Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
XXXXX
XXXXX
XXXXX
XXXXX
Case Number: 108044
Attention: XXXXX
March 25, 2009
Subject:
GST/HST INTERPRETATION
Penalties regarding the GST/HST information schedule for financial institutions
Dear XXXXX:
Thank you for your letter of XXXXX, concerning the application of penalty provisions to a failure to file or to a late-filing of the GST/HST information schedule for financial institutions. We apologize for the delay in our response.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
In January 2007, the Department of Finance released a backgrounder that announced new information requirements for certain financial institutions (FIs). FIs are required to file this information through Form GST111, Schedule 1 - Financial Institution GST/HST Annual Information Schedule annually as part of their regular GST/HST return (i.e., the Form GST34, Form GST62 or Form GST494). An FI (within the meaning of subsection 149(1)) that is a GST/HST registrant and has total annual revenue in excess of $1 million must file the Form GST111 within six months after the end of the FI's fiscal year for each fiscal year beginning after 2006.
INTERPRETATIONS REQUESTED
1. Does the Canada Revenue Agency (CRA) consider the Form GST111 to be an information return?
2. Will section 284 and/or section 326 apply to a late filing of the Form GST111, or to a failure to file the Form GST111?
If section 284 applies, would the $100 penalty apply to a failure to file the Form GST111 or to each box on the Form GST111?
3. If neither of the above sections will be applied with respect to the Form GST111, does the CRA contemplate present and/or future amendments to the GST legislation to address the issue of late filing or failing to file?
INTERPRETATIONS GIVEN
#1 - Does the CRA consider the Form GST111 to be an information return?
The Form GST111 is considered to be part of what is prescribed as the return that is required in section 238. Subsection 238(1) provides, in the preamble, "[e]very registrant shall file a return with the Minister for each reporting period of the registrant ...." Subsection 238(4) states, "[e]very return under this Subdivision shall be made in prescribed form containing prescribed information and shall be filed in prescribed manner."
"Prescribed" is defined in subsection 123(1) to mean, in part,
(a) in the case of a form or the manner of filing a form, authorized by the Minister,
(b) in the case of the information to be given on a form, specified by the Minister.
"Minister", as defined in subsection 123(1), means the Minister of National Revenue.
As indicated above, no specific form is indicated in subsection 238(4) as a return, but rather the Minister has the right to authorize any form to be considered the prescribed form for this return, and to specify what information is to be included on such form as prescribed information. This prescribed form can include the Form GST34 (personalized return), the Form GST62 (non-personalized return), or such other form as the Minister may determine, such as the Form GST111 in the case of those FIs that are required to file it. One or more forms may compose what the CRA considers to be a return in certain situations. For example, for selected listed financial institutions which are monthly or quarterly filers, the prescribed forms for the purposes of subsection 238(2.1) include the Form GST494 as well as the Form GST34 and the Form GST111 (where the FI is required to file it), while for selected listed financial institutions which are annual filers it is the Form GST494 and the Form GST111 (where the FI is required to file it). As the Form GST111 is not considered to be a separate return, we do not consider it to be an information return.
#2 - Whether section 284 and/or section 326 apply to a late filing or failure to file the Form GST111:
Section 284 states:
Every person who fails to provide any information or document when and as required under this Part or under a regulation made under this Part is, except where the Minister waives the penalty, liable to a penalty of $100 for every failure unless, in the case of information required in respect of another person, a reasonable effort was made by the person to obtain the information.
Section 284 may apply to a failure to file the Form GST111, and a penalty of $100 may be imposed by the Minister for such failure. The penalty in section 284 may be cancelled where it is waived by the Minister. This penalty would not usually be waived in the case where the registrant subsequently filed the Form GST111, therefore effectively imposing the penalty on the late filing of the Form GST111.
Subsection 326(1) states:
Every person who fails to file or make a return as and when required by or under this Part or who fails to comply with subsection 286(2) or 291(2) or with an order made under subsection (2) is guilty of an offence and, in addition to any penalty otherwise provided, is liable on summary conviction to
(a) a fine of not less than $1,000 and not more than $25,000; or
(b) both a fine referred to in paragraph (a) and imprisonment for a term not exceeding twelve months.
Subsection 326(1) applies, in part, where a person fails to file or make a return as and when required by or under Part IX.
As indicated above, where an FI is required to file the Form GST111, it forms part of what is prescribed as the return that is required to be filed under section 238. Therefore, section 326 may apply to a failure to file/late filing of the Form GST111.
However, the legislation provides that both penalties (those in sections 284 and 326) will not generally apply at the same time. Subsection 326(3) provides that a person who is convicted of an offence under subsection 326(1) is not liable to pay a penalty imposed under any of sections 280.1, 283 or 284 for the same contravention of Part IX that led to the conviction unless a notice of assessment for that penalty was issued before the information or complaint giving rise to the conviction was laid or made.
If section 284 applies, would the $100 penalty apply to a failure to file the Form GST111 or to each box on the Form GST111?
Section 284 may apply to impose a maximum of a $100 penalty related to a failure to file the Form GST111 or to provide information on the Form GST111. A $100 penalty would not apply to each line not completed on the Form GST111.
#3 - Does the CRA contemplate present and/or future amendments to the GST legislation to address the issue of late filing or failing to file the Form GST111?
The CRA is responsible for administering and enforcing the legislation as passed by Parliament. Legislative amendments are a matter of tax policy, which falls within the responsibility of the Department of Finance. At this time there are no proposed amendments regarding penalties specific to late filing or failing to file the Form GST111; however, it is our understanding that the Department of Finance is considering draft legislation to provide specific rules with respect to the new information requirements for certain FIs.
The foregoing comments represent our general views with respect to the subject matter of your request. These comments are not rulings and, in accordance with the guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, do not bind the CRA with respect to a particular situation. Future changes to the ETA, regulations, or our interpretative policy could affect this interpretation.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 780-495-6321. 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,
Eleanor Struth
Financial Institutions Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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