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PST — refund of tax on supermarket construction

My client was in the business of constructing the interiors of supermarkets. It was audited by a provincial tax authority (not Ontario) and assessed for retail sales tax on goods that it acquired and which were incorporated into the supermarkets as fixtures.

The client's accountant came to me after a year of dealing with the provincial tax authority and trying unsuccessfully to obtain a reduction in the assessment. She had given up hope that the tax authorities would relent.

I realized that many of the goods my client had purchased tax-exempt should indeed have been tax-exempt, because they were sold to the supermarket chain's property management company for resupply to the individual supermarkets. These were goods that had not been incorporated into the buildings (permanently attached) as fixtures.

After extensive work and review of the documentation, and discussions with my client's sales manager, I was able to identify a large number of items on invoices that had had tax paid which should be refunded. I compiled a detailed explanation and listing of these items and sent it to the tax authority, along with supporting affidavits and letters from the sales manager and the supermarket chain, and a careful technical analysis showing why a refund should be provided.

The tax officials agreed, and my client's assessment was reduced by over $40,000, leaving about $9,000 to pay.

Problem mostly vanished!

(2000)