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GST — registrants were not associated

My client was a small incorporated business that was 50% owned by each of a husband and wife. It was audited for GST, and the husband and wife were assessed personally for over $20,000. The auditor decided that the husband, wife and company were "associated" for GST purposes. Thus, the auditor assessed them for not filing quarterly (they had filed annually), and for using the "Quick Method" of filing, which they could not do if the sales of the associated group exceeded $500,000. (The combined sales of the corporation and the husband and wife were over $500,000.)

I was retained after the assessment was issued. I realized that the auditor had it wrong. Although it seemed surprising, a correct technical reading of the legislation was that the husband, wife and the corporation were not associated. Therefore, the entire assessment of the husband and wife was wrong.

I filed a Notice of Objection, setting out in detail why the auditor's reasoning was wrong, and explaining why the three registrants were not "associated". I backed this up with not only my analysis, but my published commentary in the Canada GST Service where I had written about this very issue, and had concluded that the persons were not associated.

The CCRA Appeals Officer agreed with my submissions and cancelled the assessments.

Problem vanished!