Taxpayer was required to collect and remit GST on referral fees

Taxpayer business operated paralegal business and had relationship with lawyer to whom it referred clients, and lawyer, in turn, payed referral fee to taxpayer and taxpayer deposited referral fee in taxpayer’s bank account. Referral fee that lawyer paid was inclusive of GST. Taxpayer also claimed input tax credits (ITC) in respect of rental expenses but provided no documentation to support claims. Minister assessed taxpayer and found that for three taxation years, taxpayer underreported GST and Minister also denied ITCs for those years. Taxpayer appealed. Appeal allowed in part. Minister conceded appeal in respect to two later taxation periods for both GST and ITCs, because taxpayer was dissolved before those two taxation years. It was clear that taxpayer underreported GST collectible in respect of paralegal and referral services for one taxation year, because taxpayer was required to collect and remit GST on referral fees received from lawyer pursuant to s. 221(1), 228(1) and 228(2) of Excise Tax Act.

1418013 Ontario Inc. v. The Queen (2018), 2018 CarswellNat 8329, 2018 CarswellNat 8369, 2018 TCC 261, 2018 CCI 261, Réal Favreau J. (T.C.C. [Informal Procedure]).

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