Précis: The taxpayer paid GST in respect of several contracts with a supplier, Menova. 8 of the contracts were completed, the balance were not. In respect of the uncompleted contracts Menova issued Credit Memos. Subsequently Menova went bankrupt. The Minister treated the Credit Memos as “credit notes” for the purposes of section 232 of the Excise Tax Act (“ETA”), with the result that the taxpayer paid $338,412.50 in HST to Menova, but was allowed ITCs of only $78,620.00 relating to the 8 completed contracts and no ITCs for any of the Cancelled Contracts. The sole issue was whether the disallowed Credit Memos qualified as “credit notes” for the purposes of the ETA.
North Shore Power v. R. - TCC: No ITCs on Credit Memos which were held to be “credit notes”READ MORE »