GST/HST: Seizure, Repossession, Receivers and Bankruptcy

Between section 183, 265, and 266, which sections take priority in application?

Section 266 supercedes section 183 as a result of subsection 183(11). There is no overlap in the application of section 183 and 265, or sections 266 and 265.

Section 183 supercedes sections 265 and 266 as a result of subsection 183(11). There is no overlap in the application of section 266 and 265.

Section 183 supercedes section 266 as a result of subsection 183(11). There is no overlap in the application of section 183 and 265, or sections 265 and 266.

Section 265 supercedes sections 266 and 183. There is no overlap between sections 266 and 183.

Speaking generally, once the receivership takes control of a debtor's property, is there GST/HST? Why?

No - the receiver is deemed to receive the debtor's asset(s) in a supply by way of sale for nil consideration - see subsection 183(1).

No - the receiver effectively "steps into the shoes" of the debtor. Specifically, the receiver is deemed to be an agent of the debtor, but the property at issue continues to belong to the debtor - see subsection 183(1).

No - the receiver is deemed to receive all of the debtor's assets in a supply by way of sale for nil consideration - see paragraph 266(2)(a).

Yes - the receiver is deemed to receive the debtor's asset(s) in a supply by way of sale for FMV consideration - subsection 183(1).

Yes - the receiver is deemed to supply the creditors with receivership services for consideration equal to the FMV of the debtor's assets - paragraph 266(2)(a).

Speaking generally, once the trustee-in-bankruptcy takes control of a debtor's property, is there GST/HST? Why?

No - the trustee-in-bankruptcy is deemed to receive the debtor's asset(s) in a supply by way of sale for nil consideration - see subsection 183(1).

No - the trustee-in-bankruptcy effectively "steps into the shoes" of the debtor. Specifically, the trustee-in-bankruptcyis deemed to be an agent of the debtor, but the property at issue continues to belong to the debtor - see subsection 183(1).

No - the trustee-in-bankruptcy is deemed to receive all of the debtor's asset in a supply by way of sale for nil consideration - see paragraph 265(1)(a).

Yes - the trustee-in-bankruptcy is deemed to receive the debtor's asset(s) in a supply by way of sale for FMV consideration - subsection 183(1).

Yes - the trustee-in-bankruptcy is deemed to supply the creditors with bankruptcy management services for consideration equal to the FMV of the debtor's assets - paragraph 265(1)(a).

Speaking generally, once a creditor seizes or repossesses a debtor's property, is there GST/HST? Why?

No - the creditor is deemed to receive the debtor's asset(s) in a supply by way of sale for nil consideration - see subsection 183(1).

No - the creditor effectively "steps into the shoes" of the debtor. Specifically, the creditor is deemed to be an agent of the debtor, but the property at issue continues to belong to the debtor - see subsection 183(1).

No - the creditor is deemed to receive all of the debtor's asset in a supply by way of sale for nil consideration - see paragraph 265(1)(a).

Yes - the creditor is deemed to receive the debtor's asset(s) in a supply by way of sale for FMV consideration - subsection 266(2)(a).

Yes - the creditor is deemed to supply the debtor with agency services for consideration equal to the FMV of the debtor's assets - paragraph 265(1)(a).

How does the Crown rank as against other creditors for GST/HST owed by a debtor?

Prior to bankruptcy, the Crown has superpriority over amounts owed to the debtor (subsection 317(3)), and a deemed trust over all of the debtor's assets (section 222). There is no change on bankruptcy.

Prior to bankruptcy, the Crown has superpriority over amounts owed to the debtor (subsection 317(3)), and a deemed trust over all of the debtor's assets (section 222). On bankruptcy, the Crown loses its trust and superpriority, and ranks as an unsecured creditor.

Prior to bankruptcy, the Crown has superpriority over amounts owed to the debtor (subsection 317(3)), and a deemed trust over all of the debtor's assets (section 222). On bankruptcy, the Crown loses its trust over the debtor's assets, but retains any superpriority that arose prior to bankruptcy (because the a/r is deemed not to be property of the debtor).

The Crown is always a first ranking creditor.

Is there ever GST/HST when a creditor sells property seized from a debtor?

No - the sale is a deemed financial service - subsection 183(7).

Yes - the sale is generally taxable unless subsections 183(3), (4) or (6) applies/applied - subsection 183(2).

No - the sale is deemed to be for nil consideration - subsection 183(5).

No - the sale is deemed to be for nil consideration - subsection 265(3)

When property seized by a debtor is sold or used by a creditor "otherwise than in the making of a supply" seized from a debtor, is there always GST/HST?

Yes - either the sale is taxed under subsection 183(2), or the creditor's use of the property results in a deemed self-supply under subsection 183(4) or (6).

No - some sales are deemed financial services - subsection 183(7).

No - the sale is deemed to be outside commercial activity if it is sold pursuant to a court order to satisfy a judgment debt - subsection 183(3).

Which of the following are the requirements to rely on subsection 183(7)?

The property seized is personal property.

That there would have been tax payable by the creditor had the creditor purchased the property in Canada at the time it was seized or repossessed.

That the creditor make a taxable supply of the seized property.

That the creditor make a supply outside Canada, or a zero rated supply.

That the property was seized after 1994, or if seized before 1994, the property was TPP with an FMV below the prescribed amount in respect of the property.

What are the requirements for subsection 183(1) to operate?

That there would have been tax payable by the creditor had the creditor purchased the property in Canada at the time it was seized or repossessed.

That the seizure/repossession satisfies "in whole or in part" a debt or obligation owing to creditor.

That the creditor seize/repossess the property.

That the property is seized/repossessed pursuant to a right or power exercisable by the creditor.

That the property is not seized/repossessed pursuant to a right or power under, or because of being a party to, a lease, licence or similar arrangement by which the person/debtor acquired the property.

That the seizure/repossession occur after 1990.

That the seizure/repossession occur after 1994.

What does subsection 183(7) do?

Provides the creditor an ITC on the property it had seized.

Provides the debtor an ITC on the property that was seized.

Provides a rebate to the creditor for the tax paid on the property it had seized.

Provides ITCs to the creditor who lease personal property seized.

Is the receiver or trustee-in-bankruptcy liable for any or all of the debtor's GST/HST?

Only the GST/HST in respect of the appointment - paragraphs 265(1)(d) and 266(2)(c) and (d).

All of the debtor's GST/HST liabilities are borne jointly and severally between the debtor and the receiver/trustee-in-bankruptcy - paragraphs 265(1)(d) and 266(2)(c) and (d).

Only the registrant/debtor is liable.

Can a trustee-in-bankruptcy be liable for a debtor's GST/HST liability if receiver is also liable?

Such a situation isn't possible.

No - subparagraph 265(1)(d)(ii) prevents the trustee from being liable for amounts that a receiver is liable for under section 266.

Yes - subparagraph 265(1)(d)(ii) makes a trustee and receiver jointly and severally liable for amounts that a receiver is liable for under section 266.

What is subsection 183(9) about?

ITCs for pawnbrokers.

The inclusion of "quitclaims" within subsection 183(1), I.e., voluntary transfers of property for the purpose of satisfying a debt.

ITCs for creditors who lease personal property.

The inclusion of "powers of sale'" by a mortgagee within subsection 183(1), I.e., exercise of a right relating to a debt security to cause the supply of property.

What is subsection 183(10) about?

ITCs for pawnbrokers.

The inclusion of "quitclaims'" within subsection 183(1), I.e., voluntary transfers of property for the purpose of satisfying a debt.

The inclusion of "powers of sale'" by a mortgagee within subsection 183(1), I.e., exercise of a right relating to a debt security to cause the supply of property.

ITCs for creditors who lease personal property.

Who must apply for a GST/HST clearance certificate?

The legal representatives of an estate, or on the winding up of a business, including receivers.

A creditor who has seized a debtor/registrants assets.

The legal representatives of an estate, or on the winding up of a business, but not including receivers.

Where no clearance certificate is obtained, what is the result?

The recipients of distributed property can be held liable for GST/HST owing.

The representative of the debtor/business can be held liable for GST/HST owing.

The recipients of distributed property can pursue the representative of the debtor/business for GST/HST owing.

More Quizzes