Asadi – Tax Court of Canada finds that an adventure is not a business for ETA purposes, and that CRA issuance of a registration number did not entail retroactive registration

After finding that the taxpayer’s sale of the new home, which she had constructed, was the result of an adventure in the nature of trade and a taxable supply, Friedlander J then addressed the issue of whether the taxpayer was entitled to an ITC for HST on the commission charged to her on the sale, notwithstanding that she had not registered for HST purposes.

Friedlander J noted that the definition of “commercial activity” in s. 123(1) distinguished between a business carried on by a person and an adventure or concern in the nature of trade, and found that the taxpayer was not required by s. 240(1) to be registered as a result of her taxable supply by way of sale of the property given the exception in s. 240(1)(b) from that requirement where the sale was “otherwise than in the course of a business.” Thus, the taxpayer did not satisfy the “person who … is required to be registered” branch of the “registrant” definition in s. 123(1).

The taxpayer nonetheless argued that she was a registrant because, in assessing her, the Minister had unilaterally issued a business number to her with the RT0002 suffix. In finding that this did not establish that the taxpayer was a registrant at the time she incurred the commission, Friedlander J stated:

[T]here was no evidence presented to show that the Minister had sent a notice of intent pursuant to subsection 241(1.3). Further, the Notice of (Re)Assessment did not reference registration, nor an effective date of registration. Accordingly, the Appellant has not adduced sufficient evidence to show that the Appellant was registered by the CRA for GST/HST purposes. In addition, as noted above, any such registration would have to have had retroactive effect in order to allow the Appellant to claim ITCs. In this case there is no evidence [of this].

Neal Armstrong. Summaries of Asadi v. The King, 2026 TCC 147 under ETA s. 123(1) – builder – (f), – registrant, and basic tax content.