Investment limited partnerships (and other DIPs) should send out requests for investor percentages to their larger unitholders by October 15

Investment limited partnerships (ILPs) with unitholders in HST-participating and non-participating provinces have now become selected listed financial institutions (SLFIs) and distributed investment plans (DIPs). The ILP must compute its final provincial HST (or QST) liability for a year, which is based on the imputed provinces of residence of its unitholders, so that, for example, if half of its investors were resident in western Canada (with a 0% provincial HST rate) and half in Ontario (an 8% rate), the actual provincial HST that it paid during the year is refunded or upwardly assessed pursuant to the special attribution amount (SAM) formula so as to result in a final blended provincial HST rate of 4%.

All this requires the ILP to determine the “investor percentages” for its units, i.e., its deemed percentage ownership by ultimate stakeholders in each province (or abroad). There effectively is a deadline for requesting the investor percentage information from most of the larger ($10M or over) unitholders by October 15, 2019. If the requests are not made by then, the relevant formula (e.g., in SLFI Regs. s. 30(1)(b)A4 -C(ii)) generally operates to produce less favourable investor percentages (i.e., more allocation to high-rate provinces).

In order for the investor percentages for the ILP’s 2019 year to be based on investor percentages as at September 30, 2019 rather than September 30, 2018, the ILP should make a reconciliation election under SLFI Regs. s. 50 (assuming that it did not obtain the investor percentages a year previously).

Some of the unitholders may not be prepared for these notices from the ILP. For example, a registered charity or a NPO must compute its investor percentage - related information based on how its income would have been allocated between provinces under Pt IV of the ITA Regs for its preceding taxation year had it been taxable.

Neal Armstrong. Summaries of PwC Tax Insights: GST/HST and QST alert: Investment plans are required to obtain investor percentages – action required by October 15, 2019, September 03, 2019, Issue 2019-31 under SLFI Regs. s. 52(10), 52(4) and s. 48(1)(b)A₆