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Taxpayer cannot rely on an unallocated prior credit balance to automatically offset future GST instalments without specific instructions.
The appellant, a law firm, was assessed $185.05 in interest for failing to pay its GST instalments for the reporting period ending June 30, 2023.
The appellant argued that it had deliberately left a credit balance of $15,084.62 from a 2019 overpayment with Revenu Québec to cover future instalments, and thus the 2023 instalments were already paid.
The Tax Court of Canada held that it had jurisdiction to determine if the debt was paid to assess the correctness of the interest.
However, the Court dismissed the appeal, finding that a taxpayer cannot invoke set-off against the Crown under the Civil Code of Québec, and the appellant had not provided specific instructions to apply the 2019 refund to the 2023 debt.
The Court also rejected arguments that the 2019 overpayment constituted an advance payment or generated offsetting interest under s. 280(3) of the Excise Tax Act.
