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.
GST/HST Rulings Directorate
5th floor, Tower A, Place de Ville
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 245207
Business Number: […]
[Dear Client]:
Subject: GST/HST INTERPRETATION
[Requirement to file an information return for reporting institutions]
Thank you for your correspondence of [mm/dd/yyyy], concerning the requirements under subsection 273.2(3) of the Excise Tax Act (ETA) to file an information return for reporting institutions. We apologize for the delay in this response.
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.
RULING REQUESTED
You would like to know whether […][X] (BN […]), would be a reporting institution under subsection 273.2(2) of the ETA and would be required to file Form GST111 for each fiscal year in which it is party to an election under section 150 of the ETA that is in effect. More specifically, you would like to know what constitutes “income” for income tax purposes for purposes of paragraph 273.2(2)(c) of the ETA.
You would also like to confirm that the status of [X] as a non-profit organization that is exempt from income tax under section 149(1) of the Income Tax Act (ITA) would not change as a result of having a section 150 election in effect with […][the listed financial institution].
As discussed during our telephone conversation on [mm/dd/yyyy], we are unable to provide a ruling since making this determination would require interpreting provisions of the ITA which is outside the area of responsibility of the GST/HST Rulings Directorate. It was agreed that a written interpretation of the relevant provisions in the ETA would be provided, which is a general explanation of the applicable provisions and how the legislation would apply.
INTERPRETATION GIVEN
Under subsection 273.2(2) of the ETA,
a person, other than a prescribed person or a person of a prescribed class, is a reporting institution throughout a fiscal year of the person if
(a) the person is a financial institution at any time in the fiscal year;
(b) the person is a registrant at any time in the fiscal year; and
(c) the total of all amounts each of which is an amount included in computing, for the purposes of the Income Tax Act, the person’s income, or, if the person is an individual, the person’s income from a business, for the last taxation year of the person that ends in the fiscal year, exceeds the amount determined by the formula
$1,000,000 × A/365
where
A is the number of days in the taxation year.
In accordance with section 6 of the Financial Services and Financial Institutions (GST/HST) Regulations, a selected listed financial institution that is either a segregated fund of an insurer or an investment plan is prescribed for purposes of subsection 273.2(2) of the ETA and as a result would not be reporting institution. Based on the information provided, it is our understanding that [X] would not be a prescribed person for purposes of subsection 273.2(2) of the ETA.
Paragraph 273.2(2)(c) of the ETA requires the determination of the total of all amounts each of which is an amount included in computing the person’s income for income tax purposes. Determining what amounts are included in computing a person’s income for income tax purposes is outside the area of responsibility of GST/HST Rulings Directorate. Based on the information provided, if [X]’s income for income tax purposes exceeds the $1,000,000 threshold amount described in paragraph 273.2(3)(c) of the ETA, [X] would be a reporting institution. As a reporting institution, it would be required to file a GST111 return.
It is important to note that there is a proposed amendment to paragraph 273.2(2)(c) of the ETA that would increase the $1,000,000 threshold amount to $2,000,000. It is proposed that this amendment would apply in respect of […][fiscal years] of a person ending after August 9, 2022.
If you require greater certainty regarding whether certain amounts constitute income for income tax purposes, you may request a ruling from the Income Tax Rulings Directorate. […]
We can also provide the following general information related to the application of the deeming provisions in subsection 150(1) of the ETA as a result of making the election under that provision. Under subsection 150(1) of the ETA, a person who is a member of a closely related group of which a listed financial institution is a member can jointly make an election with a corporation that is also a member of the group at that time. The effect of the section 150 election is that is that for purposes of Part IX of the ETA, every supply between the person and the corporation of property by way of lease, licence or similar arrangement or of a service that is made at a time when the election is in effect and that would, but for this subsection, be a taxable supply is deemed to be a supply of a financial service. As subsection 150(1) of the ETA states that the section 150 election only applies for the purposes of Part IX of the ETA, the making of a section 150 election would only impact provisions in Part IX of the ETA.
We cannot comment on whether the status of [X] as a non-profit organization that is exempt from income tax under section 149(1) of the ITA would change as a result of having an election under subsection 150(1) of the ETA in effect with [the listed financial institution] as the interpretation of the ITA is outside the area of responsibility of the GST/HST Rulings Directorate. For greater certainty, this second question could be discussed with the Income Tax Rulings Directorate. […]
DISCLAIMER
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(s) 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(s) or the additional information provided herein.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-314-5412.
Should you have additional questions on the interpretation and application of the GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287 or by fax to 1-418-566-0319.
Sincerely,
Alisenne Boxall, CPA, CA
Senior Rulings Officer
Listed Financial Institutions
Financial Institutions and Real Property Division
GST/HST Rulings Directorate
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