Section 172.2

Overview of s. 172.2(3)

Deemed tax paid by designated pension entity under proposed subsection 172.2(3)

Under proposed subsection 172.2(3), where an employer or a third party makes an actual supply to a master pension entity of one or more pension plans, a particular amount of actual tax becomes payable, or is paid without having become payable, by the master pension entity at any time in the fiscal year of the master pension entity and the particular amount of actual tax is not an excluded amount (refer to the following paragraph) of the master pension entity, a designated pension entity of each pension plan at that time in respect of the master pension entity would be deemed to have paid a portion of the amount of actual tax for purposes of the pension rebate under section 261.01. For this subsection to apply the amounts of actual tax would have to become payable, or be paid without having become payable, by the master pension entity on or after July 22, 2016.

Proposed subsection 172.2(1) provides that an excluded amount of a master pension entity would generally be an amount of tax that

• is deemed to have been paid by the master pension entity under Part IX of the Act, other than under section 191;
• became payable, or was paid without having become payable by the master pension entity when it was entitled to claim a public service bodies’ rebate under section 259; or
• is payable under subsection 165(1), or is deemed under section 191 to have been paid, by the master pension entity in respect of a taxable supply to it of a residential complex, an addition to a residential complex or land if, in respect of that supply, the master pension entity is entitled to claim a new residential property rebate under section 256.2, or would be so entitled after paying the tax in respect of that supply.

The amount of tax deemed paid by a designated pension entity of a pension plan in respect of a particular amount of actual tax would be determined by first subtracting from the particular amount any amount that the master pension entity is entitled to recover as an ITC, a rebate, a refund, or that was the subject of a credit/debit note. This amount is then multiplied by the master pension factor in respect of the pension plan for the fiscal year of the master pension entity that includes the time the amount of actual tax became payable or when it was paid without having become payable. Where the designated pension entity is an SLFI, only the federal part of the particular amount of actual tax would be included in determining the amount of tax deemed paid by the designated pension entity. This deemed tax paid would be considered to be an eligible amount upon which the designated pension entity may claim a rebate.