Section 240

Subsection 240(1) - Registration Required

See Also

Restaurant Loupy's inc. v. The Queen, 2016 TCC 260 (Informal Procedure)

winding-down operations qualified a de-registrant as a “registrant”/registration retroactive

When the operator of a restaurant ceased operations due to a termination of its lease, it applied for and was granted a revocation of its GST and QST registrations. The ARQ then assessed it under s. ETA s. 171(3) which (in conjunction with the change-of-use rules) effectively imposes GST on the fair market value of the taxpayer's capital property (here, all the restaurant equipment), where the taxpayer has ceased to be a registrant.

Favreau J found that, notwithstanding the revocation of its revocation, the taxpayer was still a “registrant” – whose definition includes a “person who is required to be registered” - given that it still held equipment which it was seeking to sell (some of which it sold eight months’ later). Thus, it was not subject to the deemed supply under s. 171(3)(b).

More than two years after its revocation of the taxpayer’s registration, the ARQ had restored the taxpayer’s registration with the same effective date as the original registration. Favreau J accepted that this restoration of the registration number was retroactive, so that even if (contrary to be above finding) the taxpayer had ceased to be a registrant, “the registration number was, on the facts, valid throughout the period at issue” (TaxInterpretations translation, para. 86).

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 171 - Subsection 171(3) continued to be registrant following revocation of registration number 300
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Registrant registrant based on wind-up activities 60
Tax Topics - Excise Tax Act - Section 141.1 - Subsection 141.1(3) - Paragraph 141.1(3)(a) holding discontinued equipment 143

Administrative Policy

30 August 2018 Ruling 185770

entering into an agreement to pool administrative support services triggered an obligation to register

A non-resident insurer which otherwise was only making exempt (insurance policy) supplies in Canada was found to have been required to register for GST/HST purposes as a result of entering into an agreement with another party under which each agreed to provide administrative services to the other at cost, to be billed annually. ETA 136.1(2) typically deems periodically billed services to be supplied at the beginning of each billing period, so that presumably the effective date of required registration was the effective date of this administrative services agreement.

Other locations for this summary
Tax Topics - Excise Tax Act - Section 136.1 - Subsection 136.1(2) reciprocal provision of admin services with annual billing at cost

8 March 2018 CBA Commodity Tax Roundtable. Q. 18

whether consignment sales in Canada cause to be carrying on business in Canada

A non-resident (VCo) sells goods to PCo on consignment with the goods delivered to PCo at VCo’s U.S. warehouse (under Incoterm® “Free Carrier”), with Pco importing as the importer of record. Once PCo finds a customer, there is a “flash sale” of the goods by VCo to PCo, and by PCo to the customer.

CRA stated that there was insufficient information to determine whether VCo would thereby be considered to be carrying on business in Canada or (if a registrant) the place of supply was in Canada. However, CRA stated:

[]I]f it is determined, based on all the relevant facts, including the terms of their agreement, that PCo acquires ownership of the goods that remain unsold 6 months after taking delivery of them outside Canada by virtue of their obligation to either purchase them at a 60% discount or destroy them, then the supply of the goods by VCo to PCo would likely be considered to be made outside Canada pursuant to paragraph 142(2)(a) of the ETA. Where this is determined to be the case, and VCo has no other presence in Canada …, VCo would not be considered to be carrying on business in Canada for GST/HST purposes and would therefore not be required to register for GST/HST purposes.

8 March 2018 CBA Commodity Taxes Roundtable, Q.1

residence of recipient not relevant to whether required to register

Where non-resident actors and directors film at Canadian locations in Canada, and are paid large sums (exceeding $30,000) respecting services performed in Canada by them on an independent contractor basis, they are required to register irrespective of the residence of the recipient.

16 March 2018 Ruling 158124

USco’s use of a Canadian affiliate for substantial marketing support for web-delivered services did not constitute carrying on business in Canada
Current arrangements

USco, which is not a registrant, supplies information services to businesses and individuals. A small portion of its customer base is individuals located in Canada ("Canadian Customers") subscribing for its information services via a website hosted on a U.S. web server for payment by credit card. The information services are delivered electronically to them from that server and do not involve direct human intervention. USco has no other business activities in Canada, although some of its employees visit Canada on an irregular basis.

USco acquires specific data from its Canadian resident affiliate ("Canco") for the purpose of packaging, marketing and selling the information services to Canadian Customers, as well as acquiring one-time services for a separate fee. Canco is not otherwise directly involved in the provision of the information services to Canadian Customers.

Canadian Customers are typically introduced to the availability of the information services by third party vendors ("TPVs") on commission who carry on business in Canada.

New Services

Canco and USco have entered into a new agreement ("Services Agreement") whereby Canco supplies additional services ("New Services") to USco, including:

  • assisting in the development and implementation of a comprehensive sales plan and strategy to penetrate target verticals;
  • performing weekly prospecting into key target accounts and sales calls both via phone and in person to present solutions;
  • assisting in the preparation of term sheets and proposals for delivery to prospective clients;
  • assisting in the negotiation of contract terms under specified guidelines and establishing baseline contracts for acceptance and execution by USco;
  • use of the Canco website for the limited purpose of providing a portal for use in communicating with purchasers and prospective purchasers of USco information services that are located in Canada; and
  • attending key trade events to promote the USco information services in Canada.

Under the terms of the Services Agreement, Canco is expressly precluded from acting as agent of USco in Canada. Canco does not have contact with USco’s customers and is not otherwise involved in the supplies of information services made by USco to Canadian Customers.

Ruling

USco is not carrying on business in Canada for GST/HST purposes.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Schedules - Schedule VI - Part V - 5 zero-rating of marketing assistance provided by Canco to U.S. affiliate 186
Tax Topics - Income Tax Act - Section 2 - Subsection 2(3) - Paragraph 2(3)(b) USco not carrying on business in Canada by virtue of extensive marketing assistance (without client contact) work provided by Canadian affiliate 228

19 March 2018 Interpretation 183900

registration potentially could be backdated by over six years in order to claim ITCs

A corporation now governed by the Canada Not-for-profit Corporations Act (“Corporation A”) was registered by telephone with an effective date of March 18, 2016, later changed at its request of January 1, 2016. It has now filed returns for its reporting periods ending on December 31, 2010 though to 2016, with the returns through to December 31, 2015 being cancelled as they were for reporting periods prior to the effective date of registration. Could Corporation A backdate its registration to April 1, 2010 so as to claim input tax credits for tax paid since then? CRA stated:

In order to backdate its registration, [Corporation A] could show it was a registrant during the period in question by proving it was not a small supplier; in other words, it was required to be registered. Its other option is to show it charged GST or HST on a consistent basis during that period on its taxable supplies.

If [Corporation A] can demonstrate that it qualifies to have its registration backdated, its request, including supporting documents, should be sent to: […]

Supporting documentation should include invoices showing the GST or HST charged to its clients or documents showing how and when it exceeded the small supplier threshold.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 225 - Subsection 225(4) - Paragraph 225(4)(b) corp potentially could have its registration backdated by 6 years to claim ITCs 205

23 March 2017 CBA Commodity Taxes Roundtable, Q.4

delivery of rented equipment to the Canadian lessee’s facilities would not result in a non-resident lessee carrying on business in Canada

A non-resident leasing company enters into an agreement outside Canada for the lease of industrial equipment to a Canadian lessee. The lessor acquires the equipment outside Canada and delivers it to the lessee’s Canadian facility. The lessor has no other relevant connection to Canada, e.g., agents, employees or facilities in Canada, soliciting of Canadian business, Canadian bank accounts or servicing obligations under the lease. Is it carrying on business in Canada? CRA responded:

[T]he non-resident would not be considered to be carrying on business in Canada for GST/HST purposes. The only relevant factor present in Canada in the scenario is the place of delivery, which is insufficient to conclude that the non-resident is carrying on business in Canada.

19 May 2017 Interpretation 178323

no backdating of registration of pure holding LP

CRA found that a limited partnership, whose only asset was an interest in a real estate development limited partnership, was engaged only in the making of exempt financial services. Accordingly, a request that the registration of the upper-tier LP be changed from a date in 2016 to a date in 2013 was rejected on the basis that:

A person’s effective date of registration is the day the person first makes a taxable supply in Canada otherwise than as a small supplier.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Financial Service - Paragraph (d) holding LP for a commercial real estate LP was not engaged in a commercial activity 135

26 February 2015 CBA Roundtable, Q.26

compulsory assignment to non-resident of coporate income tax account

What should a non-resident do if it wishes to voluntarily register for HST/GST purposes but does not (contrary
to CRA practice) want a corporate tax account assigned? CRA responded:

Every corporation who registers with the CRA for a GST/HST account also receives a corporate tax account as there is a legal requirement for certain non-resident corporations to file a corporate tax return. Every non-resident GST/HST registrant speaks to a CRA officer when opening an account… . If a non-resident corporation confirms they have no legal obligation to file a corporate tax return with the CRA, they can close the corporate tax account by phone or by mailing an RC145 Request to Close Business Number (BN) Account.

26 February 2015 CBA Roundtable, Q. 16

backdated registration of unregistered purchaser of commercial real estate
(full text available with membership password at http://www.cba.org/Sections/Commodity-Tax,-Customs-and-Trade/Resources)

Company B transfers its co-ownership interest in a commercial rental property on a rollover basis to Company C, whose sole activity is to hold the property. Erroneously, Company C is not registered at the time of the transfer. However, a joint venture election appointing the other co-owner (Company A) as operator under s. 273 is made. Six months later, it is discovered that Company C was not registered for GST/HST purposes as at the transfer date, so that Company B should have collected the GST/HST on the transfer. Company B and C are part of a group which makes supplies in excess of the small supplier threshold.

a) Can Company C register for GST/HST given that an election under s. 273 deems the supplies made under the agreement to be made by the operator (Company A) and not the participant (Company C)?

b) If Company C can register, is it possible to apply for retroactive registration back to the date of the transfer? ...

d) If an election under s. 273(1) were not made between Company A and Company C, would Company C be entitled to register for GST/HST retroactively back to the transfer date given that it is making supplies by way of lease of commercial property and that it is not a small supplier?

CRA responded:

a) ...If Company C makes a taxable supply in Canada in the course of a commercial activity engaged by it in Canada, otherwise than as a small supplier, it will be required to register for GST/HST purposes. However, as a result of making the joint venture election, Company C will not include consideration from taxable supplies deemed to have been supplied by Company A on its behalf in the course of the joint venture activities when determining if it has exceeded the small supplier threshold under section 148 of the ETA unless Company A is an associate. If Company C is not required to be registered but undertakes an activity that is not part of the joint venture agreement, it may be eligible to voluntarily register if the activity is a commercial activity engaged by it in Canada.

b) Retroactive registration back to the date of the transfer of the property would depend on whether Company C was required to be registered at that time under subsection 240(1) of the ETA. If Company C is currently engaged in a commercial activity in Canada as a small supplier it may voluntarily register and the date of registration will generally be the date that we receive the application for registration.

d) Generally, if an election under subsection 273(1) of the ETA was not made by Company C and Company A, and Company C was making taxable supplies in Canada of real property by way of lease, then it would have been required to be register under subsection 240(1) of the ETA at the time it first made a taxable supply in Canada otherwise than as a small supplier. It will be a question of fact whether, in this situation, Company C was required to be registered at the time of the transfer of the real property.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 171 - Subsection 171(1) unregistered purchaser of commercial real estate subsequently registered as small supplier 250

May 2013 ICAA Roundtable, GST Q. 5 (reported in April 2014 Member Advisory)

Crown sales included re effective date threshold

[I]f person has provided services to the province of Alberta and has exceeded the small supplier threshold, must it be registered for GST/HST back to that time, even if it is two or three years past? After listing the situations in which a registration will be backdated, CRA responded:

…[T]he mandatory registration for GST/HST will be backdated as far as when the registration become mandatory by meeting one of the conditions shown above. The tax status of a taxable supply of a property or service does not change to a zero-rated supply when made to a qualifying entity of the Government of Alberta; rather, the entity is relieved of paying the GST/HST on the supply.

CBAO National Commodity Tax, Customs and Trade Section – 2013 GST/HST Questions for Revenue Canada, Q. 15.

carrying on business analysed at agreement time
available with membership password at http://www.cba.org/CBA/sections_NSCTS/main/GST_HST.aspx

An unregistered non-resident enters into an agreement to supply and install a power generation facility inside Canada with the installation to take about eight months. Subsequently, it assigns the "in Canada" services portion of the contract to its Canadian subsidiary, and the parties and the Canadian subsidiary enter into a restated contract under which these respective roles are set out. In determining whether the non-resident "carries on business" in Canada, will the CRA look to the time of signing of the contract, or to its conclusion; and does the restated agreement represent a "novation" resulting in the cancellation of the original supply in favour of two new supplies by the resident and the non-resident? CRA essentially did not answer the 2nd question, and respecting the 1st stated:

The determination of whether a non-resident is carrying on business in Canada is generally made based on a complete set of facts at the time the non-resident enters into an agreement to make taxable supplies in Canada and those supplies are deemed to be made.

20 August 2012 Interpretation Case No. 140855r (see also Ruling Case No. 137186)

web provider with intermittent employee presence in Canada

USco (a non-resident which is not registered) provides information to its customers including Canadian customers using its website (without direct human intervention), which is hosted on non-Canadian servers; and also purchases information from a Canadian provider. Its customers pay for subscriptions using credit cards, and USco does not have a Canadian bank account. "USco employees enter Canada on an irregular basis only."

In finding that USco was not required to register, CRA stated:

...the place from which transactions are solicited is in Canada. As discussed, the place where business contracts are made may also be in Canada....even if it were to be determined that the place of contract is in Canada based on additional information, there would be insufficient relevant factors present in Canada to conclude that USco is carrying on business in Canada for GST/HST purposes.

29 March 2012 Ruling Case No. 137186 [solicitation in Canada not sufficient]

solicitation in Canada not sufficient

A non-resident company which sold on-line books to Canadian residents over the internet was not carrying on business in Canada, given

that the only factors that are present in Canada in this case are the place of contract, solicitation, and payment.

As the company thus was not required to be registered, such supplies of intangible personal property by it were deemed by s, 143(1) to be made outside Canada.

16 March 2009 Interpretation Case No. 110027

After stating that "the categorization of the Nominee as an active or bare trust is significant as it dictates who, between the Beneficial Owner and the Nominee, will be required to account for GST/HST under Part IX and thus who will be required to report tax with respect to the Projects," CRA went on to indicate that the nominee corporation in question was a bare trustee rather than the trustee of an active trust.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 169 - Subsection 169(1) 71

Q.23 – Bare Trustee as "Operator" of Joint Venture

…a bare trustee is not seen as carrying on any commercial activity with respect to the trust property, and thus is not eligible to register….

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 273 - Subsection 273(1) 107

RC2(E) "The Business Number and Your Canada Revenue Agency Program Accounts"

effective date of registration

Indicates inter alia that the effective date of registration for someone who is required to be registered is the date it begins to provide taxable goods and services (see quote below), and that a new business number is required if a corporation merges to form a new corporation.

Depending on your situation, you may have to register for the GST/HST regardless of your GST/HST taxable sales. If so, your effective date of registration is the date you began to provide the GST/HST taxable goods and services.

GST/HST Technical Information Bulletin B-068 "Bare Trusts" Amended 10 January 2005

bare trustee required to register if it charges fees

The determination that a trust is a bare trust generally will result in a conclusion that only the beneficial owner should register and that the trustee should not register. Hosever, the earning by a bare trustee of fees for its services would require the trustee to register unless one of the exemptions in s. 240(1) was available.

17 July 1995 Headquarter Letter File 11635-3

contract for consignment sale of discs manaufactured in or outside Canada entered into outside Canada

A non-resident company offers music discs for sale in Canada under a consignment arrangement with a distributor. The discs are both produced in Canada on its behalf by a contract manufacturer and produced in the U.S. and shipped to Canada. The non-resident would not be considered to be carrying on business in Canada provided that the contract for the sale of the compact discs to the distributor by the non-resident was concluded outside Canada.

Policy Statement P-051R2 "Carrying on Business in Canada" 29 April 2005

In the case of a supply of property by way of lease, factors that are typically of greater importance include the place where the property is acquired by the non-resident lessor and the place where the property is delivered to the lessee. In the case of a supply of a service that is the principal object of the contract (as opposed to a service that is merely ancillary to the supply of property), factors that are typically of greater importance include the place where the service is performed and the place where employees are located.

Ex. 2

Lease of industrial equipment entered into outside Canada, with lessee acquiring possession outside Canada and importing the equipment into Canada: non-resident lessor not carrying on business in Canada.

Ex. 3

Lease of industrial equipment entered into in Canada after the non-resident lessor has imported the equipment into Canada: non-resident lessor is carrying on business in Canada.

Ex. 8

Non-resident carrying on business in Canada where independent sales representative accepts orders and concludes contracts there, delivery is there, and advertising is directed to Canada

Ex. 9

Non-resident carrying on business in Canada where goods (manufactured outside Canada) are shipped from a rented warehouse in Canada pursuant to contracts concluded outside Canada

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 143 - Subsection 143(1) 173

Ex. 10

Non-resident not carrying on business in Canada where, pursuant to unsolicited orders received outside Canada, goods are shipped directly from the non-resident's Canadian supplier to Canadian customers

Ex. 11

Non-resident not carrying on business in Canada where, pursuant to solicited orders received outside Canada, it delivers and installs specialized equipment at the customer's Canadian address

Ex. 14

Non-resident not carrying on business in Canada where it supplies downloadable audio files through its web site hosted at its main office outside Canada, notwithstanding that contracts are concluded in Canada and internet ads are directed at Canada

P-015 "Treatment of Bare Trusts under the Excise Tax Act", 20 July 1992

"The bare trustee would not be seen as carrying on any commercial activity with respect to the trust property, and thus the trust would not be required to register under the Act."

GST M 200-3 "Calculation of the Small Suppliers' Threshold" under "Determining the Value of Consideration"

The small supplier threshold is calculated by determining the value of taxable supplies made by the person or an associate on a world-wide basis.

Articles

David M. Sherman, "GST Tidbits – Backdating of Voluntary Registrations by 30 Days", GST & HST Times, Release No. 280C – March 2013

At CRA's annual GST/HST meeting with the Canadian Bar Association Commodity Tax section on February 23, 2012, CRA stated in Question 48:

For a voluntary GST/HST registration the CRA will accept an effective date of registration that is within 30 days of the date when the registration was made, regardless of the method of registration (online, telephone, or paper). See attached link to the CRA website for further confirmation.

www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/rgstrng/ffctv-eng.html

We note that the original complaints that generated the review could be easily addressed by merely stopping the "automatic backdating" of registrations with no specified effective date by 30 days.

Barry Hull, "GST Tidbits - Backdating GST/HST Registrations", GST & HST Times, No. 267P, 24 February 2012, p. 5

CRA will no longer automatically allow an HST registration application to be backdated up to 30 days.

Michael J. Welters, "GST Number Caution", Canadian Tax Highlights, Vol. 18, No. 1, January, 2010"

Discussion of denial of taxpayers' claim for ITCs in Systematix Technology Consultants Inc., 2007 FCA 226, on the basis that suppliers had provided invalid GST numbers; and of CRA practice of assigning apparently valid GST registration numbers only for the purpose of processing of rebates.

Vincze, Esteves, "Canadian GST: A Potential Tax Minefield for Nonresidents", Tax Notes International, Vol. 10, No. 12, March 20, 1995, p. 992

RC has taken a very strict approach respecting when a person is carrying on business in Canada for GST purposes, particularly in the area of consulting services.

Forms

RC1 "Request for a Business Number" (HST or GST)

GST/HST Registry: "The GST/HST Registry lets you validate the GST/HST number of a business."

LM-1-V "Application for Registration" (Quebec)

QST Registry "Purpose of the service: To validate a QST registration number"

FIN 418 "Application for Registration for Provincial Sales Tax (B.C. PST))

Subsection 240(1.1)

See Also

Uber B.V. v Commissioner of Taxation, [2017] FCA 110

uberX driver was a taxi driver for GST purposes

The taxpayer used his Honda Civic vehicle to provide uberX driver services, whereby an app allowed registered riders to request transportation services from an uberX driver using the driver’s own vehicle. Although enterprises with a turnover of less than $75,000 were usually not required to register for GST purposes, s 144-5 in Pt 4-5(1) of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (the GST Act) required registration “if, in carrying on your enterprise, you supply taxi travel,” which was defined in s 195-1 of the GST Act as meaning “travel that involves transporting passengers, by taxi or limousine, for fares.”

Before declaring that the taxpayer was supplying “taxi travel,” Griffiths J stated (at paras. 135, 138):

… I consider that the words in s 195-1 should be given their ordinary, everyday meanings and not a trade or specialised meaning (including one which reflects what Dr Abelson describes as a “regulatory concept”). I accept …that the ordinary meaning of the word “taxi” is a vehicle available for hire by the public and which transports a passenger at his or her direction for the payment of a fare that will often, but not always, be calculated by reference to a taximeter. …

The fact that his car did not have a taximeter installed in it is not determinative….

Griffiths J also noted (at para. 143) “that some limited assistance is obtained from the mischief identified in the Explanatory Memorandum” to the Bill, which identified difficulties that arose where some taxi drivers were registered and others were not.

Words and Phrases
taxi

Uber Canada Inc. v. ARQ, 2016 QCCS 2158, aff'd 2016 QCCA 1303

Uber drivers, as operators of “taxi” businesses, likely were required to register for QST

The ARQ obtained a search warrant for searching an Uber Canada office in Montreal, which under s. 40 of the Tax Administration Act (Quebec), required that the ARQ employee laying the information have reasonable grounds to believe that Uber Canada was committing an offence, on the grounds that (1) Uber Canada (which was registered for QST purposes) was making false returns by not treating the per-drive commissions of 20% which it earned from its Quebec drivers as being consideration for taxable supplies, and (2) it was aiding the drivers in committing the offence of wilfully evading the collection of QST by virtue of its system for collecting the customer fares (through the customers’ credit cards) not treating those fares as being subject to QST (or GST).

Cournoyer JCS, in his capacity of judge reviewing the validity of the search warrant after it had been granted and executed, rejected an Uber Canada challenge to the second ground, on the basis of the failure of the information to disclose to the granting judge that many of the drivers could be small suppliers. Under s. 407.1 of the Quebec Sales Tax Act (similar to s. 240(1.1) of the ETA), a small supplier who carried on a taxi business was required to register, and the Quebec Act respecting transportation services by taxi required the registration of the Uber drivers’ cars as taxis. He stated (at para. 207, TI translation):

One cannot claim that one escapes the application of a law on the basis of one’s own delinquence.

The second ground was sufficient to justify the issuance of the search warrant, so that the first ground was not addressed.

Words and Phrases
taxi
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.3 - Subsection 231.3(3) it was reasonable for ARQ on a search to seize smart phones and laptops to make subsequent complete copies 416
Tax Topics - General Concepts - Illegality Uber drivers' breach of provincial registration statute did not justify their failure to register for QST purposes 226
Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Section 8 seizure of computers containing personal information was the only practicable approach 132

Subsection 240(3) - Registration Permitted

Administrative Policy

May 2016 Alberta CPA Roundtable, GST Q.6

backdated voluntary GST/HST registrations/recourse if denied

How is back-dating of registrations being assigned and what is the process if the request is denied? CRA responded:

If a taxpayer who is registering voluntarily requests that a registration be backdated beyond a 30-day period…[t]he taxpayer must provide evidence that GST/HST had been charged from the date requested on a regular and consistent basis. Documentation such as copies of the sales journal, sales or service contracts or the earliest 3 to 5 invoices are generally sufficient for this purpose.

Business Enquiries (BE) telephone agents will advise taxpayers to send the required documentation to the applicable Regional Correspondence Centre (RCC). Once the request is received, RCC agents will scan the request into a searchable database that the BE telephone agents have access to. …

Requests are usually denied if there is insufficient proof. Taxpayers can resubmit the request and the appropriate proof to backdate the registration.

28 January 2014 Interpretation 156861

registration of nominee

This interpretation essentially is an advance version of Notice [264] below. CRA stated that if a "nominee corporation is an agent and makes taxable supplies of its services of acting as an agent to the participants in a joint venture, the nominee corporation may register voluntarily if it is not required to register."

RC4022 "General Information for GST/HST Registrants"

If you are a small supplier and you are engaged in a commercial activity in Canada, you can choose to register voluntarily. If you register voluntarily, your effective date of registration is usually the date you applied to be registered. However, we will accept an earlier effective date, provided that the date is within 30 days of the date the application for registration is received, regardless of the method of registration.

GST M 300-4-7 "Exempt Supplies - Financial Services"

If listed financial institutions are not engaged in any commercial activities (e.g., zero-rated financial services), they cannot register.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 150 - Subsection 150(1) 0

GST Memeorandum (New Series), 2.3 "Voluntary Registration"

Articles

Andrew Linton, Jillian Adams, "CRA Denies Voluntary GST/HST Registration for Financial Institutions", Canadian Tax Focus, Vol. 9, No. 4, November 2019, p. 7

CRA is refusing requests for Canadian branches of foreign FIs to register for GST/HST purposes

Potential reduction in filing and payment-frequency obligations if Cdn branch of foreign FI voluntarily registers (p. 7)

A Canadian branch of a foreign financial institution that has imported taxable supplies must self-assess GST/HST and file returns. Companies in this situation may seek to reduce their compliance burden and improve their cash flow by applying for voluntary GST/HST registration. …

[A] listed financial institution that is registered for GST/HST can file returns and self-assess tax on imported taxable supplies on an annual basis. …

[O]n the other hand, a registered entity may also have to file an annual information return if it is a “reporting institution” (ETA subsection 273.2(2)). …

[W]hile an unregistered entity may have to remit tax on a monthly basis, a registered entity may have to pay tax only once or twice a year….

Refusal of CRA of voluntary registration of branch (p. 7)

Given these two reasons, a listed financial institution that is resident in Canada may want to voluntarily register for GST/HST (pursuant to ETA subsection 240(3)). However, the CRA is increasingly refusing such applications; its reason is that the existence of a Canadian branch does not make the financial institution a Canadian resident for GST/HST purposes. …

[A]ccording to ETA subsection 132(2), a non-resident person with a permanent establishment in Canada is considered to be resident in Canada in respect of the person's activities carried on through that establishment; thus, such a company should meet the definition of a listed financial institution resident in Canada (ETA paragraph 240(3) (c)) and should be allowed to register for GST/HST on a voluntary basis.

Paragraph 240(3)(a)

Administrative Policy

14 October 2016 Interpretation 170549

nominee accepted as registrant

ACo and BCo, which were co-tenants of a property in construction held through a Nominee made a s. 273 election in year X + 2 designating ACo as the operator. At the same time as making this election ACo and BCo also signed an agency agreement in which Nominee was designated as the agent of ACo and BCo and which provided that the Nominee was the authorized agent and representative of ACo and BCo including for the claiming of input tax credits – and the Nominee made such claims prior to the end of the period of administrative tolerance expressed in GST/HST Notice 284.

Before dealing with the ITC claims of the Nominee, CRA stated:

The Nominee is registered for the GST/HST….These comments are based on the understanding that the Nominee is engaged in commercial activities as a result of its agency activities on behalf of ACo and BCo and therefore is correctly registered for the GST/HST.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 273 - Subsection 273(1) Westcan test for JV, co-tenancy was JV 176
Tax Topics - Excise Tax Act - Section 169 - Subsection 169(1) agent could not claim ITCs 157
Tax Topics - General Concepts - Agency co-owners required to report pro rata portions of sale made by their agent 195

GST/HST Notice 284 "Bare Trusts, Nominee Corporations and Joint Ventures" February 2014

taxable supply of nominee services

After noting that a nominee corporation potentially may makes taxable supplies as agent on behalf of the participants in a joint venture, CRA stated:

If the nominee corporation is an agent and makes taxable supplies of its services of acting as an agent to the participants in a joint venture, the nominee corporation may register voluntarily if it is not required to register.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 177 - Subsection 177(1.1) agent not entitled to ITCs 113
Tax Topics - Excise Tax Act - Section 273 - Subsection 273(1) administrative tolerance for nominee operators 197
Tax Topics - General Concepts - Agency acquisitions of agent those of principal 116

15 November 2011 Headquarters Letter Case No. 135608

commencement of preliminary commercial activity

Where a "capital pool company" raises capital pursuant to a prospectus on a blind pool basis in order to invest in a company or make an asset acquisition, it will not be considered to be engaged in commercial activity (and, therefore, will not be entitled to register) until it has identified a particular asset acquisition. However, once it has identified an acquisition of assets that will be used in a commercial activity, anything done by the CPC (other than the making of a supply) in connection with the acquisition or establishment of that commercial activity shall be deemed to have been done in the course of the commercial activities of the CPC. Where the targeted acquisition instead is of a corporation, an input tax credit generally only will be available to the extent that the requirements of s. 186(2) are satisfied.

Paragraph 240(3)(b)

Administrative Policy

CBAO National Commodity Tax, Customs and Trade Section – 2013 GST/HST Questions for Revenue Canada, Q. 14. ("Voluntary Registration")

available with membership password at http://www.cba.org/CBA/sections_NSCTS/main/GST_HST.aspx

Respecting a non-resident person who purchases and sells tangible personal property in Canada, but does not "regularly solicit" orders in respect of such sales, CRA stated:

The CRA will register a non-resident person that purchases and sells taxable tangible personal property for delivery in Canada in the ordinary course of carrying on a business outside Canada, but does not regularly solicit orders in respect of such sales, if that person applies under subsection 240(3)… .

Paragraph 240(3)(c)

Administrative Policy

GST/HST Notice 308 GST/HST and Investment Limited Partnerships July 2018

Ability of SLFI to backdate registration by more than 30 days to beginning of reporting period (p. 12)

An ILP may be able to voluntarily register for GST/HST purposes under subsection 240(3). For example, as a listed financial institution under the proposed amendments, an ILP could voluntarily register if it is resident in Canada even if it is not engaged in a commercial activity in Canada. For voluntary registration, the effective date of registration is usually the date the person's application is considered to be received by the CRA (for example, when an application is mailed, the post-marked date). However, the CRA will accept an earlier effective date, provided that the date is within 30 days of the date when the registration application was received, regardless of the method of registration (online, telephone, or paper).

In recognition of the reduced administrative requirements for a registrant SLFI compared to a non-registrant SLFI, in certain circumstances, the CRA will register an SLFI that is registering voluntarily effective the first day of the reporting period in which the registration application is received, if that effective date is requested by the SLFI on its registration application. The registration application must be made using Form RC1, Request for a business number and certain program accounts or Form RC7301, Request for a business number and certain program accounts for certain selected listed financial institutions, as applicable. In addition, a letter from the SLFI should be attached to the registration application including confirmation in writing that in the particular reporting period: (i) it is an SLFI; (ii) it did not make any taxable supplies; and (iii) it did not file any rebate applications. These documents should be sent to the CRA’s Prince Edward Island Tax Centre.

Forms

RC7301 Request for a Business Number and Certain Program Accounts for Certain Selected Listed Financial Institutions

Use of RC7301

Only use this form if both of the following apply to you:

  • You are a selected listed financial institution (SLFI) for goods and services tax/harmonized sale tax (GST/HST) purposes or Quebec sales tax (QST) purposes, or both
  • You want to register for GST/HST and QST purposes or you want to register for QST purposes

Otherwise, use Form RC1, Request for a Business Number and Certain Program Accounts.

Requirement for backdating SLFI registration by more than 30 days

More information must be provided if the effective date of registration indicated below is more than 30 days before the date of application for registration. Usually, depending on the business’s situation, you must provide one of the following:

  • written confirmation that the business is an SLFI for GST/HST or QST purposes or both and is a resident in Canada, the business did not make any taxable supplies, and the business did not file any rebate applications for a particular reporting period if you are voluntarily registering for the GST/HST and QST, or for the QST only, effective the first day of that particular reporting period
    Note: In this situation, this form must be received by the CRA during that reporting period.
  • a document (a balance sheet, a financial statement, or an information slip) proving that the business is required to register for GST/HST and QST purposes because its revenues from QST taxable supplies, including zero-rated supplies, exceeded $30,000 (or $50,000 for a public service body) over the last four calendar quarters or in a single calendar quarter
  • sale invoices or other documents proving that the business began charging the GST/HST and QST on the effective dated entered on this form if you are voluntarily registering for the GST/HST and QST and you have taxable supplies

Assignment of annual reporting period

Part B3 – Reporting Period

We will assign you an annual reporting period. If you want to elect to have a different reporting period than annual, your options are listed below.

Subsection 240(6) - Security

Administrative Policy

Memorandum (New Series), 2.6 "Security Requirements for Non-Residents" May 1999

6. In general, the amount of security that must be posted is set at a minimum of $5,000 and a maximum of $1 million.

7. The initial amount of security required is based on 50% of the estimated net tax of the non-resident person, whether the net tax be a positive or negative amount, for the 12-month period following registration. After that, the security required will be equal to 50% of the net tax during the person's previous 12-month period.

Subsection 240(7) - Failure to Comply

Administrative Policy

CBAO National Commodity Tax, Customs and Trade Section – 2014 GST/HST Questions for Revenue Canada, Q. 6

response to failure to provide security
available with membership password at http://www.cba.org/CBA/sections_NSCTS/main/GST_HST.aspx

What are the implications of the non- resident's failure to provide the required security? CRA stated:

Subsection 240(7), outlines what the CRA can do when there is a failure to comply. Essentially, the provision states that the CRA can retain any GST/HST refund or rebate payable to a non- compliant non-resident as the required security, and any amount retained as security is deemed to have been paid to the non-resident person. Generally, the CRA would not pursue enforcement action under subsection 329(2) where a non-resident corporation failed to provide the required security.