Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
[Addressee]
[Dear Client],
Subject: GST/HST INTERPRETATION
Beneficiary Pension Plans in a Master Trust Arrangement
[…][We spoke] on [mm/dd/yyyy], about the eligibility of a pension entity of a pension plan to claim a rebate under section 261.01 of the Excise Tax Act (ETA).
[…][Your enquiry involves] a case in which a beneficiary pension plan holds units in a master trust. While we did not discuss the details of the master trust agreement in question, I understand that it bears the normal attributes of a master trust; for example, it provides for the collective investment of the assets of participating beneficiary plans and incurs related expenses. In this regard, the master trust is the recipient of supplies such as investment, administration and management services, the consideration and tax for which is paid by the master trust from the assets. In determining the value of the units held by a beneficiary plan, the relevant expenses are classified in the books and records of the master trust as being attributable to a particular participating plan and are netted against that plan’s share of the assets. The master trust does not provide the investment, administration or management services to any person.
[INTERPRETATION REQUESTED]
You have asked whether a section 261.01 rebate is available to a beneficiary plan for the expenses incurred by the master trust. […].
[INTERPRETATION GIVEN]
[…], a particular trust may be a “pension entity” and therefore eligible for a rebate, subject to section 261.01 of the ETA, if it is governed by a registered pension plan. Therefore, […][in your case], if a beneficiary plan governs a particular trust in the arrangement, the trust may be a pension entity and may be eligible for the rebate. Note, however, that a master trust cannot normally be considered as a pension entity as master trusts are not generally governed by a registered pension plan. For this reason, a master trust would not generally qualify for a rebate under section 261.01 of the ETA. Detailed explanations for the latter result are provided in RITS cases 141407, 142567 and 147682 which have previously been provided to you.
[…][You indicated that] there are no other trusts in the pension arrangement other than the master trust. Since it is unlikely that any of the beneficiary plans in the arrangement govern the master trust, there would be no pension entities in the arrangement and therefore no rebates available under section 261.01 of the ETA.
[…][You described] a situation where a beneficiary pension plan in the arrangement governs its own trust […]. In that case, there may be a pension entity in respect of that beneficiary plan; however, there would still be no rebate available to the entity unless it has “eligible amounts” on which to calculate a rebate. An “eligible amount” for a particular claim period of a pension entity is defined in subsection 261.01(1) to include an amount of tax, other than a recoverable amount in respect of the claim period, that:
“(a) became payable by the pension entity during the claim period, or was paid by the pension entity during the claim period without having become payable, in respect of a supply, importation or bringing into a participating province of property or a service that the pension entity acquired, imported or brought into the participating province, as the case may be, for consumption, use or supply in respect of a pension plan…”
Therefore, to the extent that an unrecoverable amount of tax is paid or payable by the pension entity, the amount may qualify as an eligible amount upon which the pension entity may calculate a rebate. However, such amounts would not include the GST/HST paid or payable for the aforementioned services acquired by the master trust.
We note that the Department of Finance is aware of the above-described results and is currently examining issues with respect to the treatment of master trusts. […].
[In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the interpretation given in this letter, including any additional information, is not a ruling and does not bind the Canada Revenue Agency (CRA) with respect to a particular situation. Future changes to the ETA, regulations, or the CRA’s interpretative policy could affect the interpretation or the additional information provided herein.]
Paul Hawtin
Special Provisions – FI Unit | Unité des dispositions spéciales - IF
Excise and GST/HST Rulings Directorate | Direction de l'accise et des décisions de TPS/TVH
LPRAB | DGPLAR
Canada Revenue Agency | Agence du Revenu du Canada
Tel./Tél.: 613-952-8816
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