News and Insights

GST/HST Memorandum 8.4, “Documentary Requirements for Claiming Input Tax Credits”

Tax Development Aug 23, 2012

Seven years after it was first mentioned in the Canada Revenue Agency’s GST/HST Memorandum 8.1, “General Eligibility Rules” (see paragraph 70 of that document), the Canada Revenue Agency (“CRA”) has finally released this memorandum. Generally, this document discusses the conditions that must be met before a registrant is entitled to claim input tax credits (“ITCs”) on purchases made in the course of commercial activities (i.e., revenue from the sale of taxable goods and/or services). This memorandum replaces GST Memorandum 400-1-2, “Documentary Requirements”.

In addition to outlining the standard documentary requirements to be obtained by a registrant prior to claiming an ITC, there is also discussion of some key information on, and exceptions to, the general rule, which are discussed below.  

Under the documentary requirements, a supplier must provide its name on documents issued to the customer related to the sale of taxable goods or services.  Where a person acts as an intermediary for a supplier, that intermediary’s name and registration number may be provided to the customer to satisfy the documentary requirement, and in these situations, it is not necessary that the intermediary acts as agent.  In addition, a trade name of the supplier or its intermediary can be shown on the documentation, which does not have to be one that is registered with the province in which the supplier resides, or in which the supplier does business.   

Also, despite the fact that invoices under $30 are not required to show the amount of tax included on the sale, there must be enough evidence to enable the registrant acquiring the goods and/or services to determine the ITC amount.  If it is not clear that either GST/HST has been charged or what the amount of tax actually was, the documentation is not sufficient to support the ITC claim.  

There are instances where the CRA will waive some of the normal documentary requirements imposed on registrant customers, such as where computerized records or contractual agreements are used, or where amounts are paid as an allowance or reimbursement to employees.  For registrants using computerized records and where documentary evidence is not available, the CRA will generally exempt registrants from the standard documentary requirements if the registrant maintains proper computerized books and records that capture sufficient information to identity:  

  1. the supplier’s name or trading name and address, or those of the supplier’s duly authorized agent or representative;
  2. the supplier’s GST/HST registration number;
  3. the reporting period in which the GST/HST in respect of the supply was paid or became payable, and the amount of GST/HST paid or payable;
  4. the recipient’s name or trading name and address, or that of the recipient’s duly authorized agent or representative; and  
  5. the nature of the supply.  

The above also applies to registrants that use contractual agreements for the sales of goods and/or services where the documentary evidence is not available.  

Interestingly, since all taxi businesses are required to be registered for GST/HST purposes, they are exempt from the requirement to include their GST/HST registration numbers on individual receipts over $30.  However, taxi businesses are still required to provide all other supporting documentation required by their customer to claim the ITCs.  

With regards to the tax disclosure requirements for suppliers, which are separate from the documentary requirements discussed above, CRA allows suppliers to simply post signs at their establishment to indicate the tax rates that apply, or that tax is included in the amount charged.  However, this may not be sufficient to establish the customer’s ITC eligibility, and therefore, a customer may be required to request additional relevant information, in writing from the supplier, in order to claim the ITC in respect of the sale.  It is the supplier’s legal obligation to provide information sufficient to meet the documentary requirements on taxable sales to customers where a request is made by the customer.  Failure to do so may result in a $100 penalty for every failure.  

GST/HST Memorandum 8.4