Registration for the GST/HST is mandatory when a person becomes liable to charge and collect the GST/HST as a supplier of goods or services. In the ordinary course, the supplier will register prior to that time. However, registration can also be back-dated to the date the supplier became liable to charge and collect the tax.
In addition to mandatory registration, a person can voluntarily register for the GST/HST, even if the person has not made a taxable supply. For example, an acquisition entity used to acquire the shares of a target corporation may never be required to register for GST/HST, as it may never itself make a taxable supply. However, the acquisition entity may wish to voluntarily register in order to claim input tax credits to recover the GST/HST it pays on legal and other advisory fees in respect of the acquisition. Historically, the CRA routinely permitted the back-dating of such voluntary registrations to a date up to 30 days prior to the request for registration. As a consequence, an acquisition entity was able defer its GST/HST registration until close to, or even following, the closing of the acquisition transaction.
We understand the CRA has changed its interpretation of the rules governing voluntary registrations. The CRA will no longer provide an effective date for a GST/HST registration prior to the date of receipt of the registration application, unless the applicant can show that it was required to charge and collect GST/HST on a supply made before that date (i.e., mandatory registration). As a result, the GST/HST registration application should be attended to at the time of formation of virtually all entities, and specifically acquisition entities, to ensure that the entity is not denied input tax credits to which it would otherwise be entitled.
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