| A buyer must pay the GST on any taxable purchase, even if the parties did not think that any GST was payable, according to a recent decision of the B.C. Supreme Court.
Under the GST legislation, when GST is payable, the buyer is generally responsible to pay it, while the seller is responsible to collect it from the buyer and remit it to the Crown. The property in this case was a used residential and commercial building. The residential portion of the building was exempt from GST. The commercial portion was taxable, but the seller assumed that the buyer was registered for GST, relieving her of her duty to collect and remit the tax. As a GST registrant, the buyer would have been responsible to remit the tax himself, but would have been able to offset the GST payable against the GST collected on the commercial rents of the tenants.
Unfortunately for everyone, the buyer did not register for GST. When Revenue Canada discovered that the sale went through, it assessed GST, penalties and interest of over $20,000. Although the tax was payable by the buyer, Revenue Canada demanded payment only from the seller, because she should have collected it from the buyer. |