Section 241

Subsection 241(1)

See Also

Ouazana v. The Queen, 2020 TCC 124 (Informal Procedure)

a retroactive GST registration of a real estate buyer relieved the vendor of liability for failure to charge GST

On February 7, 2014, the appellant made a taxable supply of real property (being the portion of a building that was rented to commercial tenants) to a purchaser which represented that it was registered for GST and QST purposes but, in fact, was not, so that the registration numbers it provided to the appellant were invalid. On November 16, 2016, the purchaser was re-registered with retroactive effect to February 7, 2014 with the same registration numbers that had been stated in the Agreement of Purchase and Sale.

In finding that the retroactive registration was effective for s. 221(2)(b) purposes, so that the appellant could not be reassessed for failure to have charged GST to the purchaser, Favreau J stated (at paras. 28-29):

Subsection 241(1) requires that the minister notify the person who applies for registration of the “effective date of the registration” which is the date on which the applicant becomes subject to the ETA. When the effective date of registration is backdated, the retroactive effect of the registration must be recognized for all purposes of the ETA unless there is a clear provision of the ETA to the contrary. No such provision seems to exist in respect of paragraph 221(2)(b).

In my view, a strong comparison can be drawn between paragraph 241(1) and paragraph 241(1.5). In paragraph 241(1), there is no limitation to the discretionary power of the Minister to backdate the effective date of registration of a person while in paragraph 241(1.5) the discretionary power imposed on the Minister is limited to a date that is not to be earlier than 60 days after the particular day on which a notice of intent was sent by the Minister to the person. Prior to this provision being introduced in the legislation of 2014, there was absolutely no time limit for the Minister to determine the effective date of registration of a person that is not registered but is required to be registered and has failed to apply for registration.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 221 - Subsection 221(2) - Paragraph 221(2)(b) retroactive registration of purchaser was effective for s. 221(2)(b) purposes 208

Subsection 241(1.5)

Administrative Policy

May 2016 Alberta CPA Roundtable, GST Q.10

no longer unilaterally backdated GST/HST registrations

CRA has been observed backdating registrations more than 60 days before the date the notice of intent was mailed out, contrary to s. 241(1.5).

CRA responded:

Registration should be followed in accordance to this legislation. Taxpayers can send in correspondence and ask for the account to be reviewed if the registration has fallen outside the limitations of the legislation.

26 February 2015 CBA Roundtable, Q. 23

not precluded from reassessing pre-registration periods

New ss. 241(1.3) to (1.5) require CRA to give 60 days’ notice before registering a person who has failed to register. How does this affect the decades-old auditing practice of simply assigning a GST/HST registration number to someone who should have been registered, and then assessing the person under that number for unremitted net tax? CRA responded:

The CRA’s new discretionary registration authority under subsection 241(1.5)…does not preclude the CRA from assessing a particular person who should have been registered for unremitted net tax. If the CRA exercises the authority under subsection 241(1.5)…to register a particular person, the CRA could still assess that person under paragraph 296(1)(a)…for unremitted net tax in respect of reporting periods prior to that person’s effective registration date.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 296 - Subsection 296(1) - Paragraph 296(1)(a) may assess net tax prior to effective date of registration 125