CRA confirms that a regular registrant is denied ITCs on HST that is charged to it under the simplified regime, and that s. 211.17(1) does not preclude a net refund under the SAM formula

A selected listed financial institution (SLFI) that was registered under the regular GST/HST registration provisions purchased intangible personal property (the “IPP”) from a non-resident supplier, which was registered under the simplified regime for non-residents.

CRA indicated that because the SLFI did not provide proof of its regular GST/HST registration to the non-resident, it was considered to be a specified Canadian recipient, so that the non-resident was required to charge GST/HST on that specified supply (at the Ontario rate of 13%, given that the usual place of business, as defined in s. 211.17(1), of the SLFI was in Ontario.)

Because such HST was charged under the simplified regime, the SLFI was precluded, under s. 211.17(1), from claiming any ITC for such HST.

Regarding the application of the specified attribution method (SAM) formula to the SLFI, CRA indicated that it would be applied in the usual manner in this simplified regime context, i.e., the federal GST charged to the SLFI would be slotted into A of the formula, converted to a blended HST rate based on the investor percentages and with the actual Ontario HST paid to the non-resident then subtracted from that result to arrive at the resulting effect on the net tax of the SLFI insofar as this IPP purchase was concerned.

Although s. 211.17(1) provided that the SLFI recipient was generally not allowed to claim an ITC, rebate, refund, or remission in respect of the GST/HST that was required to be collected by the non-resident under the simplified regime, s. 211.17(1) would have no application to restrict the SLFI from claiming a net tax refund for the reporting period if that was the result of the application of the SAM formula, including with respect to this acquisition of the IPP.

Neal Armstrong. Summaries of 3 April 2025 GST/HST Interpretation 248372 under ETA s. 211.14(1) and s. 225.2(2).