A Difficult Mix: GST-HST-QST and Closely Related Corporations

GST-HST-QST rules on documentary requirements can get quite complicated when goods and services are acquired by a corporate group. Yet, even if goods and services are acquired in commercial activities by a corporate group, there are circumstances where GST-HST-QST paid and claimed are subsequently assessed by fiscal authorities as improper documentary requirements. In many cases subsequent to an audit, these taxes end up being unrecoverable by the corporate group. Had the documentary requirements been right in the first place, these assessments wouldn’t occur. One question that must be addressed is wether the tax was claimed by the proper person.

Jurisprudence

In the Telus Communications case (2009 FCA), the court denied the input tax credits claimed for GST that Telus paid on liabilities it incurred in acquiring a business.

In the Systematix Technology Consultants Inc. case (2007 FCA), the court denied the Input Tax Credit (ITC) claimed by the registrant on several supplies since for various reasons the suppliers did not have valid GST registration numbers.

Complexity

Your Corporate Group has a Higher Level of Complexity in Managing the GST-HST-QST Documentary Requirements if:

• Your group has several active corporations
• Not all members of your group are GST-QST registrants
• Your organisation has recently acquired substantial assets of a business
• Invoices are sometime addressed to names other than the legal name
• The account payable function is outsourced

Ad Valorem will review your invoices and contracts and apply corrective actions to improve the GST-HST-QST compliance process.