UNCLAIMED GST ITCs ALLOWED ON REASSESSMENT
TCC CONFIRMS CRA MUST ACCOUNT FOR UNCLAIMED CARRIED-FORWARD ITCs
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In a long-running GST/HST issue, the question has been whether the Minister’s obligation to “audit to net tax” requires CRA to take into account ALL unclaimed Input Tax Credits (“ITCs”) carried forward to a particular reporting period under audit. In the past, CRA maintained that its obligation under section 296(2) of the Excise Tax Act (“ETA”) only required it to allow unclaimed ITCs for the particular reporting period under audit and not any that may have then remained unclaimed from prior periods.
In a seismic decision of Justice Visser of the Tax Court of Canada ("TCC"), the TCC has now answered that question in favour of all Canadian GST registrants — a decision which we review below.