19 February 2008 GST/HST Ruling 99952 - ITC's for tax on imported goods

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.

Dear XXXXX:

Thank you for your letter XXXXX with respect to form GST111 – Schedule 1 – Financial Institution GST/HST Annual Information Schedule (AIS).

We would like to thank you for providing your comments with respect to the AIS. Your comments and suggestions were considered in the development of guide RC4419, Financial Institution GST/HST Annual Information Schedule (the guide). We are currently finalizing the guide and it should be released shortly. The guide will provide line-by-line instructions, additional clarification, as well as examples. We would like to provide the following clarification in response to some of your comments.

A financial institution will be able to use estimates for certain lines in the AIS when the actual amounts are not reasonably ascertainable. A financial institution will have to use its best efforts to provide as accurate information as possible. We are not currently contemplating expanding the areas where an estimate may be used. It is recognized that where estimates are used certain totals may include estimated amounts.

The AIS refers to total annual revenue. The meaning of total annual revenue will be clarified in the guide. A financial institution will be able to use the total of all revenue amounts as stated in its financial statements which are filed with its income tax return or the total of all revenue amounts included in its financial statement information filed with its income tax return (for example, the General Index of Financial Information (GIFI)). A specific reference to a line in the GIFI will not be included.

At this time, a drop down menu to select major business activities will not be included in Section A of the AIS. When indicating its major business activity, a financial institution will be able to provide a North American Industry Classification System code. However, a detailed description of its major activities will also have to be included.

For certain lines, a financial institution will be able to use amounts reported for income tax purposes including amounts reported in the GIFI. There will be explanations in the guide as to when this is possible. Specific references to lines of the GIFI will not be included in the guide.

We appreciate XXXXX's interest in assisting in the process of eliminating information required in the AIS to minimize the administrative burden and compliance costs to the taxpayer. However, we are not currently contemplating the elimination of any part of the information requested in the AIS.

We are providing the following additional information in respect of specific questions raised in the Appendix to your letter.

1. Although revenue from capital leases may be treated as interest income for financial statement purposes as well as by some taxpayers for income tax purposes, leases are not financial services for GST/HST purposes. Revenues from taxable supplies subject to GST made during the fiscal year should be entered on line 072 of the AIS. Revenues from taxable supplies subject to HST made during the fiscal year should be entered on line 073 of the AIS.

2. On line 060 of the AIS a financial institution will have to enter the total amount of exempt supplies of financial services made during the year. A financial institution will be able to use revenues reported for income tax purposes that are attributable to its exempt supplies of financial services.

3. In general, a financial institution will have to include in Section C of the AIS income statement as well as balance sheet acquisitions. Line 160 of the AIS requires a financial institution to enter the total amount of exempt and zero-rated financial services purchased during the fiscal year. This amount should be based on costs reported for income tax purposes that are attributable to its purchases of exempt and zero-rated supplies of financial services.

4. A financial institution should include on line 550 of the AIS the GST/HST part of credit notes received and debit notes issued as well as adjustments for tax paid in error, price adjustments, and patronage dividends.

5. Other deductions that should be entered on line 562 of the AIS include adjustments for rebates paid or credited to buyers. For example, where an insurer supplies taxable "specified services" to a segregated fund and the fund is entitled to a rebate for the tax it paid on these services, the insurer can credit the fund with the amount of the rebate. In this situation, the insurer files Form GST189, General Application for Rebate of GST/HST, with its GST/HST return (claiming the amount on line 107 of the return). The insurer would include the amount it credited to the fund on line 562 of the AIS.

6. A financial institution should enter on line 563 the total amount of other adjustments to be deducted from its net tax during the fiscal year. For example, where a selected listed financial institution (SLFI) has a negative amount on line 031 of its GST494 return, the SLFI would include this amount on line 563.

XXXXX

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 Canada Revenue Agency with respect to a particular situation.

If you require clarification with respect to any of the issues discussed in this letter, please call me at 613-952-9248 or Dawn Weisberg at 613-952-9210.

Yours truly,

Ivan Bastasic
Director
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate

2007/12/31 — RITS 100376 — Energy XXXXX Drink XXXXX