Download a PDF copy of this Blog here.
Many commercial agreements include broad rights of set-off, which sophisticated businesses use to net out liabilities between parties. While that seems straightforward in commercial terms, businesses run into problems when applying this practice to GST/HST. Under the Excise Tax Act, HST collected – or collectible – by a supplier is NOT the supplier’s money to begin with. Rather, it is money held in trust for the Crown.
In this Indirect Tax Report, we review a recent decision of the Court of Appeal for British Columbia (“BCCA”) confirming that HST cannot generally be discharged through contractual set-off, even where the underlying commercial debt is undisputed.
