Section 124

Subsection 124(3)

Administrative Policy

GST/HST Memorandum 16.2 Penalties and Interest 9 January 2009

retroactive amendments
See also ITA s. 221.1

5. Once a retroactive amendment to Part IX of the Act is enacted, interest is calculated retroactively on any resulting amount due. …

6. While cases may arise where interest is computed retroactively, no penalty will be imposed retroactively as a result of an amendment to Part IX of the Act.

28 May 1996 Interpretation File No. 11675-1

interest but not penalty applied retroactively to announced effective date

As a result of a proposed amendment to Sched V, Pt VI, s. 28, the "para-municipal" members of the correspondent would be retroactively liable for the collection of GST on supplies of electricity to the municipality for which consideration became due, or was paid without having become due, after April 23, 1996. Some members are choosing to wait to implement the proposed changes until such time as they are passed and have expressed concern with respect to interest and penalty charges. It is your understanding. Would this give rise to penalty and interest charges when the proposed amendments are passed? The Department responded:

The Department will not make assessments based on proposed amendments until such time as those amendments are enacted. However, because proposed amendments apply retroactively once they are enacted, persons are encouraged to comply with proposed amendments as of their effective date. In response to your enquiry, when a proposed amendment is enacted, subsection 124(3) of the ETA requires interest to be calculated retroactively on any resulting amount that is payable or remittable by a person as if the amendment had been enacted before its effective date. This subsection also requires the retroactive calculation of interest on amounts becoming payable by the Department as a result of a retroactive amendment being enacted. Although interest applies retroactively, subsection 124(4) of the ETA provides that penalty will not be applied retroactively when a proposed amendment is enacted.