Buying equipment and inventory before you are registered does not have to mean losing the tax on it forever.
Short answer
Not entirely — if you are still holding the property when you become a GST/HST registrant, section 171(1) of the Excise Tax Act deems you to have reacquired it at that moment and lets you claim an input tax credit for the tax embedded in it, even though you paid that tax as an unregistered purchaser. But every credit, before or after registration, still has to clear the documentation rules in s.169(4), which are tiered by dollar amount.
Section 171(1) is the rule that recovers pre-registration tax: “Where at any time a person becomes a registrant and immediately before that time the person was a small supplier, for the purpose of determining an input tax credit of the person, the person shall be deemed (a) to have received, at that time, a supply by way of sale of each property of the person that was held immediately before that time for consumption, use or supply in the course of commercial activities of the person; and (b) to have paid, at that time, tax in respect of the supply equal to the basic tax content of the property at that time.” The small-supplier threshold that decides when registration became mandatory is set at $30,000 of revenue under s.148(1).
Getting the credit still means clearing s.169(4): “A registrant may not claim an input tax credit for a reporting period unless, before filing the return in which the credit is claimed… the registrant has obtained sufficient evidence in such form containing such information as will enable the amount of the input tax credit to be determined.” The prescribed information is tiered by invoice amount — nothing below $100, a supplier name above it, and the supplier's GST/HST registration number once an invoice reaches “$100 or more and less than $500.”
Two different failures get confused with each other, and they have different fixes. Buying before registration is a timing problem s.171(1) solves on its own the moment you register. Missing paperwork on a supplier invoice, such as no registration number or no supplier name, is a documentation problem under s.169(4), and it is not solved by registering; it is solved by going back to the supplier for a corrected invoice, or accepting the credit is unsupported. On a diligence review of historical credits, apply the regulation's own tiers before pricing the exposure: an invoice under $100 needs none of this information at all, so a flat percentage of “invoices missing a registration number” usually overstates the real risk.
A 30-minute call is enough to tell you which of these facts applies to your deal.
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