GST/HST Collections and Remittance: National Money Mart Case

Posted By: Bobby B. Solhi on November 6, 2017 at 6:46:41 in All , Case Comments

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GST/HST Collections and Remittance

In National Money Mart v. 24 Gold Group Ltdthe  Ontario Superior Court of Justice delivered a decision that now clarifies s. 224 of the Excise Tax Act which provides a mechanism for a vendor to sue a purchaser in order to collect any unpaid GST/HST amounts that the vendor may have paid to the CRA as a result of an GST/HST audit.

A vendor’s obligation with respect to GST/HST collections and remittance can be a tricky especially when the vendor did not originally charge GST/HST on their supply to the purchaser in the first place.   As a practical matter, it is typically a CRA audit that will uncover that the vendor should have charged GST/HST on a particular transaction and it would be at that point that the seller will becomes liable to the CRA to remit the GST/HST.

Section 224 of the Excise Tax Act provides a statutory right to the vendor to sue the purchaser in order to recover the GST/HST amount that it pays to the CRA.

Importantly, in a summary judgment, the Court also held that limitation period to sue the purchaser does not start until the CRA has completed its audit and payment is made by the vendor.

*Bobby B. Solhi is a GST/HST tax lawyer and partner at TaxChambers LLP

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