Fake ID and the GST

Posted: March 18, 2010 | Last Updated: February 06, 2016

Posted: March 18, 2010

Written by: Bradley Madison

How often do you check the ID of your suppliers?

If you run a business you are likely familiar with how GST works.  When purchasing inventory and supplies, your business must pay the GST to the supplier, but may then claim an input tax credit (an “ITC”) offsetting the tax paid.  To claim an ITC you need to know the GST registration number of the supplier.

What you might not know is that if your supplier has given you a fake registration number, or even a valid number that is not his, your business can not claim the ITCs and may be on the hook for a hefty tax bill.

In the recent case of Comtronic Computer Inc. v. The Queen this is effectively what happened.  An apparently nefarious supplier gave Comtronic GST registration numbers that although validly-issued, belonged to other businesses.  Comtronic failed to check the validity of the registration numbers.  As a result, its claims for ITCs of nearly $500,000 were denied and it was also assessed a 6% penalty. 

The law is clear that risk of supplier “GST ID theft” rests with your business, not the Crown.

Don’t make the same mistake.  Your business should take active precautions to guard against this sort of ID theft.  You can check the validity of GST/HST registration numbers using the CRA’s online registry or by calling the CRA’s business enquiries line.