In National Money Mart v. 24 Gold Group Ltd , the Ontario Superior Court of Justice delivered a decision that now clarifies s. 224 of the Excise Tax Act which provides a mechanism for a vendor to sue a purchaser in order to collect any unpaid GST/HST amounts that the vendor may have paid to the CRA as a result of an GST/HST audit.
A vendor's obligation with respect to GST/HST collections and remittance can be a tricky especially when the vendor did not originally charge GST/HST on their supply to the purchaser in the first place. As a practical matter, it is typically a CRA audit that will uncover that the vendor should have charged GST/HST on a particular transaction and it would be at that point that the seller will becomes liable to the CRA to remit the GST/HST.
Section 224 of the Excise Tax Act provides a statutory right to the vendor to sue the purchaser in order to recover the GST/HST amount that it pays to the CRA.
Importantly, in a summary judgment, the Court also held that limitation period to sue the purchaser does not start until the CRA has completed its audit and payment is made by the vendor.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
