3 November 1999 GST/HST Interpretation HQR0001930 - - ITCs & Pension Plan Expenses

To summarize briefly. XXXXX has set up a pension plans for its employees. The Trustee of this plan is XXXXX[.] The trust agreement does not specifically differentiate between pension plan expenses or employer expenses. Under the agreement, XXXXX may direct the Trust to pay various expenses out of the trust funds. The Pension Plans are not registered under the Excise Tax Act (ETA).

XXXXX

The suppliers providing services to the pension plan send the invoices, made out in XXXXX name directly to XXXXX then directs the trustee by letter to pay the invoices by sending a cheque directly to the suppliers.

Your first question is[:]

a) When XXXXX directs the trustee to make the payments is that considered to be a re-supply for purposes of section 155 [o]f the ETA? If yes, should GST have been charged and remitted?

Under subsection 123(1) of the ETA the recipient of a supply is defined as the person who is liable to pay consideration under the agreement for the supply. Since XXXXX is invoiced for the supply it is liable to pay and is therefore the recipient of the supply. There is no re-supply to the trust in this instance and since the value of the consideration has been set by a non-related third party section 155 is not an issue. This situation involves a straight forward payment for a supply and it doesn't matter that a person other than XXXXX made the payment to the supplier.

Your second question is[:]

b) Per Bulletin TIB-032R under the section "Employer Expenses Invoiced to and Paid for by the Plan Trust", the last paragraph states "where the employer or plan trust has paid for the other's expenses but does not invoice the other for the re-supply of the related property or services, the Department will not seek to apply section 155 of the Excise Tax Act, provided that neither the employer nor the plan trust, as either supplier or recipient, claims an input tax credit with respect to the related property or services." Since the pension plan has paid for the "employer type pension expenses' and not invoiced XXXXX for these expenses, is XXXXX entitled to claim the ITCs?

Since the invoices for these employer expenses are made out in XXXXX name, and to the extent that these supplies are used in XXXXX commercial activities, they may claim the GST charged on these supplies as ITCs. Under s[ubs]ection 123(1) the recipient of a supply is defined as the person liable to pay the consideration i.e., the invoice is made out in their name. Under subsection 169(1), the general rule for credits, a person who has acquired a supply for which tax is paid or payable by that person, may claim an input tax credit. The application of TIB-032R is not required in this instance.