Federal Appeal


Goods and Services Tax

Input tax credits

Company not entitled to input tax credits after using false invoices to support claim

Company was registrant for purposes of Part IX of Excise Tax Act and operated or claimed to operate gold-trading business consisting essentially in acquiring scrap gold for resale to refiner. During relevant period (April to November 2012), company reported goods and services tax (GST) it collected from its sole client from sale of used gold jewellery and impure gold bars (scrap gold). Minister made assessment under Act during relevant period, denying company claimed input tax credits (ITCs) of $994,730.97. Company’s claim for ITCs was denied on grounds that company did not trade in gold, or alternatively, that it acquired gold from persons other than alleged suppliers listed on its purchase invoices. Minister alleged company knowingly, acting with wilful blindness, participated in false invoicing scheme that allowed clandestine suppliers of gold to sell their gold for cash, which afforded company opportunity to purchase its gold at substantial discount in relation to its market value. Minister also contended that purchase invoices produced as part of company’s documentary evidence did not satisfy requirements set out in paragraph 169(4)(a) of Act and s. 3 of Input Tax Credit Information (GST/HST) Regulations because they did not identify company’s true suppliers. Company’s appeal was dismissed by Tax Court of Canada (TCC). TCC concluded company was not entitled to input tax credits claimed for its purchases of gold during period because: invoices company relied on to support its claim were false; and company used these invoices to knowingly mask identity of its true suppliers. Company appealed. Appeal dismissed. Appeal could not success on issue of burden of proof as it was non-issue. TCC had sufficient evidence to conclude as it did. It did not, therefore, commit any error justifying intervention.

TricomCanada Inc. v. R. (2017), 2017 CarswellNat 1979, 2017 CarswellNat 1980, 2017 FCA 95, 2017 CAF 95, Nadon J.A., Johanne Gauthier J.A., and Trudel J.A. (F.C.A.); affirmed (2016), 2016 CarswellNat 1193, 2016 CarswellNat 46, 2016 TCC 8, 2016 CCI 8, Robert J. Hogan J. (T.C.C. [General Procedure]).

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