Section 150

Subsection 150(1) - Election for Exempt Supplies

See Also

CIBC World Markets Inc. v. The Queen, 2018 TCC 103, rev'd 2019 FCA 147

s. 150 election precluded zero-rating of services rendered to parent's NR branches

Administrative services provided by CIBC World Markets Inc. (WMI) to its parent (CIBC) respecting activities carried on by CIBC through its non-resident branches would have been zero-rated but for an ETA s. 150(1) election that had been made between them (which deemed services and licences of property supplied between members of the closely-related CIBC group to be exempt financial services). (Zero-rating would have generated input tax credits.) WMI made a subtle argument that although those non-resident branches were deemed non-resident persons respecting their branch activities for zero-rating purposes, they could not be members of a closely-related group to the extent of such activities.

Bocock J recognized that finding that the election denied zero-rating “renders a ‘sub-species’ of exported financial services less competitive.” Nonetheless, he found the statutory language deeming financial services following a s. 150 election to be exempt rather than zero-rate to be too emphatic and specific to accommodate what might have been the broader policy.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Schedules - Schedule VI - Part IX - Section 1 an ETA s. 150(1) election denied zero-rating for services provided to a parent’s non-resident branches 391

Administrative Policy

6 July 2012 Headquarters Letter Case No. 142921

A taxpayer which absent a s. 150 election would not have been a small supplier and had made such election on a valid basis with two financial institutions who were closely related then had its registration inadvertently cancelled. At that time, the "closely related" related definition required that it be a "registrant."

Ruling that such cancellation "did not cancel the Election under section 150 since the Taxpayer would have been required to be registered, i.e., was a registrant, throughout the period in question."

GST/HST Memorandum 17-14 Election for Exempt Supplies July 2011

Requirement that election corporations be resident

13. Besides being closely related, corporations wishing to make the election under section 150 must also be members of a closely related group of which a financial institution is a member. "Closely related group" is defined in subsection 123(1) to mean a group of corporations each member of which is a registrant resident in Canada and is closely related, within the meaning assigned by section 128, to each other member of the group and for the purposes of this definition,

  1. a non-resident insurer that has a permanent establishment in Canada is deemed to be resident in Canada, and
  2. credit unions and members of a mutual insurance group are deemed to be registrants.
Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 132 - Subsection 132(2) 112

GST M 300-4-7 "Exempt Supplies - Financial Services"

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 240 - Subsection 240(3) 19

Guide for Providers of Financial Services under "GST Registration and Reporting of Tax"

The election under s. 150 is available to a listed financial institution resident in Canada has registered even if it is not involved in the commercial activity.

Guide for Providers of Financial Services under "Special Provisions" - "Election for Exempt Treatment of Supplies"

General synopsis.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 205 - Subsection 205(3) 24


Allan Gelkopf, Zvi Halpern-Shavim, "Five Arbitrary Differences between Corporations and Partnerships for GST/HST Purposes", Sales and Use Tax, Federated Press, Volume XIII, No. 2, 2015, p. 674.

Election only available for corps (p. 675)

. . . for some reason, only corporations can benefit from the section 150 election. The election does not apply to partnerships that are listed financial institutions, or to partnerships that are closely related (e.g., wholly-owned) to listed financial institutions.

Michael Firth, Brent Murray, "Section 150 Elections and the GST Rate Cut: Do the Benefits Continue to Outweigh the Costs?", Canadian GST Monitor, July 2008, No. 238, p. 1.

Subsection 150(2)


CIBC World Markets Inc. v. Canada, 2019 FCA 147

s. 150(2) amendment was required because of the risk of taxpayers arguing otherwise

Administrative services provided by the appellant (“WMI”) to its parent (“CIBC”) respecting activities carried on by CIBC through its non-resident branches were treated by CRA as not being zero-rated under Sched. V, Pt. VII, s. 2 because of an ETA s. 150(1) election made between the two companies, which deemed “every supply” between them to be an exempt financial supply (so that WMI’s related inputs did not generate input tax credits). The Crown argued that ETA s. 132(3), which merely deemed CIBC to be a non-resident person in respect of “activities” carried on by it through its non-resident permanent establishments, was not adequate to the task of deeming those PEs to be separate persons for s. 150 purposes.

Essentially, Noël C.J. considered that the “activities” language in s. 132(3) indeed was adequate because the GST (a “transactional tax”) is therefore essentially only about activities, including those engaged here in the debate as to whether s. 132(3) or s. 150(1) applied in relation to them (para. 40). The fact that other ETA provisions raised by the Crown had more exacting separate-person language only demonstrated that they were addressing more difficult issues that required the full bench press. Furthermore, respecting the Crown’s argument that s. 150(2), which expressly provided that s. 150(1) did not apply to imported supplies, implied an intention the s. 150(1) would apply to the exported services of WMI, Noël C.J. stated (at para. 50):

[S]ervices in contrast with tangible goods cross the border only in a virtual sense so that the exigible tax on imported services cannot be collected in the usual way – i.e., at the time of entry when the goods are released … . As a result, reliance had to be placed on self-assessment by the parties to the importation in order to collect the tax (ETA, s. 218). The prospect of collecting the tax was made more challenging when a joint election under subsection 150(1) was in place between the parties to the importation. As explained in the commentaries which accompanied the amendment to subsection 150(2), “[a]pplying the closely-related group election to those supplies would result in both parties to the election avoiding tax altogether …” … . The amendment to subsection 150(2) closes this avenue by preventing parties to an election from relying on subsection 150(1) to justify a decision to not report or self-assess. For example, using the present set of facts, but reversing the flow of the cross-border services, it would not be open to the appellant to justify a decision not to report the importation of these services on the basis of the incorrect, but nevertheless reasonably arguable position that, as the Crown maintains here, CIBC’s foreign permanent establishments are not deemed to be non-resident persons for the purpose of the subsection 150(1) election.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 132 - Subsection 132(3) a non-resident PE had deemed separate person status sufficient to insulate it from an ETA s. 150 election 305
Tax Topics - Excise Tax Act - Section 132 - Subsection 132(4) expansive deemed person language required because 2 PEs involved 372
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Closely Related Group definition has the effect of extending s. 150 election to exported supplies of Canadian PEs of non-resident insurers 189
Tax Topics - Statutory Interpretation - Ordinary Meaning ambiguity can arise on consideration of how the provision interacts with another 172
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Supply no supplies between PEs of the same person in the absence of s. 132(4) 70

Paragraph 150(2)(b.1)

Administrative Policy

GST/HST Notice No. 303 - Changes to the Closely-related Test

example of substantially all test not satisfied


Corporation A and Corporation B have an election under section 150 in place on March 22, 2016. Corporation A owns 90% of the value and number of the issued and outstanding shares, having full voting rights under all circumstances, of the capital stock of Corporation B. However, Corporation A does not have qualifying voting control of Corporation B, as set out in the proposed changes to section 128 and consequently, they would not be members of the same closely related group on March 22, 2017. They enter into an agreement on January 1, 2017 for the provision of services by Corporation A to Corporation B. Under the agreement, 60% of the services will be performed before March 22, 2017 and the remaining 40% on or after that date.

Since the corporations are not members of the same closely related group on March 22, 2017 and not all or substantially all of the services to be provided under the agreement will be performed before that date, none of the services performed under this agreement would be deemed to be financial services.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 128 - Subsection 128(1.1) - Paragraph 128(1.1)(a) - Subparagraph 128(1.1)(a)(i) exception for special voting matters provided by statute, or where a statute provides a special class vote 264
Tax Topics - Excise Tax Act - Section 156 - Subsection 156(1.1) - Paragraph 156(1.1)(b) examples of CBCA exceptions 104

Subsection 150(6) - Credit Unions Deemed to Have Elected

Administrative Policy

18 November 2021 GST/HST Interpretation 232687 - Application of the election under section 150 of the Excise Tax Act to a closely related group

credit union need not file the s. 150 election

CRA noted that the effect of s. 150(6) in relation to the s. 150 election is that “a credit union does not have to file the election and cannot revoke the election in regards to supplies made to another credit union.”

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 128 - Subsection 128(1) - Paragraph 128(1)(a) - Subparagraph 128(1)(a)(i) s. 150 election can accommodate a minority interest of management employees 496
Tax Topics - Excise Tax Act - Regulations - Closely Related Corporations (GST) Regulations - Section 3 - Paragraph 3(a) s. 3(a) can accommodate minority employee incentive shares 218

Guide for Providers of Financial Services under "Special Provisions" - "Supplies between Credit Unions"

This provision permits credit unions to exchange taxable supplies with each other on a GST-exempt basis without having to file an election with the Department.