CAF-2 · Chapter 17 · Question 9 of 15
Emerald Traders (ET) purchased taxable goods from Sapphire Electronics (SE), another registered person, and paid the invoice value inclusive of sales tax. Later, SE failed to deposit the sales tax to the government. Under Section 8A, ET can be held jointly and severally liable for the unpaid tax IF:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) B) ET is proven to have had knowledge or reasonable grounds to suspect that the tax payable in respect of that supply would go unpaid.
Explanation
Where a registered person receiving a taxable supply has knowledge or reasonable grounds to suspect that the tax payable in respect of that supply would go unpaid, such person (the buyer) as well as the person making the supply shall be jointly and severally liable for the unpaid tax.
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