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The taxpayer, a dentist, purchased a practice from another dentist. The taxpayer was under the understanding that the parties would file an election under subsection 167(1) of the Excise Tax Act to avoid paying GST/HST. For reasons that are unclear, no such election was filed. Approximately four years later, the taxpayer’s new accountant found the error. The taxpayer filed a rebate application to ask for a refund of the GST/HST that should not have been paid.
The CRA denied the taxpayer’s application. He appealed to the Tax Court of Canada. His appeal was dismissed. The Court ruled that the taxpayer had two years to file an application to correct the error. He filed the application two years too late.
GST and QST rules are strict. Although they provide for a mechanism to correct mistakes, if mistakes were in fact made, there’s a rigid timeline that must be adhered to.