on the day that she became registered for GST/QST purposes.

In affirming the finding below that “the right to bring an action to recover the sales taxes is not subject to the collector having been registered with the tax authorities when the services were provided,” Dutil JA stated (at paras 12 and 13):

Sections 223 and 224 of the Excise Tax Act and the Sections 425 and 427 of the Act Respecting the Québec Sales Tax, demonstrate that the taxes are payable as a function of the supply of a taxable service (in this instance) and not the registration with the taxing authorities by the supplier of the service. The right of recovery by legal proceedings is specifically created by the statutes as if the tax debt was due to the supplier and not the taxing authority.

… [T]he services in question are taxable because the law provides that unless specifically stipulated, GST and PST are not included in the gross price for the taxable goods or service.


GST M 300-7-7, "Co-operative Advertising", : The registered recipient of a supply can prepare and sign documentation that meets the requirements so long as the supplier accepts the documentation and ensures that it adequately discloses the amount of tax paid.

Subsection 223(2)

See Also

Agence du revenu du Québec v. 9141-5315 Québec Inc., 2017 QCCQ 12233

Quebec restaurant establishes due diligence defence respecting a cashier’s failure to provide a receipt

A Revenue Quebec inspector purchased food at the Tim Hortons restaurant of the accused and the cashier did not provide him with a receipt. The accused was charged for failure to comply with s. 350.51 of the Quebec Sales Tax Act, which provided:

If the operator of an establishment providing restaurant services makes a taxable supply of a meal (other than a zero-rated supply) in the course of operating the establishment, the operator shall prepare an invoice containing prescribed information, provide the invoice (except in the cases and conditions prescribed) to the recipient without delay after preparing it and keep a copy of the invoice.

In finding that the accused had established a due diligence defence, Costom JCQ stated (at paras. 23, 24, 29, 32, TaxInterpretations translation):

Clear directives were provide to all personnel to underline the importance of respecting the obligation to provide customers with their invoice.

[A] notice was posted in the employees’ room, which referred to that obligation. Furthermore, there were notices to that effect beside each of the two cash registers. Finally, there was a pop-up on the screen for each transaction which reminded yet again the employees that they were required to provide the customer with an invoice.

[A] document … had to be signed by each of the employees, confirming that they were familiar with the obligation… .

All these measures have satisfied the Court that the accused was not simply content to inform its employees of the obligation to provide customers with their invoice, but that it had put into effect a system of control and supervision of the application of this directive.

She also referred (at para. 35) to the potential disciplinary measures for non-complying employees.