National Commodity Tax, Customs and Trade Section – 2014 GST/HST Questions for Revenue Canada, Q. 22

A large registered business with a monthly reporting period acquires a specified property or service in Ontario in January of Year 1, is charged 13% HST, but does not claim the input tax credit until its return for January of Year 2, in which it also reports the corresponding recaptured input tax credit. Will CRA assess a penalty for failure to report the RITC in the January of Year 1 return? CRA responded:

[U]nder paragraph 30(1)(d) of the NHVATS No. 2 Regulations, the large business would have been required to report the RITC no later than the reporting period following the reporting period that the tax became payable… or… was paid… . Since the RITC was not reported until the filing of the GST/HST return for the reporting period of January Year 2, the large business would be liable to a penalty under section 284.01 and as determined under section 7 of the Electronic Filing and Provision of Information (GST/HST) Regulations, equal to 10% of the unreported RITC amount.

A large registered business with a monthly reporting period acquires a specified property or service in Ontario in January of Year 1, is charged 13% HST, but does not claim the input tax credit until its return for January of Year 2, in which it also reports the corresponding recaptured input tax credit. Before noting that CRA would assess a penalty for failure to report the RITC in the February of Year 1 return, CRA noted:

[U]nder paragraph 30(1)(d) of the NHVATS No. 2 Regulations, the large business would have been required to report the RITC no later than the reporting period following the reporting period that the tax became payable… or… was paid, whichever is earlier. [T]he assumption is made that the earlier of these two reporting periods would be the February Year 1 reporting period.

A large registered business with a monthly reporting period acquires a specified property in Ontario in January of Year 1, is charged 13% HST, but does not claim the input tax credit until its return for January of Year 2, in which it also reports the corresponding recaptured input tax credit. Will CRA assess a penalty for failure to report the RITC in the January of Year 1 return? CRA responded:

[U]nder paragraph 30(1)(d) of the NHVATS No. 2 Regulations, the large business would have been required to report the RITC no later than the reporting period following the reporting period that the tax became payable… or… was paid… . Since the RITC was not reported until the filing of the GST/HST return for the reporting period of January Year 2, the large business would be liable to a penalty under section 284.01 and as determined under section 7 of the Electronic Filing and Provision of Information (GST/HST) Regulations, equal to 10% of the unreported RITC amount.