- Section 231 of Canada’s Excise Tax Act lets businesses recover GST/HST paid on debts that become uncollectible, but only if strict conditions are met.
- To qualify, the supplier must deal at arm’s length, the supply must be taxable, the debt must be proven bad, and it must be formally written off in the books.
- The tax must also have already been reported and remitted for the period when it first became collectible.
- In Heydary Green Professional Corporation v. The King, the Tax Court denied the claim because the firm did not prove each debt was bad, did not properly write off the debts, and had not paid all required tax before claiming the deduction.
Source: taxandtradelaw.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
