Subsection 266(2) - Receivers
See Also
International Hi-Tech Industries Inc. v. The Queen, 2014 TCC 198
Prior to its bankruptcy, the appellant granted a general security agreement ("GSA") to its parent and related companies as security for a $6 million advance. In the appellant's name, the receiver for the secured creditors appealed the Minister's denial of input tax credit claims of the appellant. The trustee in bankruptcy had already accepted the GSA as valid, waived redemption of the security and released the interests of the general creditors in the collateral (i.e., essentially all the appellant's assets, as the secured creditors' claim exceeded the value of the bankrupt estate), but had not specifically authorized the present proceedings.
The Minister applied to dismiss the claim on the basis of the lack of legal capacity of the receiver to bring the claim (i.e., that only the trustee could bring the claim).
After noting (at para. 17) that he "would likely have concluded in this instance that the prior assignment of the book debts (choses in action) under the GSA has otherwise validly transferred the rights to the referable property enumerated under sections 301 (person assessed may file an objection) and 306 (objector receiving or deemed to receive a confirmation may file an appeal)" he quoted ETA s. 266 (including "the receiver shall be deemed to be an agent of the [debtor]") and found (at para. 18):
[A] secured creditor, acting as a "receiver" in respect of part of the property of the debtor under a "debt security", becomes an agent under subsection 266(1) and is not precluded from objecting to a GST assessment or reassessment in respect of certain property assigned (the book debt) and maintaining thereafter the appeal which follows.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 301 - Subsection 301(1.1) | secured creditors able to bring claim for ITCs of bankrupt | 277 |
| Tax Topics - Other Legislation/Constitution - Federal - Tax Court of Canada Rules (General Procedure) - Section 29 | secured creditors able to bring claim for ITCs of bankrupt | 324 |
Administrative Policy
20 December 2011 Interpretation Case No. 133520
In response to a question as to how ss. 266(2)() and (h) applied to a receiver who managed only one or a few assets of a person's business, CRA stated:
It is our view that paragraphs 266(2)(g) and (h) require a receiver that manages one or a few, but not all, of an insolvent's properties, businesses, affairs or assets (a "single asset receiver") to file outstanding returns on behalf of an insolvent only in respect of the "relevant assets" of that receiver.
...
[B] paragraphs (g) and (h) of subsection 266(2) require a receiver to file outstanding returns for reporting periods which occurred prior to the receiver's appointment, but only insofar as the outstanding returns "relate" (in the case of paragraph (g)) or "can reasonably be considered to relate" (in the case of paragraph (h)) to the receiver's relevant assets, as though the receiver had been acting as receiver of the insolvent during the reporting period of the insolvent for which the return was not filed.
As discussed in the Excise and GST/HST Rulings memorandum issued […] on [mm/dd/yyyy] (RITS […]), where a receiver (such as a single asset receiver) is responsible for only a part and not all of the person's businesses, properties, affairs or assets, the receiver may use a sub-account of the person's GST/HST registration account for GST/HST purposes.