Tax Court Denied GST Credits Over Missing GST Numbers and Registration Timing

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Tan v. The Queen shows how strict GST/HST input tax credit documentation rules can be. Even where business expenses were real, the Tax Court denied disputed ITCs because key prescribed invoice details were missing, especially supplier GST registration numbers, and because some services related to the pre-registration period. The Court treated subsection 169(4) of the Excise Tax Act and section 3 of the Input Tax Credit Information (GST/HST) Regulations as mandatory requirements in Canada’s self-assessing GST system. CRA conceded part of the claim, but most disputed ITCs remained denied. [2] [1]

Tan v. The Queen: the GST/HST lesson every business owner should know

If you run a business in Canada, this case is worth your attention.

Tan v. The Queen, 2015 TCC 121, is a Tax Court of Canada decision about a restaurant owner who made real business purchases, paid real amounts, and still lost most of the disputed GST input tax credits because the paperwork did not meet the legal standard. [2]

This case matters for:

  • small business owners
  • restaurant owners
  • contractors
  • landlords
  • anyone who files GST/HST returns
  • anyone who relies on bookkeeping records prepared after the fact

The main lesson is simple.

For GST/HST input tax credits, real expenses alone are not enough. The supporting documents must contain the prescribed information required by law before the return is filed. [2] [1]

What happened in Tan v. The Queen

Ms. Tan operated MTM Chinese Restaurant in Hamilton as a sole proprietor. She became a GST registrant effective May 13, 2005. Before that date, she had already been operating the restaurant, collecting GST from customers, and remitting GST. [2]

She later filed a GST return for the period from May 13, 2005 to December 31, 2005 and claimed a net tax refund of about $4,330. CRA reassessed the return and denied ITCs totaling about $2,533. Interest and penalties were also assessed. [2]

At the hearing, CRA reviewed the documents and conceded that additional ITCs of $819.25 should be allowed. The remaining disputed ITCs stayed denied. [2]

The disputed expenses included:

  • restaurant equipment such as a burner, walk-in cooler, dishwasher, woks, chopping block, and steam table
  • installation of a kitchen range hood and exhaust system
  • advertising flyers
  • grease disposal services [2]

The Court accepted that the purchases and services were connected to the restaurant business. The problem was the documentation. [2]

What are input tax credits

Input tax credits, often called ITCs, are the mechanism that allows a GST/HST registrant to recover GST/HST paid on business inputs used in commercial activities.

Subsection 169(1) sets out the general rule. Subject to Part IX, where a person acquires property or a service and, during a reporting period in which the person is a registrant, tax becomes payable or is paid, the amount determined under the formula is an input tax credit to the extent the property or service was acquired for consumption, use, or supply in the course of the person’s commercial activities. [1]

In plain language:

  • if you are a registrant
  • and you pay GST/HST on business purchases
  • and those purchases are for your taxable commercial activities

you may generally claim ITCs.

But that is only the starting point.

The key legal rule: subsection 169(4)

Subsection 169(4) adds a separate documentary requirement. It says a registrant may not claim an ITC unless, before filing the return in which the credit is claimed:

  • the registrant has obtained sufficient evidence in such form containing such information as will enable the amount of the ITC to be determined, including prescribed information, and
  • where applicable, the registrant has reported the tax in a return filed under Part IX. [1]

The first branch was the key issue in Tan.

The Court held that these documentation requirements are mandatory. [2]

That means the taxpayer needed the proper supporting evidence before filing the GST return.

What “prescribed information” means

The prescribed information comes from section 3 of the Input Tax Credit Information (GST/HST) Regulations, as quoted in Tan.

For invoices where the total amount shown is $30 or more and less than $150, the prescribed information includes:

  • the supplier’s name or business name
  • the supplier’s GST registration number [2]

For invoices of $150 or more, the documentation must include:

  • the information required for smaller invoices
  • the recipient’s name or business name
  • the terms of payment
  • a description of each supply sufficient to identify it [2]

In Tan, many of the disputed documents did not include the supplier’s GST registration number. Some also did not clearly show that GST had actually been charged or paid. [2]

That became the central reason the claims failed.

Why supplier GST numbers were so important

The Court focused heavily on the missing supplier GST registration numbers.

Ms. Tan argued that CRA already had supplier GST numbers in its own system because CRA issues those numbers. She also explained that after the audit began, she tried to obtain the missing information from suppliers and also sought disclosure from CRA, but CRA refused because of confidentiality rules. [2]

The Court still agreed with CRA.

The judge held that:

  • the claimant must obtain the prescribed information before filing the return
  • the supplier’s GST number is part of that prescribed information
  • it is the claimant’s responsibility to obtain it
  • CRA does not have to complete missing invoice details for the taxpayer [2]

This reasoning fits directly with subsection 169(4), which bars the ITC claim unless the registrant has already obtained sufficient evidence before filing. [1]

Why “tax included” wording did not solve the problem

One of the disputed items involved a written contract for installation of the kitchen range hood and exhaust system. The contract price was $19,000 and stated that the price included all applicable taxes. [2]

Ms. Tan argued that this should support the ITC claim.

The Court accepted that subsection 223(1) allows a supplier to indicate either:

  • the consideration and tax separately, or
  • that the amount paid includes tax [2]

But the Court held that this did not cure the separate defect. The supplier’s GST registration number still did not appear on the supporting documents. [2]

So even where a contract says taxes are included, the ITC claim can still fail if the prescribed information is incomplete.

Why GST registration timing mattered

Tan also shows why GST registration timing matters.

Ms. Tan became a registrant on May 13, 2005. Some of the disputed invoices related to services supplied before that date. [2]

The Court referred to subsection 171(2), which deals with ITCs when a person becomes a registrant. As quoted in Tan, subsection 171(2) can allow certain pre-registration tax to be included in the first reporting period after registration, but only in limited situations, such as tax payable on services to be supplied after registration for use in commercial activities. It does not generally allow ITCs for services supplied before registration. [2]

Two examples mattered:

  • an invoice for promotional flyers had the supplier’s GST number, but the services were rendered before registration, so the Court denied the ITC
  • an invoice for grease disposal was dated before registration, and there was not enough evidence that the service extended into the post-registration period, so the Court denied that ITC too [2]

This is a practical point for startups, landlords beginning commercial operations, and businesses doing major renovations before formal GST registration.

How Canada’s self-assessment system influenced the result

The Court emphasized that Canada’s GST/HST system is a self-assessing system. [2]

That means CRA relies on taxpayers to:

  • maintain proper records
  • obtain compliant invoices
  • claim ITCs only when the legal requirements are met

The Court said the technical requirements are part of the foundation of that system and must be followed strictly. [2]

This point appears repeatedly in the earlier authorities the Court relied on.

The earlier cases the Court relied on

Systematix Technology Consultants Inc. v. Canada

The Federal Court of Appeal in Systematix held that the legislation is mandatory and requires persons who paid GST to suppliers to have valid GST registration numbers from those suppliers when claiming ITCs. [5]

The Court in Tan relied on that principle directly. [2]

Comtronic Computer Inc. v. The Queen

Comtronic went even further. The Tax Court held that the claimant needed not just a GST number, but a valid GST number assigned to that specific supplier. Even where the purchaser was blameless and had paid GST, the ITCs failed because the supplier information was defective. [7] [2]

Tan cited Comtronic to reinforce the strict approach. [2]

Related cases in the sources

Other cases in the sources support the same broad theme:

  • Amiripour confirms that subsection 169(4)(a) and section 3 of the Regulations are mandatory and that ITCs can fail where supporting documentation is missing [4]
  • Garmeco confirms that a claimant must show both that it was the recipient and that the supplies were acquired for use in its own commercial activities, while also satisfying the documentary rules [3]

There is also a later case, Axamit Versa Inc. v. The King, where the Tax Court accepted that the supplier’s GST number had been obtained before filing even though it was not necessarily contained in a signed supplier document, based on credible evidence and broader interpretive analysis. [6] That case may show some nuance in how the “form” of evidence can be analyzed. However, Tan itself applied the stricter line of authority and treated the missing supplier GST number on the disputed documents as fatal on the facts before it. [2]

Why fixing invoices later can become difficult

A practical takeaway from Tan is that correcting invoice problems after filing can be hard.

Ms. Tan tried to obtain missing information after the audit started. She also tried to get supplier GST numbers from CRA. [2]

The Court still held that the required information had to be obtained before the ITC was claimed. [2] [1]

In real business life, later corrections can be difficult because:

  • suppliers may have closed
  • staff may have changed
  • records may be incomplete
  • invoices may have been issued casually
  • the audit may happen years later
  • CRA confidentiality rules may limit what can be disclosed about third parties [2]

That is why invoice review at the time of purchase matters so much.

Practical lessons for Canadian business owners and landlords

Tan offers several practical lessons.

1. Register for GST/HST before major startup expenses where appropriate

If you expect significant startup costs, renovations, leasehold improvements, equipment purchases, or contractor invoices, registration timing should be reviewed early.

This is especially important for:

  • new restaurants
  • landlords beginning commercial leasing activity
  • contractors launching operations
  • businesses opening a new location

Subsection 171(2) has limited rules for pre-registration tax, and the facts matter. Early planning can improve the GST result. [2]

2. Review invoices before filing the GST/HST return

Before claiming ITCs, confirm that invoices contain the required details.

For invoices over the regulatory thresholds, check for:

  • supplier legal name or business name
  • supplier GST/HST registration number
  • invoice date
  • recipient name where required
  • terms of payment where required
  • clear description of the goods or services
  • GST/HST details or wording showing tax included, where applicable [2]

3. Request corrected invoices right away

If an invoice is missing key information, ask for a corrected invoice immediately.

That is much easier:

  • while the supplier relationship is active
  • while the transaction is fresh
  • before the GST/HST return is filed

4. Keep organized evidence

Maintain audit-ready records, including:

  • invoices
  • contracts
  • proof of payment
  • correspondence with suppliers
  • bookkeeping entries
  • registration timing records
  • support for when services were actually rendered

5. Train staff who process payables

Many ITC problems begin in accounts payable or bookkeeping.

Anyone who enters invoices should know what to look for.

6. Treat GST/HST compliance as a systems issue, not just a filing issue

Tan was not really about whether the restaurant bought equipment. It was about whether the business had a compliant documentation system.

That is the bigger lesson.

How Cloudiverse CPAs can help

Bookkeeping Services in Burnaby

For business owners in Burnaby and across Canada, this is where proactive support matters.

Cloudiverse CPAs acts like Google Maps for tax and GST compliance.

You still drive the business. The firm helps you avoid costly wrong turns before CRA reviews the file.

That support can include:

  • GST/HST registration planning
  • corporate tax support
  • bookkeeping system design
  • invoice review processes
  • audit-ready recordkeeping
  • support for landlords, contractors, restaurants, and growing small businesses

In a case like Tan, the strongest protection comes from getting the process right at the beginning.

Final takeaway

Tan v. The Queen is a strong reminder that GST/HST ITCs depend on both substance and documentation.

The expenses may be real. The business purpose may be clear. The tax may even have been paid.

But subsection 169(4) creates a separate legal gate. If the prescribed supporting evidence was not obtained before filing, the ITC claim can fail. [1] [2]

In Tan, missing supplier GST registration numbers and pre-registration timing issues were enough to deny most of the disputed ITCs. CRA allowed about $819.25 after reviewing the documents, but the remaining disputed amounts stayed denied. [2]

For Canadian business owners and landlords, the message is practical and clear:

  • review invoices early
  • register at the right time
  • keep organized records
  • build audit-ready bookkeeping from day one

This article summarizes information from a publicly available Tax Court of Canada decision. It is for educational purposes only and does not express any personal opinions about the individuals or businesses involved.

Cited sources:

Tan v. The Queen, 2015 TCC 121 (2015) 

ETA s. 169 General rule for credits:

Systematix Technology Consultants Inc. v. The Queen :

Comtronic Computer Inc. v. The Queen :

Section 171 Of Excise Tax Act

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