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.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen St
Ottawa ON K1A 0L5
[Addressee]
Case Number: 153337
Business Number: [...]
December 13, 2013
Dear [Client]:
Subject: GST/HST RULING
Section 150 election for exempt supplies
Thank you for your fax of April 24, 2013, concerning the eligibility of [...] ([...][Corporation A]) and its subsidiaries to elect, under section 150 of the Excise Tax Act (ETA), to deem certain supplies to be financial services (i.e. exempt supplies) for purposes of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST).
The HST applies in the participating provinces at the following rates: 13% in Ontario, New Brunswick and Newfoundland and Labrador, 14% in Prince Edward Island (effective April 1, 2013) and 15% in Nova Scotia. The GST applies in the rest of Canada at the rate of 5%. Effective April 1, 2013, the 12% HST in British Columbia has been replaced by the 5% GST and a provincial sales tax.
All legislative references are to the ETA unless otherwise specified.
You are writing to the Canada Revenue Agency (CRA) on behalf of your client, [Corporation A] and its wholly owned subsidiaries listed as follows.
• [...] ([...][Subsidiary A])• [...] ([...][Subsidiary B])
• [...] ([...][Subsidiary C])• [...] ([...][Subsidiary D])
Statement of Facts
Our understanding is as follows:
1. Effective [mm/dd/yyyy], [Corporation A] and its subsidiaries undertook an internal restructuring of operations. The nature of the activities and the various supplies made between [Corporation A] and its wholly owned subsidiaries are reflected below.
• [...]. [Corporation A] is assigned Business Number (BN) [...].[Corporation A] supplies memberships to residents in [...][Province A] whereby Members are provided [...] a variety of [...] insurance products and services and other benefits. [Corporation A] charges management fees and fees for the use of office space and facilities that are owned by [Corporation A] and supplied to its subsidiaries.
• [Subsidiary A] is incorporated [...] and is wholly owned by [Corporation A]. [Subsidiary A] is assigned BN [...]. [Subsidiary A] owns certain equipment and has licensed certain software which in turn is supplied to [Subsidiary B] and [Subsidiary C]. [Subsidiary A] also subleases certain office space to [Subsidiary C].
• [Subsidiary C] is incorporated [...] and is wholly owned by [Subsidiary A]. [Subsidiary C] is assigned BN [...]. [Subsidiary C] is licensed as an insurance agent in [Province A] and sells various types of insurance to [Corporation A] members including property insurance on behalf of [Subsidiary B] and automobile and travel insurance on behalf of third party insurers.
• [Subsidiary B] is incorporated [...] and is wholly owned by [Subsidiary A]. [Subsidiary B] is assigned BN [...]. [Subsidiary B] is a licensed insurer in [Province A], [...][Province B] and [...][Province C] and supplies property (primarily homeowner) insurance to [Corporation A] Members.
• [Subsidiary D] is incorporated [...] and is wholly owned by [Subsidiary A]. [Subsidiary D] is assigned BN [...]. [Subsidiary D] owns certain vehicles which it leases to [Corporation A] and [Subsidiary C] for use by employees of those corporations.
2. [Corporation A] and [Subsidiary B] elected under subsection 150(1) in[yyyy], to deem certain supplies to be financial services effective [mm/dd/yyyy].
3. [Subsidiary B] and [Subsidiary C] are engaged in exempt activities. Due to the corporate restructuring in [yyyy] mentioned in Fact 1, in order to minimize the impact of the GST/HST on these two entities, it was determined that additional elections under subsection 150(1) should be filed between the following:
• [Subsidiary A] and [Subsidiary B]
• [Subsidiary A] and [Subsidiary C]
• [Corporation A]and [Subsidiary C]
• [Subsidiary D] and [Subsidiary B]
4. [...]
5. [...].
6. [Corporation A] subsequently filed Forms GST27 to elect to have certain supplies to be financial services under subsection 150(1). The Forms GST27 were dated [mm/dd/yyyy], and requested an effective date of [mm/dd/yyyy]. You have enclosed copies of the GST27 Forms between the entities [...]. However, you indicated that a copy of the Form GST27 between [Subsidiary D] and [Subsidiary B] could not be located and therefore could not be provided. CRA records do not indicate receipt of an election between [Subsidiary D] and [Subsidiary B].
7. The Forms GST27, included the following information:
• [Subsidiary A] and [Subsidiary B]. [Subsidiary B] is identified as a listed financial institution (LFI) that is a member of the closely related group.
• [Subsidiary A] and [Subsidiary C]. [Subsidiary B] is identified as an LFI that is a member of the closely related group.
• [Corporation A] and [Subsidiary C]. [Subsidiary B] is identified as an LFI that are members of the closely related group.
8. [Corporation A], [Subsidiary B] and [Subsidiary C] were informed in writing by the CRA [...], that elections to deem certain supplies to be financial services under subsection 150(1) will cease to be in effect, effective [mm/dd/yyyy]. [Subsidiary A] and [Subsidiary D] did not receive such letters.
Ruling Requested
You wish to confirm that the [Corporation A] and its wholly owned subsidiaries have elected to deem certain supplies to be deemed to be financial services (i.e. exempt supplies) under section 150 and may continue to operate under the elections.
Ruling Given
In accordance with the conditions set out in section 150, [Corporation A], [Subsidiary B], [Subsidiary C] and [Subsidiary A] have elected as set out in the three GST27 Forms listed in Fact 7 above to deem certain supplies between them to be financial services effective [mm/dd/yyyy], and may continue to operate under the elections.
This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-952-8811. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Monica Ma
Rulings Officer
Special Provisions - FI Unit
Financial Institutions and Real Property Division
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