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GST — voluntary disclosure of GST collected on commercial rents

My client, an investor, owned two commercial buildings in another city. My client hired a management company to manage the buildings, and was not involved in managing them himself.

The buildings consistently lost money (after mortgage interest), and so my client assumed he had no tax issues to worry about. After 8 years, he realized that the building managers had been collecting GST from the tenants all along, but had not remitted any GST. The client came to me to initiate a voluntary disclosure.

I negotiated with the CRA, over a lengthy period, to reduce the assessment to 6 years and to waive much of the interest on the assessment, in addition to cancelling all the penalty.

In the end, the client had to pay only about half the total amount that he thought was owing when he first approached me — and that payment was not due until 6 years after I first took on the file!

(2004)