Section 278

Subsection 278(1) - Place of Filing

Subsection 278(2)

See Also

Royal Bank of Canada v. The Queen, [2007] GSTC 122, 2007 TCC 281

s. 278(2) precluded direct collection on assessment of recipient until supplier released from remittance obligation under CCAA

CRA assessed Canadian Air Lines ("CAIL") in June 2000 for failure to charge GST on frequent flier points which the appellant ("RBC") paid for. CAIL did not pay the assessment and in January 2001, CRA assessed RBC for GST that was payable by it on the same points purchases. CAIL had filed under the CCAA in March 2000 and when the CCAA plan was approved, it was relesed of its liabilities arising before March 24, 2000. I

In rejecting submissions on behalf of RBC that the second assessment gave rise to double taxation, Hershfield J stated (at paras. 68, 69, 73 and 78):

[I]t is untenable to think that recipients would be liable to pay two collectors for GST on the same transactions. To prevent this…[s]ubsection 278(2) provides that amounts collectable by the Crown from a recipient cannot be paid to the Crown if the supplier is liable to collect the tax from the recipient. That subsection reads as follows:

…It is not enough then that an assessment has been issued against the Appellant. As long as CAIL as supplier has an obligation under section 221 to collect tax from the Appellant as agent of Her Majesty…the Crown cannot collect the tax payable by the Appellant as recipient of a supply except on behalf of CAIL.

… CAIL filed the Plan under the CCAA which released it of its liabilities arising before March 24, 2000. As the Plan was accepted by CAIL's creditors…it may necessarily follow that CAIL's collection obligation under section 221 was terminated so as to lift the limitation in subsection 278(2). But in the absence of provisions in the Act spelling out when such limitation is lifted, such finding is best left for another day – perhaps in a collection forum.

... That there are collection issues arising from the dual assessment is not sufficient to support a finding that the present assessment should fail on the grounds that it violates a rule against double taxation.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Financial Service - Paragraph (l) taxable supply of frequent flyer points 146
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Supply taxable supply of frequent flyer points 207
Tax Topics - Excise Tax Act - Section 181 - Subsection 181(1) - Coupon frequent flyer points could be coupons 114
Tax Topics - Excise Tax Act - Section 181.2 frequent flyer points not gift certificates 121
Tax Topics - Excise Tax Act - Section 296 - Subsection 296(1) - Paragraph 296(1)(b) no double taxation in s. 296(1)(b) assessment of purchaser because supplier had been released from its remittance obligation under CCAA plan 262

Administrative Policy

8 March 2018 CBA Commodity Tax Roundtable, Q.13

wire transfer account info should be confirmed by fax

A non-resident client pays by wire transfer and sends a fax to the Revenue Processing Section to confirm payment - but still receives an assessment for non-payment. Comments? CRA stated:

Wire transfers are sent through the banking system based on the originating bank. Intermediary banks often have a limit on the number of characters allowed in the transaction, so this can result in some essential information being cut off.

Currently, the best way to ensure that a wire transfer is successful is to also send a fax with the account information. The fax should be sent to the attention of the CRA’s Revenue Processing Section at fax number 204-983-0924.

With the launch of the new ISO 20022 standard (expected in 2019), the information on a wire transfer will be fixed information and we will be able to ensure the “fixed field” is at the front of the data stream instead of the end. Additionally, there will be additional characters allowed. We expect this will resolve the current payment allocation challenges for these wire transfers.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 157 - Subsection 157(1) - Paragraph 157(1)(b) wire transfers can get lost because of intermediary banks cutting off essential characters 71

8 March 2018 CBA Commodity Tax Roundtable, Q.10

SLFI tax must be remitted irrespective of a failure of a SLFI supplier to charge the tax going into the SAM formula

A Canadian financial institution makes a taxable supply of services (Services) to an unrelated Canadian selected listed financial institution (SLFI), for cash consideration but erroneously fails to invoice and collect any GST/HST in respect thereof. The SLFI is required to make the computation of net tax under the “SAM” formula in s. 225.2(2) based on the tax payable by it. S. 228(2.3) requires the remittance of that net tax. In contrast, s. 278(2) provides an exception from a remittance obligation where “the amount is required under section 221 to be collected by another person.”

Would s. 278(2) still prevent the SLFI from having to remit any tax in respect of the Services, on the basis that the supplier should have collected and remitted such tax under s. 221?

CRA responded:

…[T]he supplier of the Services is required [under s. 278(2)] to collect the HST payable by the SLFI under subsection 221(1) and include the HST in the supplier’s net tax calculation. If the supplier’s net tax is a positive amount, the supplier will remit that amount to the Receiver General. However, this does not have an impact on the SLFI’s net tax calculation or its SAM formula calculation.

In a particular reporting period, an SLFI includes an amount of tax payable, or paid without having become payable, by the SLFI during the reporting period in its SAM formula calculation in order to determine its tax liability for the provincial part of the HST for the participating provinces which could result in the net tax or interim net tax for a reporting period being a positive amount that is required to be remitted to the Receiver General. [A]ny amount of tax payable by the SLFI in a particular reporting period with respect to the Services will be included in the SLFI’s SAM formula calculation for that reporting period and consequently, its net tax or interim net tax calculation. If the SLFI’s net tax or interim net tax amount is a positive amount, the SLFI will remit that amount to the Receiver General in accordance with subsection 278(2).

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 225.2 - Subsection 225.2(2) SLFI tax based on amount payable even if not charged 392