The Excise Tax Act (ETA), subsection 240(1), requires a person who provides taxable property and services in Canada in the course of their commercial activity, who no longer qualifies as a small supplier to collect and remit GST/HST. Generally, a small supplier is a person with revenue, along with the revenue of all persons associated with that person, from worldwide taxable supplies equal to or less than $30,000 ($50,000 for public service bodies) in a calendar quarter and over the last four consecutive calendar quarters. The 2014 Federal Budget announced a method whereby the CRA could register a business that should be registered for GST/HST. In 2014, the legislation passed the legislative readings and now it is law. New subsections 241(1.3) to (1.5) of the ETA provides the CRA with the power to unilaterally register a person who has not registered for GST/HST but, in the CRA’s view, is required to do so. Under the current legislation, if a taxpayer wishes to object to the CRA’s decision to register the company, no appeal rights are outlined in the legislation. Therefore, if a person disagrees with CRA’s unilateral registration, it will have to bring a formal application for review to the Federal Court.
The CRA will continue to first contact non-compliant businesses to have them register as required. Only if those attempts are unsuccessful, will the CRA issue a formal notification indicating that the person will be registered for GST/HST purposes effective 60 days from the date of the notice. It should be noted that even though the legislation is only now law, in the past, the CRA has simply assigned GST/HST numbers to anyone under audit who should have been registered but was not. It hasn’t been stated as to whether the CRA will issue an assessment for unpaid tax at the same time that it sends the notice of intent, or whether it will delay the assessment until the GST/HST registration number has been assigned. The registration date is important for businesses, as input tax credits cannot be claimed on current expenses in which they incurred GST/HST prior to this day.
Like all notices from the CRA, when it comes to GST/HST registration, they should be replied to in a timely fashion!
Article written by: Greg Sawatsky, MAcc, CPA, CA