April 17th, 2023
Consultaxe sales tax specialists explain how your company can avoid paying and claiming GST/HST/QST charged erroneously by digital platform operators.
This article aims to make buyers of goods and services via digital platform operators aware of an important issue for Canadian companies that has been observed by our tax specialists.
Reclaiming GST/HST/QST claimed in error
If you are a GST/QST registrant, significant amounts of GST/HST/QST may be claimed in error as input tax credits and input tax rebates (ITC or ITR) or partial rebates in the case of public service bodies on GST/HST/QST paid to digital platform operators who are registered for GST/HST in the simplified system and for QST in the designated system.
How can I know if GST/HST/QST was claimed in error?
To find out if the digital platform operator is registered in the simplified GST/HST system and in the designated QST system, you can search the Canada Revenue Agency’s web page, “Confirming a simplified GST/HST account number” (see links below). In QST, the QST number of registrants in the designated plan begins with NR. We also recommend that you verify the QST number by searching the Revenu Québec website to ensure that the supplier is in good standing. We have seen some cases where providers were collecting tax with invalid numbers.
How can you avoid mistakenly paying GST/HST/QST to digital platform
operators?
If you are a GST/QST registrant, you should not claim ITCs, ITRs or partial claims on GST/HST/QST paid to digital platform operators when they are registered in the simplified GST/HST system and the designated QST system, as refunds claimed will be denied during GST/HST/QST audits by the Quebec Revenue Agency and the Canada Revenue Agency.
Instead, you must provide your GST/QST numbers to digital platform operators in order to avoid paying GST/HST and QST on supplies made by them when they are registered in the GST simplified plan and the QST designated plan.
How can we correct overclaimed GST/HST/QST?
If you find this problem in your company, we can help you correct the overclaimed amounts of GST/HST/QST and minimize the cost to your company. Please contact us if you would like more information on this topic or to discuss your specific situation. The information presented in this article is intended to provide information to Consultaxe clients and others whom the topic interests. The information presented herein is general. Before making a decision, readers should consult a professional advisor.
References
https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-
businesses/digital-economy-gsthst/charge-collect/cross-border.html
https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-
businesses/digital-economy-gsthst/confirming-simplified-gst-hst-account-number.html
https://www.revenuquebec.ca/en/businesses/consumption-taxes/gsthst-and-qst/special-
cases-gsthst-and-qst/suppliers-outside-quebec/collecting-the-qst/
https://www.revenuquebec.ca/en/businesses/consumption-taxes/gsthst-and-qst/special-
cases-gsthst-and-qst/suppliers-outside-quebec/suppliers-outside-quebec-that-are-
registered-for-the-qst-under-the-specified-system/
